Building an External Brand Presence in 2022⎜ Emergant ⎜ EP 192

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This is a podcast episode titled, Building an External Brand Presence in 2022⎜ Emergant ⎜ EP 192. The summary for this episode is: <p>Ryan Cramer of Crossover Commerce talks with Barcus Patty of Emergant one-on-one as they discuss building an external brand presence in 2022. They'll also cover predictions on the future aggregator market as well as the current supply chain issues.</p><p>---</p><p>Crossover Commerce is presented by PingPong Payments. PingPong transfers more than 150 million dollars a day for eCommerce sellers just like you. Helping over 1 million customers now, PingPong has processed over 90 BILLION dollars in cross-border payments. Save with a PingPong account <a href="https://usa.pingpongx.com/us/index?inviteCode=ccpodcast" rel="noopener noreferrer" target="_blank">today</a>! </p><p>---</p><p><strong>Stay connected with Crossover Commerce and PingPong Payments:</strong></p><p>✅ Crossover Commerce @ <a href="https://www.facebook.com/CrossoverCommerce" rel="noopener noreferrer" target="_blank">https://www.facebook.com/CrossoverCommerce</a></p><p>✅ YouTube @ <a href="https://www.youtube.com/c/PingPongPayments" rel="noopener noreferrer" target="_blank">https://www.youtube.com/c/PingPongPayments</a></p><p>✅ LinkedIn @ <a href="https://www.linkedin.com/company/pingpongglobal/" rel="noopener noreferrer" target="_blank">https://www.linkedin.com/company/pingpongglobal/</a></p><p>---</p><p>You can watch or listen to all episodes of Crossover Commerce at: <a href="https://usa.pingpongx.com/podcast" rel="noopener noreferrer" target="_blank">https://usa.pingpongx.com/podcast</a></p>

Ryan Cramer: What's up everyone. Welcome to My Corner Of The Internet. I'm your host, Ryan Cramer, and this is Crossover Commerce presented by PingPong Payments, the leading global payments provider, helping sellers keep more of their hard earned money. Hey, what's up everyone. Welcome back to another episode of Crossover Commerce. I'm your host, Ryan Cramer and this is My Corner Of The Internet where I bring the best and brightest in the Amazon and e- commerce space. Happy Monday to everyone who's joining us live on Facebook, LinkedIn, YouTube, and Twitter, or if you're listening to us on your favorite podcast destination, welcome back to the show. This is episode 192, where again, My Corner Of The Internet, where we talk all things Amazon e- commerce. Today's no exception. But before we get kicked off, just want to go ahead and give a quick shout out to our presenting sponsor, PingPong Payments. PingPong Payments, no, not a table tennis company. No, not a company that's going to help you with your backhand. It's going to be helping you save time, money, and effort. What does that mean? It means if you're making payments to a different country in a localized currency, you can actually save more money by instead of paying additional fees, paying out your suppliers, your manufacturers, your distributors, your VAs. Whatever you are doing as a small and medium sized business, you're going to be able to do it more effectively with a PingPong account. It's free to sign up. It's cost effective to do. And it's almost better every single time. I'm going to say not almost, better every single time than going to the bank and trying to do an international payment. So if you're sending money and receiving money from a different country as a small or medium size business owner, go ahead and sign up for PingPong Payments today. When you do that, just go to usa. pingpongx. com/ podcast to get all of our past episodes as well as signing up for free today. That being said, episode 192, we're getting very close. In the next two weeks we're going to be hitting that magical marker of 200. I'm going to countdown myself because I'm not sure what that episode looks at. But until then, we have a great lineup of people who are going to be touching on various different topics of the Amazon and e- commerce space. We're winding down... Again, as of today, this is December 6th so we have just a few weeks left until the magical Christmas holiday season, whatever you want to call it, however you to tend to celebrate it. But in the Amazon world, this is crunch time for people and retail world crunch time for lots of different people. So today, instead of going on one different topic, we're going to touch on a bunch of different topics. We're going to be talking about building an external audience 2022, as well as touch on a couple of other things; the future of aggregators, supply chain logistics. I was just listening to a report from CNBC breaking down Amazon's tactics and how they're mitigating supply chain headaches and how they've been doing that for years and now it's come to fruition. So we'll touch on all those different things. But wanted to bring back a friend of the show, Barcus Patty of Emergant. Last time he was with Helium 10, now he is with an amazing new company called Emergant who's buying and acquiring new businesses and brands selling on Amazon, AKA as we most of us know in the space an aggregator. So without further ado, we want to bring on Barcus Patty head of growth over at Emergant. Barcus, what is going on? How are you doing today?

Barcus Patty: Hey man. Nice to see you again. Thanks for having me on.

Ryan Cramer: Of course. I love it when you say yes and you don't ask questions, so that's the best kind of guest I crosstalk.

Barcus Patty: Well, it's usually alike so too.

Ryan Cramer: That's right.

Barcus Patty: I know you're good at just whatever.

Ryan Cramer: Yeah, sure. No problem. Send me the details and I'll do that right now. So since the last time we talked specifically on just this show, I've been on your show, you've launched a podcast, bunch of different new projects you have working on. What's been new since the last time you've been on Crossover Commerce?

Barcus Patty: Yeah. Well, I work for an entirely different company now, so that's probably the biggest-

Ryan Cramer: Same headaches, new people.

Barcus Patty: Yeah. Previously at Helium 10, I was there for two years. Before that, I was with another Amazon software company and I was there for four years. So over six years in software for businesses selling on Amazon, and then I switched over into the aggregator space and super excited about it. I like this side of the industry. It's pretty intriguing to see how much money is flowing through all these aggregators. And there's over a list of... it's over a hundred aggregators right now, but a lot of them aren't even talking about how much money they're raising. So everything that you hear about, that's not even probably the majority of the money being raised. So super interesting. It'll be telling to see what happens in the next 18 to 24 months. There's a lot of opinions about that. So those are fun to navigate.

Ryan Cramer: It's okay. We lost you on video, but no problem. It's all right. I'll bring him back. Let's go ahead and bring him back to just a single space. Barcus, he must have kicked a cable. But for everyone who's tuning in, Barcus Patty, he was just talking about, if you're just tuning in, had him as a... going from Helium 10. There he is back again. There you go. I got you again.

Barcus Patty: Yeah. Sorry about that.

Ryan Cramer: No, it's okay. Kicking cables, it's all good. I have it more often than not.

Barcus Patty: It's exactly what I did.

Ryan Cramer: That's all good. So you were telling us, obviously in the next 18 to 24 months or so I think I would agree with you, I think it's a fascinating space to be in, but you're on the other side. You've gone from software to the other side. What's the biggest difference for you maybe in that capacity? Is it as you had thought or maybe a little bit different? How exciting has it been since you moved to this side of the world?

Barcus Patty: The biggest difference? So with most software right now, you're still dealing B2B, business to business sales, but it's a different type of business owner. A lot of people when we were even at the previous company and at Helium 10, a lot of those customers are new to selling, or I don't want to say green, but a lot of the majority of them are new to selling online. I've heard you can have your own business and make money selling on Amazon, and I want to get started. And I've heard that Helium 10 is the best software to get started. So then on our end, we've got people that make five to 10 million a year or more or whatever, and they're like, " We want to sell our business." Still technically it's all B2B, but we're looking to buy those businesses that are profitable, however long that's taken. So it's still the same. It's just a little different. You're having higher level conversations.

Ryan Cramer: Different part of the journey that you're talking with them at.

Barcus Patty: Yeah. It's the end of the journey or at least the end of that chapter. A lot of people are like, " We just want to start over. We're good at building a business to make$ 4 million a year, but we don't know how to build the team to go to 40 million and we don't want to bring in outside money to build it to 40 million. So we'd rather just sell it 4 million and then just rinse and repeat our process that works for us." Which is a cool thing. You realize your limits as a business owner and a person, and you're like, " Well, I did this. I can probably do it again." Those are cool conversations to have.

Ryan Cramer: Yeah, I would agree. I would think that. That would be fascinating, especially when you're looking at all the businesses that potentially you're going to acquire or just helping people. I would think that only a certain percentage of that's going to be inbound, or you're talking with people that you're going to have serious conversations with the acquisition, but then also helping people, hey, maybe take a look at this business or try to look at this model and grow this way. Is that also part of the conversation that you're having with, " hey, if you can turn this around, these numbers will look completely different and maybe we can talk again in six months or so"?

Barcus Patty: Yeah. So that's part of what I do here at Emergant is if anybody is interested in talking to us and they want to sell their brand to us, or if they're just interested learning more about how to sell a business. So I always do a quick 30, 45 minute... It's a no pitch consultation. If you've got, " Hey, look, man, I want to sell my business. Can you give me some pointers or whatever? Or what do I need to look out for?" And I give them some initial thoughts. It's not even due diligence, it's really just looking at the brand from Amazon's perspective and using some software to look at some other data and really just coming up with, " Hey, everything looks great. Do you want to have another conversation? Do you want to have a conversation with the founders?" Or I think if you do a couple of these things, you can really improve these core things that aggregators are looking for, and you can sell now, but you could probably get more. Or hey, there's a couple of... I hate to say red flags, because it sounds so bad, but for example, if your product reviews are at 4.4 for the two ASINs that make up the most of your income. You really want that above four and a half, before you bring it to anybody to sell, because it just increases your valuation. So now it's easier said than done to do that, but most aggregators these days, they want as much of a turnkey business as possible so that's what you want to give them. I always use this analogy, but it's like buying a home. Most people want a move in ready home. They don't want to come in and have to rip up the floors or replace the windows or fix a leak. So that's the same concept. You want to present your brand to sell in the best way that you can. So that's a lot of those conversations that I have initially.

Ryan Cramer: Well, it makes sense too, because at team scale, you only have so many people to work on those kinds of things. If you're talking about someone who's ripping out the floors, someone's doing the roof and all those things, those take time, money and effort and it's just not a quick turnaround time. You say a lot of people want to do turnkey. You can tweak a couple of things cosmetically and structure and build it as you go. So what's that focus for the team over there? First off, it's not agnostic. I know all these answers, but I want to also present this for people because you're not... Emergant is one of those that are newer to the market, but obviously not as flashy, not a lot of PR, but that's by design, that's not obviously by mistake. So is it more agnostic? Is it category focused? What are we talking about?

Barcus Patty: We won't shy away from any initial conversation. We're obviously not going to buy any electronics brands these days just given the crosstalk.

Ryan Cramer: You don't want to buy a micro ship product?

Barcus Patty: Yeah. Well, just based on what Amazon did to a bunch of electronics brands over the summer. They suspended like 5, 000. So that's an area where you might shy away from but we're learning. We've got a few brands in apparel and we've got a coffee brand, we've got sports and equipment brands and others. So we're finding our way. And maybe we lean heavy into apparel, I don't know what's going to happen. Or maybe we lean heavy into something completely different. I think that's the goal. I think all aggregators will eventually, whether they want or thinking about it now or not, they're all going to start to niche to differentiate themselves. And some already have. Because if you are really good at apparel and you know apparel and you know those categories, you know those flat files and everything like that, it's easier to train a team on, hey, we're building an apparel portfolio. And that's easier to scale those brands when you know what to do in those categories versus getting into supplements. We don't know anything about supplements, but it's going to take us a while. So like the classic 80-20 rule. So we're not agnostic, but we're finding what we're really good at. And right now it seems to be apparel. But that doesn't mean that we're going to dive into it. So it's just what we've found and what we've looked into these days.

Ryan Cramer: Well, that's the fascinating thing too, because I think you're starting to see the nuances of... This is my favorite thing to do is watch the whole side of the industry. And I like to see how people position theirselves, like what phrasing they like to use of branding and we want to find a brand. And it used to be, we want to find an Amazon business. Okay, well, that's changed. Why is that? Because a lot of people are finding that brands to put them on Amazon or finding the ones that are being successful off of Amazon, what are those values? The audience that they're building on, the way they're in touch with their consumer, the meat on the bones that they can take that brand to another level. All those kinds of things are very specific. But then finding this niche down of, hey, we're only in health and wellness or we're only in sports and... or home and garden. I think over the weekend I saw an article was, we really just want to buy brands. It's one of those private smaller ones that we just want to buy home and garden products. And that to me speaks volumes because they know how the supply chain works. They can go to the specific either events or whatever that is and get in front of people and say, " Listen, we're successful with these already. Why not trust us with yours to take it to the next level?" So if we're going to go to predictions for 2022, that's where I would agree with you on that.

Barcus Patty: Well, yeah. As an aggregator, if you ever want to sell your entire portfolio or part of it, then it's easier to be like, " Hey, we've done this with these five brands in home and garden. And we basically created one massive brand." And it's just easier to sell that versus, " Hey, we've got these five brands and these are socks and these are Bluetooth headsets and these are garden..." So it's an easier sell. And then like you said too, people will by default probably trust an aggregator more if they're in home and garden and if that's pretty much all they do. You'll trust them that they can take care of your home and garden brand.

Ryan Cramer: Yeah, I agree. So with that being said, you threw so many different topics my way that we can go down all these different roads. We talked about just a little bit about the aggregator space. And we can obviously tie back to that. Building an external brand presence in 2022, a lot of people are looking at what are important things. There's so much that happened to TOS. There was an update with that of how to launch new products. There was all these different little tweaks in almost death by a thousand paper cuts it seem like this entire year. But what a lot of people are emerging with in this year, not to have a pun on the name Emergant.

Barcus Patty: No, it's okay.

Ryan Cramer: It's just natural. It comes out. The emerging conversations that are happening are building a brand and I'm going to reiterate it again, building a brand on and off of Amazon. Amazon is slowly making those tweaks of, hey, follow this company or the brand itself so when new products launch, you can be noted. And how traffic is being associated and awarded in certain areas versus not. Is that what people are going to have to learn that what you are building is not just a widget factory, put it out there and it's going to sell crazy. You have to build a cohesive storefront if people are going to come in and out of your retail store. That's what Amazon's going to start to look at.

Barcus Patty: Well, they're already leaning towards that. Just brand registry alone, it's not just for protection anymore. There's all these amazing tools in there. And they keep coming out with new tools. They came out with just a couple in the past few months and it's telling. And also you mentioned social posts. So Amazon has posts where you can create inside Amazon. It's almost like posting to... The best way to describe it is like, your brand can post to Amazon's version of Instagram. They don't have an app for it. But you get to post about your brand. And then they're dispersed if people follow your brand, they can see those posts and they're on listings and stuff. And there's so many other things in inside brand registry. And it's super easy to get into. All you need is a trademark, which you should have one anyway. If you want to build anything real, you need to protect it from the legal sense, treatments. Almost inaudible. Because I love when brands kill it off of Amazon or even off of Walmart or whatever. It just shows that that brand's listening to their demographics, they're understanding their needs, and they're developing products and upgrading products based on those needs. You might build the coolest whatever in the world, the coolest garlic press in the world that you think, but everybody else might think it's terrible, which is good information. So many people lean into, oh, I got one negative review. Apple gets negative reviews. I'm not an Apple fanboy, but I respect their legacy, what they've built. So if you think of your favorite brand in the world, they get negative reviews. They get people that absolutely hate them for whatever reason. So just lean into those and try to figure out, are they really just upset because they had a bad day? Or is there something that I can approve about some sort of experience, a product, whatever. I mean, I love Amazon leaning into it because it's going to continue to separate the real brands from people who are just trying to sell something to make money online. Not knocking that at all, but the brands that are really trying to build that brand and build people that care about Acme, Inc, whatever the name of your brand is. If you get them to really care about that and care about what you have to say, just long term, it's just better all the way around. No, go ahead.

Ryan Cramer: I was going to say, so does that mean that businesses as they start to... I guess, in this capacity when you're talking about eventually exiting, which I believe that's a conversation that every Amazon owner wants to do, whether it's a pass off their business or do it in a way where they can acquire new brands or businesses or they build it so it's sustainable and growable is the model that is being placed out there now. Now I have to be brand friendly. Can it be only on Amazon or does it have to be now both Amazon and direct to consumer? Is it leaning towards...

Barcus Patty: I look at anything like that as an asset to the business. If you have an email list or any type of messaging list, if you have a social media presence with engaged followers, that's an asset. Now it depends on the aggregator, which one finds the value in the most. And it's really important, when you get rid ready to exit don't talk to just one. I would love for somebody to like, " Hey Barcus, I love you. And I want to sell you my brand." Cool, man. Unless you know everything about your brand, unless you already know that valuation going into it, you've done everything, you've done all the homework, you've got an accountant, you got an attorney. Unless you're there, it's really smart to go talk to multiple aggregators. And here's why, it's because it's not just for that evaluation. You'll understand what's important to certain aggregators. Maybe you've done really well in your region of the United States. And locally, brick and mortar, maybe you have 20% of your business as that. Maybe going down there, you find an aggregator that's like, " Hey, we're leaning in into retail." And then it's like, they get what you're trying to do. Versus somebody who's like, " We only care about Amazon and everything else we're going to kill." And there are aggregators like that. I'm not knocking that at all. We just all have different goals. So that's why it's important because you just want to find who's going to take care of your brand the best. Now some people go into sell, they don't care. Hey, man, whoever's going to give me the most, I don't care if you kill my social media and my retail, my brick and mortar. I don't care about that. Whoever's going to give me the biggest check. Not knocking that at all. So I just think it's important right now because it's a seller's market. There's a lot of competition.

Ryan Cramer: Yeah. Well, to unpack that, you would think that a lot of people do want to care about it. I would think an emotional attachment would be, once you exit your brand, that you put so much time and money and effort into it. And again, I've heard in different veins that they can look for a brand that's only been around... I say brand. I'm trained in branding and marketing. So I want to say brand always. For a person who's selling only for 12 months or even less than, or I would say at least a year, but they're okay with it seeing just for a year's worth of time that product being okay. And then putting that in their portfolio or making a pitch to that. Is there a minimum that feels right for either you guys or that feels right to call it successful online instead of just a FUD or a flash in the pan or a trend or anything like that?

Barcus Patty: Yeah. Our minimum right now is, you've got to be selling for at least 12 months and you've got to be obviously profitable. There's other things in there too. But if somebody just launched a brand three months ago, we're not going to buy it because we don't know what's going to happen. Now, I'm not saying that that'll never happen with us and that'll never happen with another aggregator, but typically all of us want to see at least 12 months of growth. Now, maybe that's only 10% year over year or maybe that's 30%. Whatever that number is, we do want to see that because that just shows us, you've built something. We start looking at certain metrics and making decisions like, how far can we take this? We look at the market and competitors and everything.

Ryan Cramer: Is opportunity a big factor as well in terms of, hey, maybe I might be number one for three straight years in the pillow category or something like that? I only say that because a notorious aggregator out there is like, we have the number one selling pillow on Amazon for five straight years. To me, does that sound appeasing as a brand or a business owner that I've had that longstanding business? And as an aggregator, is that appealing to people that it's been number one for five years. There's not much room for growth, is there, in terms of on Amazon only specifically because the only place to go is down if you're number one for five years.

Barcus Patty: I mean, it really depends. And I hate that answer, but that's...

Ryan Cramer: Oh, it does depend.

Barcus Patty: If you think about what happened during the pandemic, a lot of brands saw the COVID bump. So they saw a rise. I mean, everything around e- commerce saw a bump to the point now that we're dealing with supply chain issues all over the world, it's not just the US. So it always depends. Maybe you were number one in granola bars for five years pre- COVID, then you saw 40% jump in 2020 because of COVID. And then you still keep growing. There's brands that have seen a COVID bump. We call it a bump because it went up and down, but they're still continuing to grow. And none of what's happening right now is anything that anybody could have predicted. So a lot of factors play into it. If you're the number one selling pillow brand for five straight years on Amazon, if Ryan that's your brand and you're coming to me on Amazon like, " Hey, I want to sell you this brand. We've been selling blah, blah, blah." If you have zero online presence, you have zero social media, you don't have any type of messaging list, I'm like, " Okay, there's an opportunity. Are you selling anywhere? You only sell on Amazon." Amazon, I think they have, what? Half of e- commerce these days. Half of e- commerce transactions exist on Amazon, so there's growth there. And that depends on the aggregators. Are we leaning into building a D2C brand? Are we leaning into social media or leaning into retail or walmart. com? So that's where having these conversations and interviewing these aggregators really come into play because maybe we're like, " Hey, we're really great at social media and D2C. We can take this brand and build it. We can go another 30% in 12 to 18 months just by building that out." But if you're only Amazon, maybe we're like, " I don't know if we can do this." But maybe you're terrible at PPC, but somehow you're still number one. Maybe it's just the product alone and the reviews maintain that organic ranking. But maybe you're only spending like 2% of your monthly sales on PPC. And your A cost is like 40, 50%. Well if there's an aggregator out there that's really, really good at PPC like, " Hey, we can get this down to 20%. We can spend 10% easy, get it down to 20%." There's so many variables that come into play, even if you're the best selling product in your category.

Ryan Cramer: Well, that's what's so fascinating about all this too is because of all the different iterations that can happen. Again, that's the nature of just Amazon being Amazon. Amazon's almost... I think the last I saw is 43%. I mean, it's close to 50. It might as well be 50. I'm sure after December it'll be close to 50, just the nature of inventory and whatnot. Everyone's looking for the right story, the right way to build it. And I think that it's so hard to understand that it really just depends on the person in terms of how do you want to do it simultaneously? A lot of people say, " Hey, do it at the same time. Do Amazon as well as direct to consumer." I spoke on this very podcast to a business owner that was representing Italian brands and they were selling on direct to consumer website literally that weekend before they just launched bundles on Amazon. They're super profitable in the year leading up to it. Now they just know that there's eyeballs, it's the gift giving season, there's opportunity for certain ones to sell on Amazon. But I've also heard the other way of there's only certain products that will make sense to go direct to consumer. So there's all these different ways where people are constantly saying, " What do I start with?" Honestly, truly just depends on the product itself, is it a repeatable product? Is it a product that you can build a social following around? Is it something that fixes a problem? Is it something that's just a one time purchase instead of a gift product. It really does depends. So what are the surprising factors that you think of that when you're going through these on a day to day basis, and you're looking at different brands that is shocking to you, I'd say? What's the most surprising thing that you run into a lot?

Barcus Patty: Getting into it. So I've been doing this five months now so I-

Ryan Cramer: Hey, you're an expert more than some businesses and companies that have existed out there.

Barcus Patty: It's still surprising to me that people are admitting like, " Hey, I've hit my plateau. I can build a brand to$2 million a year. We're profitable. I can live off of this and I've quit my whatever job. So this is just me, but I don't want to raise capital. I don't want to take a loan and I don't know how to build a team. So this is why I want to exit." That seems to be the majority. I thought a lot of people would just be like, "I just want to see how much you'll give me or I want to retire." And we get those. People are open, I just want to sell it because I think I can make a really great profit these days. And then there are people that are looking to retire. But what's been surprising to me is people are... And I think that's what makes a really successful business owner is you know your limits. I can't do everything. I'm not Elon Musk. I can't do everything all the time at the same time. And I think that's been the most surprising.

Ryan Cramer: I mean, that makes sense to me. I would think that, again, a team of one to 10 people, you can only do so much. And because of the cost of going up... This is where I also see trends too. And as you and I are trends people of as cost continue to rise for standing out on Amazon, albeit PPC, or just advertising and whatnot, if you're not willing to take capital or you don't have this kind of backing that you can play at that level too, I almost see that a lot of people read the writing on the wall and say, " Listen, there's not going to be a long time before someone's willing to throw every dollar they have at this and stand above and they're going to overtake me, if I'm truly maxed out." That could be the financial sense. And then also with the headaches of again, supply chain and logistics, no one has ability to manage both or the capital to really manage both. So is it that gap that you think where a lot of people that sweet spot are like... one or both are the issues.

Barcus Patty: I think if you have any assets right now, especially in the United States, North America, I think now is an amazing time to sell anything. If you have a car that's got great value and it's paid off, it's a great time to sell it. The same thing with a house. And I'm not telling anybody to sell those things. It's just because you can get a high price. Now you have to turn around and buy something else at that same high level. You can't sell your car and then build a new car. Most of us can't. But you can sell a business and then start back over and build that business. So I think that's what's intriguing to a lot of people is you weren't getting these numbers in 2020 and 2019 and 2018 and going back. And the thing with aggregators is businesses buying businesses have been around since businesses have existed. So this isn't new.

Ryan Cramer: It's not a new model.

Barcus Patty: It's not a new business model, it's just new to our community. And it came in with billions of dollars. And hats off to Thrasio because most of that money is at Thrasio right now. So they set the tone. They set the pace. And so it's gotten a lot of attention, why all of a sudden? I mean, honestly, I've got a friend of mine that is building a aggregator for SaaS companies, software as a service. And I've got a friend of mine locally that has a real estate aggregator. They're buying literally any home that will sell to them. Sometimes they're immediately flipping them or sometimes they will buy more and fix them up and sell them later. So I think that aggregators are something that... I think venture capital and private equity firms are just trying to diversify. And I think that it's like, oh, we've heard about this Amazon thing, we heard about SaaS companies and we heard about real estate and there's probably others. But businesses acquiring businesses is nothing new. Right?

Ryan Cramer: Right. Well, and the money that comes into the market too, is it earmarked for projects? And it's also almost like people have to understand with VC money or venture capital money, it's to see that you can make a dent or turn around on investment. And again, it's a quick thing too. So if it's a strike when the iron's hot, that's why I love Emergant so quickly is because they don't want to be the ones left out of the market. Not a bad thing. It's just, that's where opportunity always is. Again, that's why you see the EV market taking a step out of-

Barcus Patty: Exploding.

Ryan Cramer: Yeah. Exploding right now. You have all these companies that are like, well, they're going to take on Tesla. Well, it makes sense because where's a lot of money going into electric vehicles? It was initially Tesla. Then everyone's like, " Well, I could do it cheaper more effectively and I want a piece of that pie." Of course, and it makes sense.

Barcus Patty: Something like the EV market, that's just trickle down too, not trickle down economics. But Panasonic has gotten a boom because they're building the cells for Tesla, or they were. Oh man, I can't remember so nobody quote me on that. I think they were building Tesla's-

Ryan Cramer: At one they were or are still?

Barcus Patty: Anyway. But everything from batteries to solar panels to motors to... The EV market is moving rapidly, and even the major manufacturer is taking notice. So GM, Ford and Dodge, Chrysler, they're all saying, " Hey, by 2035 or 2040 or whatever their number is, half of our fleet or most of our fleet is going to be EV." And for them, they've now realized that it's quicker and cheaper to manufacture that. It's going to take a while to ramp up production, but there's just less moving parts in an EV vehicle versus an internal combustion. So if there's less moving parts, there's less parts to acquire, there's less parts to put together. So eventually it'll be of benefit. And also if there's less parts, there's less parts to break. So I'm not saying EVs are going to take over the world. I love anything that goes fast, but that's just one example of the EV market exploding. But then there's all these other things, all these other parts of EV manufacturing that get an uptick as well.

Ryan Cramer: Right. Well, you can even attribute that back to business in the e- commerce world. If there's these companies that are actually... they're incubating. I would say from this model, even as of 16 months ago or 18 months ago, you're starting to see these different branches start to come off of the aggregator model. There's the accelerator model, there's the agency, which has always been around, but they're tying into that of just running brands more at scale. There is the aggregator model, and then there's also the different investment models that are stemming from it like, hey, invest into my business so I can grow it to a point of exiting my business. So again, the trickle down nature of, if we can apply that and there's a lot of different businesses that can almost say, " I can take that. And instead of building out ourselves, it's already built, we just to take on the processes and now we can just do whatever we want under this portfolio of product, solution, whatever we want to call it." So it's almost not streamlining it, but it's almost connecting the dots and taking out some of the little pieces here and there. Not a bad thing. That's how business is in general. So what does that look like? So as brands become under these portfolios and whatnot, is there any... because the model is based mostly on Amazon, is there any sort of hesitation or concern going into 2022? What does it look like for the next year of, we should really plan for X, Y, Z, and that's what everyone needs to buckle up for?

Barcus Patty: Well, I don't want to give away any secrets but-

Ryan Cramer: Yeah. Nothing proprietary and let stay employed after end of this.

Barcus Patty: Yeah. Let's try. I think that our focus is just, it's 80-20 and that's how every major business is. And what I mean by that is, what can we do that's going to make the biggest impact on our business? Is it buying a supplement brand that is primarily D2C and we know nothing about... We're just not well versed in D2C and supplements as we are other things that are selling on Amazon primarily. So that's probably not something that we're going to entertain. Just as an example. So I think we're going to continue to focus on... Emergant has been around since October of 2020, so a little over a year. So we've really found our footing on what we're good at. So we're just going to keep continuing to lean in into that, building a team that fills those needs and we're constantly hiring. As everybody is these days. But just lean in into what we're good at. And every aggregator is just a little different and we're just going to continue to build the team that helps us build upon what we're good at. So team building really, I think that's the biggest thing that we're going to look into. So as far as specifics, I think our specifics, what're are looking for in a brand is primarily going to stay the same. I like seeing that they have some sort of social media presence. You don't have to be killing it on Walmart or Etsy or your own Shopify store, but having those and they're profitable, it means that there's potential for that brand to live off of Amazon. So I like seeing things like that. Some aggregators don't care for it because they're just not trying to build that team out. And I think aggregators going into 2022 are going to continue to lean in what they're good at. Maybe they've built a team and they're good at Walmart now. Maybe they're building their own software. Maybe they're building a team that is for social media that's going to control all the social media for all the brands that they acquire but they're going to drive all that traffic back to Amazon. So that's my vanilla prediction for 2020.

Ryan Cramer: Again, a lot of different paths to go down. I think that there's a lot of different fascinations in terms of the model. Do you feel that it would almost be condensing too to look at manufacturing as well? And we were talking about logistics earlier, to look at just different opportunities in terms of the way to partner and build in the United States in terms of logistics, in terms of a cost perspective. Is that going to be on a lot of people's radars, do you think? Or already is, I would think.

Barcus Patty: I mean, it already is. I heard a story and I don't know the name of the brand, but this guy or this company, it's like everybody else, you could go buy$ 10 million worth of inventory and it's still going to take eight months, so they took a sizeable portion of their money and they basically bought the factory. They bought equipment and now they're relocating to Mexico because... And then they're going to hire everybody in Mexico and train them in everything and ramp up production there. I mean, it's a really big task, but their goal is to have that to become one of their major manufacturing points. And to not lean on any one source so much in 2022. And also in Mexico, because it just makes sense from logistics, you can get product from there to Amazon warehouses in probably less than a week.

Ryan Cramer: Isn't it train or truck? Train or truck is pretty consistent from Mexico. Because you don't need a boat or anything, obviously. It doesn't need to be unloaded, onboarded.

Barcus Patty: Yeah. You still have customs and everything, but it's not coming through the ports. So most of it's not coming through the ports.

Ryan Cramer: It's not sitting on water for a month at a time.

Barcus Patty: Yeah. So I know there are a lot of brands looking into manufacturing in North America and South America. Maybe they're in North Dakota, maybe they're looking into Canada or somewhere up there, or maybe in Mexico, maybe somewhere else in Latin America. And my prediction and I posted about this last week, my prediction is that that will continue to be a growth spot for manufacturing. It's not going to be another industrial revolution, but some of these brands realize that they can't survive another 2021 of waiting seven to eight months or longer from the moment they place an order to getting inventory. They can't survive that. And they can't survive a$40, 000 shipping container anymore. Just the shipping container. That's not even the inventory. And I'm talking about big brands too. There are big brands that are like, " We can't do it." I think Walmart and Lowe's or maybe Walmart and Home Depot-

Ryan Cramer: It's Home Depot. They're leasing their own fleets.

Barcus Patty: No, Walmart has bought their own container ships. They're just like, " No, we're not waiting on you. We'll come get our own stuff."

Ryan Cramer: I posted that article too. Literally CNBC just released this 25 minute documentary almost of Amazon literally just unloaded in October its first built by Amazon containers in Houston today. It makes sense too, going off of that logistic system of the whole nuance of why there's so many different delays is you have to return back those shipping containers on the boat that they come on if they're not yours. So if Amazon owns it and they ship it to the port of Houston, for example, they know a guaranteed container can now go onto a train or anything like that. They don't have to rely on, do I have containers? Do I not have containers? And they're able to build those out. Again, that's Amazon at Amazon scale. SMEs can't do that, but they have the ability to now solely rely on their own containers, which is a really cool thought process of, I own everything in my whole entire ecosystem. And again, in shipping logistics, I think they handle 72% of all their shipping in terms of all the packages that are left at their warehouses. It's unreal. That's how they started their ecosystem. And I think a lot of retailers are going to have to catch up with that if they want to continue to be competitors.

Barcus Patty: And that came out of necessity a few years ago. The US logistics just couldn't keep up. They were using everybody DHL, UPS, FedEx, USPS. Those four combined and I'm sure there's other small regional, but they couldn't keep up with the demand of Amazon. That's why we now have Amazon trucks in our neighborhoods, just as much as we have USPS. I see the Amazon Prime truck drive by every day just as much as I see the USPS truck. They're not stopping at my house every day. I'm just saying they drive by.

Ryan Cramer: According to their head of logistics, they will take over as the number one shipping and logistics provider delivery service by early 2022. And that's just a month or two away that they said that they're going to handle more packages and deliveries than USPS, which is the number one provider. So taking over the postal service one package or box at a time or sealable package. What else are people trying to keep an eye on, especially over there that you're... Again, predictions are predictions until Amazon decides to drop a bomb on us and we're like, well, what does this mean? And just completely derails us for the year. What are the things that you think are likely to happen and, or that could... A lot of things make sense building up to where we are, or we're going to go.

Barcus Patty: As far as aggregators or just Amazon in general or both, doesn't matter?

Ryan Cramer: Yeah. I would say both. I mean, we're all about being fluid here.

Barcus Patty: For aggregators, here's my prediction and I've said this before. And it might take a little bit longer than a year, but I think that in a year to two years, the valuations will stabilize and drop off on some categories. And here's why. Because as aggregators start to niche down, you won't have as many people competing to buy that brand. Let's say we go heavy into home and garden, we're not going to buy your electronics brand or whatever. So we won't be competing. We're not going to put in an offer for that. And when you have a reduction in offers, then there's less competition. So I'm not trying to force the market down or anything. I just think that it's going to be a natural byproduct. It's a bubble. And we've all said that, and everything's a bubble. Everybody's been hot and heavy in crypto this year more than... Crypto is hotter this year than ever but now we're seeing a downturn in all these high numbers. So I think it'll happen. I don't think it's going to just insanely drop off, but I think that we're just going to have... I think that most brands out there, unless they're just this home run brand that's just like, we have to buy this brand because we can 20X it in 18 months. Those will still exist. I think there's a lot of brands trying to sell their brand and for several reasons, but also people are out there just kicking the tires like, " What will you give me for this?" Some people have no idea what their brand is worth. They've no idea so I'm just going to kick the tires. Wow, you're going to give me$ 5 million. I'll sell. It's not my child. I'm not that emotionally attached to it. I'll sell you in a heartbeat. So I think that there's a lot of those people that are still out there, but those people are going to also dry up, that cream of the crop is what I like to call it. Brands that are out there wanting to sell their businesses or at least interested. I think that's going to dry up just a little bit. But maybe it'll continue to grow. Again, 2020, nobody would've predicted that e- commerce would've grown 40, 50% because of the pandemic. So we'll see. That's my prediction for aggregators. I think we're all going to get smarter and leaner and just trying to build our teams the best way that we know how. For Amazon, I think that... and I've always said this since, I don't know forever, I still think that building some sort of external presence matters and this has nothing to do with evaluations. But when you have your own audience, maybe that's 2000 people, or maybe that's 20, 000 people, whether that's on social media, maybe it's just TikTok or maybe it's just Facebook or whatever, and maybe you just have a small messaging list. You can control and dictate where they buy your products. Maybe they buy them just on Facebook or just Etsy or Amazon, but you don't rely on the traffic of one source anymore. Maybe you're number two, number three in your category and you're like, I can't crest over that. I start to spend more money on PPC and my A cost goes up and then my rankings go down. So I know where I'm good or if I leave everything alone and I leave PPC alone, I'm number two and number three for most of the keywords. But if you had some external presence and you drive traffic to it, then maybe you get to number one. Maybe you stabilize at number one and number two, instead of number two or number three, or you start to build out a D2C brand. But it just gives you options and then those options give you leverage in a brand. I think a lot of brands overlook this because... I've been doing this for over six years and in my opinion, the people that are really good at building a brand that primarily sells on Amazon, they're super analytical, meaning they can look at a PBC spreadsheet and it doesn't make them have an aneurysm. They can look at business reports and it's almost like a beautiful mind. They can just pick everything up really quickly. But to build a D2C brand and to create content and everything, it's a very creative process. Everything from building a logo, to driving traffic and building a nice website and building a really nice social presence, that's just a different side of the brain. Some people are really good at analytics, some people are really good at creative. So I think that if you want to start... somebody need to help you down that path, if you're not really sure where to start. But if you want to start building a social media presence, I would just start documenting. I love social media. I love watching how brands are created through social media. And there's dozens of examples, but-

Ryan Cramer: Almost like, " Hey, we hit our 1, 000 follower mark or we-"

Barcus Patty: Not even that dude. I've watched brands blow up on TikTok. And these are people that are just making something. So I'm in the 3D printing as you know, so I follow a lot of other people with 3D printing. And a while back, I saw this kid just make a Pokemon ball. He just printed it, different colors, it opens up. He went viral and it was like, " Hey, can I buy one?" He's like, " Sure. They're$ 25." He got over 300 orders. So he made a couple of videos of like, " Hey, some people have been asking, so here's my website or Etsy or whatever." He had over 300 orders. He had to go buy more printers to make those. So I still follow him. He has a business now because of that. And that's just one example, I think that just documenting the process of your business, the most boring things in the world... I follow a guy on social media that owns a septic tank company, but I don't want to have a septic tank, but he's a good storyteller and he has a lot of good business advice in my opinion. So I continue to follow him. Even though he can only service his regional area, everybody knows that guy in that area, that's the septic tank guy on TikTok. So everybody knows and he's talked about videos, where his local presence has been uplifted because of social media. And not everybody's great at that. So that's why I was saying, just start documenting it and understanding what your demographic wants to hear from you. What do they want to watch? Maybe you just talk about how selling on Amazon. You can talk about the highs and the lows and that's endless content alone. But maybe you showcase your brand on social media and people are like, " Wow, I love this thing. Can I buy this thing?" So I think if you don't know where to start, just document, just start doing that and you'll learn what people want to watch and you'll get better at that. It's a skill. Creating content is a skill.

Ryan Cramer: Muscle man.

Barcus Patty: Yeah.

Ryan Cramer: Like working out.

Barcus Patty: Yeah.

Ryan Cramer: We don't want to do it, but we have to, to get stronger at it.

Barcus Patty: Yeah.

Ryan Cramer: I know we're already at the top there and I could talk with you all day, but for people who are just curious, obviously, if they heard you before, now need to get connect with you, obviously on social media, we have you linked out to all the different places. But is there good way to connect with either you or Emergant if they want to talk you more?

Barcus Patty: Yeah. So like I said, if you're just now joining in, so I offer free initial consultations and there's no pitch. If you're like, " Hey, are you guys interested in this brand? Or I know nothing about selling a brand online, can you give me a couple of pointers?" I do that all the time. So if you just shoot me a message on Facebook or LinkedIn, I can shoot you a link and we can chat later. You can also email me, barcus @ emergant and then Emergant on Facebook and LinkedIn and we also have our website emergant. com.

Ryan Cramer: There you go. Learn more at emergant. com. It's spelled with an A. This is a tip, a hot tip for people. If you try to spell it how it actually is, Google will try to rename it for you. So if you can't find it, it does exist. You just have to put in the website. But if you're just googling Emergant, make sure it's with an A, not a E and hot tip for business today, make sure it's with an A instead of the E. So for people who are trying to Google you, put the dot com after, it'll just help.

Barcus Patty: Yeah.

Ryan Cramer: But hey, Barcus, thank you so much for hopping on today. Stick there, and we'll catch up a little bit more after the show. But thank you so much for as always friend of the show for hopping on Crossover Commerce.

Barcus Patty: Yeah, man. Thank you.

Ryan Cramer: Yeah. And everyone else, thank you so much for hopping on another episode of Crossover Commerce. We appreciate you every single time you come on this podcast in My Corner Of The Internet. Again, this is episode 192 of Crossover Commerce. This week is action packed. We'll have a podcast every single day this week leading up to our 200th episode, hopefully next Friday, that's what we're shooting for. So if you're counting down with me, that'll be next Friday or next Thursday is what we're shooting for. So in the meantime, I wanted to thank Barcus Patty from Emergant, who is a friend of the show, him and I talk all the time about different things that are emerging in the market. So if you haven't followed him or connected with him, make sure you definitely do. And just reach out and say where you can maybe improve your business and go from there. That being said, this is Crossover Commerce episode 192. I'm Ryan Cramer, the host of this show. Make sure you guys take care and we'll catch you guys next time.

DESCRIPTION

Ryan Cramer of Crossover Commerce talks with Barcus Patty of Emergant one-on-one as they discuss building an external brand presence in 2022. They'll also cover predictions on the future aggregator market as well as the current supply chain issues.

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