In this video, Rachel Go chats with Scott Needham, Founder of SmartScout. Rachel and Scott discuss how the Amazon landscape has evolved, his learnings from running BuyBoxer and SmartScout, the dangers of overhiring, building relationships as a growth channel, FBA fees and the bigger picture, and much more.
Rachel Andrea Go: Can you share a little bit about your background and what—how it led you to where you are today?
Scott Needham: Sure, yeah, good question. How far back do we want to go?
Rachel Andrea Go: As far back as you feel is relevant.
Scott Needham: So, I, you know…I studied how to be a software developer and then, when my brother was selling on Amazon, I was paying attention. I helped out a little bit, but when I started to see the problems that he was having, it was all around scaling — something that software can help out a lot with — and so I jumped in and I’ve been selling on Amazon for 11 years.
And, you know, I jumped into all things technical, [I] really tried to improve our operations, and it was fun. It was a lot of fun in those first years, just learning so much, and we were able to just grow quite a bit. And then, I transitioned. As we figured out that business model, we’re like, “What services are we using that we think we could do a better job with?” So, yeah, we started—let’s see, an agency; we built a reimbursement service; and then, in about 2019, I started a podcast of my own to learn and to share my learning.
And that podcast experience led me to lean in further into the community. And actually it motivated me to build what I currently spend most of my time doing now, and that’s working on SmartScout, which is a research tool for sellers and brands alike. And that’s what I wake up thinking about.
Rachel Andrea Go: And what was the landscape in Amazon at the time?
Scott Needham: I wish I knew better. I knew what my perspective was, but you know, we—it was a fun time to sell. There were some categories that were just so open to—yeah, it was…. There were some categories [that] if you just put a product up, it didn’t matter the price you put; it would just sell. So, we would find a lot of wide open space. And there were a few large sellers already, you know. We saw the top sellers, they were usually resellers, you know: A brand, they’d buy wholesale and sell to other brands. And what’s funny is I didn’t really notice too much or pay attention to private label. And that’s probably a mistake because we were so early. I think we could have made a dent in some categories.
It would have been a lot of fun, but we were having our own efforts of growing our business. We ended up with, you know, over a hundred employees and there was not a lot of software tools, so we kind of had to build our own stuff.
Rachel Andrea Go: I see. So, did building your own software for your business kind of pivot into one of your software or SaaS businesses?
Scott Needham: Yeah, absolutely. We did—when we were researching what brands to work with, that was kind of the beginnings of what became SmartScout. We built a tool to research brands, and I was like, “No one else has a tool like this. I think we can share it.” So, that was—yeah.
Rachel Andrea Go: I noticed you spent quite a while building BuyBoxer. Can you share some prominent takeaways from your time there?
Scott Needham: So, that was, like, our wholesale reselling business, and…[there were] a lot of takeaways, you know. We grew and did a lot of things right, and there were a few mistakes that we lived with that were like, “We probably should have just solved that a little bit more thoroughly. I, for one, I think our finances…there was a few times that we had to look back and, like, realize, “Hey wait, you know, our inventory says this, you know, our inventory value that we count says this, and then our QuickBook says this,” and, like, we’d have to write off inventory. Now, I wish we would have just had a little bit more clarity on our finances and kind of have that discipline on a monthly basis so that we can make right choices.
I think—we actually did build our own prep. We had our own warehouse and while we put in a lot of effort and got it in a really good spot, I think it kind of forced a few decisions that were a little awkward. For example, we’d have 75 employees. We would buy product just to keep them busy. That seemed to be a theme and kind of puts a wrong pressure on your business. I think what we should have done is just have a smaller warehouse and be okay that we can’t ship everything. And that would have—that means we would have only bought the best of the best, you know. You never want to be in a position where you’re buying just to keep people busy, because the most important decision you’re making as an Amazon business is, like, is your purchase orders. You have to live with them, you have to live with them for years, or, sorry, six months, you know, so you always want to make sure that they’re very— that they’re the right mix. Yeah.
Rachel Andrea Go: So, I didn’t realize that you had such a big team both in the warehouse and in your Amazon business. Can you share a little bit more about what managing that many people was like?
Scott Needham: The truth is most of the employees were in the warehouse. So, we didn’t really have to worry too much about, you know, the purchasing that was—we used software to simplify that process. Now, another challenge that we faced with our warehouse and the staff was we actually had a warehouse in a different state than we lived in.
And, there were some cost savings reasons for that. But actually, I think by not being close to the warehouse, us owners and managers, we missed things, you know, and the motivation wasn’t there, the discipline. Or, maybe not even just discipline but, like, you know, problems would kind of get bigger than they had to, so I would totally recommend, you know, have a facility close to you.
Rachel Andrea Go: Was there any specific event that triggered the launch of SmartScout or did it kind of evolve off of what you were already creating?
Scott Needham: So, it was…like I said earlier, it was an idea that we had built a bit, you know. BuyBoxer built an idea of how to look at all the brands on Amazon. And so I…when I wanted to build a tool to serve people, I had an inventory manager and I thought that could be a really good business. But then that wasn’t innovative, whereas this research tool, to be able to look at every brand at once, you know (there’s a million brands on Amazon), and see them all, and you just be able to filter around — that was kind of a difference maker that we got really excited about. And so I’d already worked on it, connected with a front-end developer, and within two months, we had a product and we went to market so that’s—that’s how that tool came about.
Scott Needham: And because I had a podcast, when I went live, day one, we had 75 paying users. So, it was—we hit the ground running. And still, to this day, you know, we’re well past that. We’re close to 3,000 users, and it’s been a lot of fun.
Rachel Andrea Go: Congratulations! So, speaking about, kind of, podcasts as an acquisition channel, where would you say SmartScout has seen the best growth in terms of how you get paying—how you acquire paying users?
Scott Needham: That’s a good question. I really—you know, we don’t have funding and so, you know, we don’t spend a ton of advertising dollars. I think the best growth channels for us have been investing in things that can be a long-term benefit.
And so, here’s a way to think of my strategy (I learned this from Russell Brunson, he’s an entrepreneur and a writer): He talks about the Dream 100, that every industry that you are in, there’s, let’s say, a hundred people that are influential that kind of make up, you know, the movers and the shakers of the industry. These can be people on YouTube, they could be on other social media channels, they can be business owners, you know, other businesses.
And Amazon, the FBA world, the seller community — absolutely, there’s a lot of people that make up the Dream 100. And I have spent my time building relationships with them. And the best way I build relationships is I just try and make them look good. I serve them, I give them more than they give me, and often—sometimes it works: I get shout-outs; I get them on my podcast; they reshare my podcast. That was a big turning point for my podcast, was getting the right people to share it as a—and recommending it, and then my numbers went up.
So, really, it’s been a crucial part just, like, working on that Dream 100 and figuring out a way that we can work with each other and help each other. And, you know, a podcast is part of that. It’s a great way to serve people, but there’s plenty of other ways. I give shout-outs all the time and actually I wish I did more.
Rachel Andrea Go: I noticed you have a really impressive email list at SmartScout. So, how did you grow the SmartScout newsletter?
Scott Needham: You know, the SmartScout newsletter — it has been fun for me to write myself. It definitely changed: For a little while, I had an employer write it, but then when I took it over, I enjoyed it, I leaned into it, it was a way to keep myself sharp about the news but also in my voice. So, for some people, it has been interesting because, you know, I’ve been around for 11 years and so I have a perspective. The true reason why we’ve grown emails is just because anyone that jumps into the SmartScout world — we get their email, and they join it and some of them stick around and some of them don’t, and that’s okay.
The seller map tool that we have built — after people use it for about two minutes, to keep using it, we ask for their email. And early on, we had built the tool that was, you know—we collected a few thousand emails right off the gate, so free tools can be a great way to collect emails and then people that just jump in and do a free trial. So, we give a free trial to our tool and, you know, in that process, we get an email.
Rachel Andrea Go: SmartScout has an AI listing architect. Can you tell me more about what that does and how you get the data and make sure all the listings are really optimized?
Scott Needham: Yeah, so, we’ve been tracking keyword data for two years now. It’s been an interesting angle. I’m not sure if we do everything best with keywords, but we do have a few unique perspectives that no one else has. And then—so, when we matched that keyword data with, you know, the capabilities of AI we’re like, “Well, we just have to build a listing builder,” and so that’s what we did. We connected with the new AI technology and leveraged it, layered in our keyword data, and together, that’s what makes up the listing builder.
Rachel Andrea Go: What are some things that you’ve noticed the most successful brands have in common?
Scott Needham: You know, this may be annoying to some people, but I do think that idea, the business model, the core of what drives your business matters, you know. Not all businesses are equal. I know the reselling business pretty well, lived it for years, and I really jumped in, but I have come to find out, you know — that’s not a business that you can sell very well.
And so I think people that are in that business: You should be profiting, you should be taking home money. The most important thing. Now—but, when I look at other brands like, you know, their business model matters, what they sell matters, their competitive advantage. Are they just buying generic products from a manufacturer in China, or do they have their own manufacturing process? Do they—what’s defensible about their business? Because that ultimately can lead to your margins. That can lead to having less competition. And so it doesn’t matter how good of an operator you are; if you—if the first steps of your business aren’t amazing, you know, it’s gonna be tough.
Rachel Andrea Go: And then on the flip side, are there any interesting growth or revenue opportunities on Amazon that you notice a lot of brands overlook?
Scott Needham: The latest one—it just depends what phase you are at. Let me give one—let me give two phases, depending on where you’re at: If you’re a larger business, one of the low-hanging fruit would be… actually, what’s the…”tailored?” I can think of every word but the right word…
It’s customer engagement. They’re customer engagement tools, and the first one that they’ve built is called Tailored Audiences, where it allows you to reach new customers. And so, if you have a sophisticated brand, like—you totally gain everything by doing this. I think that, then…yeah. I’ll mention another one is, if your product has a video…well, if you have a brand registry, you should have a video on your product. Why? Because it actually opens up your product to affiliates that they can monetize your product.
So, if you look—say there’s a product with a video. Usually, Amazon will show there’s gonna be, like—they’ll open up five slots of videos for influencers to promote your—and talk about your product. They actually monetize that, they make money off of that. And so, if you have one video, it actually opens the gates for five videos. And it’s been a solid conversion lift for several people that—to do that.
Rachel Andrea Go: So, what are some prominent changes in eCommerce—last year, in 2023, that you found the most interesting or that promises long-term impact?
Scott Needham: I mean, the most obvious change was actually in December, when Amazon announced that their new FBA fees, which kind of incentivizes you to help Amazon’s—they help their Amazon supply chain to be more efficient. So, they’re like, “Hey, you can shift to this one warehouse and it’s gonna cost you this much. But, if you ship to three warehouses, we’ll give you a discount.” And so, some people were annoyed by this, but I just look at it as just common sense in that, if you’re going to be a good partner to Amazon, they’ll be a good partner back. And if you do this, your FBA fees don’t even go up. So, it was a great way. I think that’s probably the better way to look at it than to just be annoyed at Amazon and their fee structures changing every year.
Scott Needham: I think, on the landscape of things, TikTok Shop, I have, you know—in December, I sold 12 units on TikTok Shop, and we have plans to do more. It is a—I personally am hesitant to learn new business models. It’s tough. It’s tough when you have an existing business that’s doing really well. You have it figured out, and then to, like, jump into a new one? It’s hard. But we had the right product that was, like, in the right spot, we were motivated — Let’s go TikTok shop.
And, oh, what I was gonna say I like the most about TikTok Shop is it kind of—it’s just everything in one box. The reason we like Amazon is, like, everything that we need, we can solve through Amazon’s services. Same thing as on TikTok, you know? They have an advertising portal, they have an affiliate portal, or, like, an influencer portal, and then, you know, their seller center. So, it’s just nice to have it all there and so they could play nicely with each other. Whereas, if you are on Shopify, then you’re like, “Well, I have to bring traffic through Facebook or Instagram.” Then you’re dealing with two different platforms. So, I like simple, and TikTok Shop so far has been fairly straightforward.
Rachel Andrea Go: Have you noticed any pricing concerns between if you post an item on TikTok as well as on Amazon and they’re a different price?
Scott Needham: No. We had a higher price on TikTok and then we would discount, you know, here and there, so, that’s not so far that—it works, you know? It’s just kind of—you’ve got to match the—it has to be a reasonable price of what people will pay. But I think, you know…I think you could actually take advantage of that, the arbitrage of knowledge.
Rachel Andrea Go: What’s your advice to merchants going into 2024?
Scott Needham: Really, it’s—what I wish I would have heard my second year of selling is that there is so much more to learn. And so just take—you should have a few learning opportunities every year, and, you know, I explain one, TikTok Shop can be a learning opportunity, and there are—there’s gonna be a lot. So, just make sure that you’re not, like, too stale in your knowledge and that you keep pushing forward.