E176: Paul Jarrett

Customisation, Logistics, and Growth: A Deep Dive into Subscription Box Strategies

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eCom@One Listen on Spotify

Podcast Overview

Subscription based businesses, a waste of time or a profitable revenue stream?

We get asked this question, a LOT. 

Done well, they can be a really strong addition to any eCommerce business. It makes sales more predictable and gives ample opportunity for upsell.

Listen to this week’s podcast to find out if subscription based boxes are the right tactic for you. 

eCom@One Presents:

Paul Jarrett

In this episode, Richard sits down with Paul Jarrett, CEO of Bulu, a company that specialises in shipping subscription boxes for established brands. Paul shares insights on the challenges and successes of getting into eCommerce, particularly with their transition into the subscription box business. 

From solving shipment and technology challenges to catching the attention of big brands, Paul offers valuable advice on adding excitement and personalisation to the subscription box delivery experience. The discussion also delves into the importance of logistics, customer retention strategies and future trends in subscription services. 

If you’re interested in the world of eCommerce and the future of subscription models, this episode is packed with valuable insights and practical advice. Listen now!

Topics Covered

00:20 – Retaining clients for subscriptions and strategies for standing out in the crowded marketplace

04:02 – From nothing to 60,000 subscribers, the journey and challenges of Bulu Box

09:22 – Enabling brands to reach diverse sales channels, focus on independent retailers over Amazon and Shopify

12:02 – Some fulfillment companies built on Uber-like models facing frustration and education leading to demand for flexibility

22:51 – Reflect, reevaluate and plan for future success

24:55 – Logistics costs are high, transparency is important

28:39 – Customer feedback, subscription balance, CAC to LTV ratio

30:15 – Unexpected subscriptions leading to receiving complimentary products through data exchange

35:10 – Focus on social media sales, identify customer needs, be hands-on with manufacturing and avoid big retailers

36:58 – Advises seeing opportunity in tough times, building relationships, and seizing opportunities from industry challenges

40:10 – Predictions on the future of eCommerce: customisable orders, streamlined payment systems and relevance of subscription models

43:17 – Book recommendation 

Richard Hill [00:00:04]:
Hi there. I'm Richard Hill, the host of eCom@One. Welcome to episode 176. Oh, yep. It's a 176 weeks in. A 176th episode, this one's a cracker. I speak with Paul Jarrett, Chief Executive Officer at Bulu, where Paul heads up a team of delivering some of the world's biggest brands' subscription boxes to the likes of Disney, etcetera. Now Paul dives into how can a business use personalization with their subscription box to retain their customers.

Richard Hill [00:00:30]:
You know, a lot of people have signed up for various subscriptions over the last year, but retaining those clients, and whether or not you really want to retain those clients and some really cool ideas from Paul and takes on that. And what strategies can ecommerce companies use to make sure that subscriptions stand out in over very, very, very, crowded marketplace in most instances now. We talk overcoming some of the challenges of subscription boxes around retention, and Paul takes on the future of the subscription box business. And, of course, So much more in this episode. So if you enjoyed this episode, hit subscribe or follow button wherever you're listening to this episode, so you're always the first to know when a new episode is released now. Let's head over to this fantastic episode. Hi, Paul. How are you doing?

Paul Jarrett [00:01:13]:
I am fantastic. How are you?

Richard Hill [00:01:16]:
I am very fantastic too.

Paul Jarrett [00:01:19]:
Thank you for having me on. I'm looking forward to this.

Richard Hill [00:01:21]:
Now this is a first. So I'm sat in Lincoln City in the UK, and you're sat in Lincoln, Nebraska. What are the chances of that? Yeah.

Paul Jarrett [00:01:31]:
He's the good twin, and he's the bad twin. Probably the American is the bad one.

Richard Hill [00:01:37]:
No No comment. No comment. Well, thanks for coming on the show, Paul. I think, if you can kick things off, introduce yourself to our listeners and how you got into the world of ecommerce.

Paul Jarrett [00:01:46]:
Yes. My name is Paul Jared. I'm the CEO and co owner, cofounder of Bulu. The way that I actually got into ecommerce was Trying to survive in college and and selling through eBay. And, that was a, you know, interesting time. And then that rolled into I was at an ad agency, and we're one of the 1st companies to, like, do a ecommerce website, which is, like, embarrassing now, but at the time, it was cutting edge. You're right. And, went to worked in San Francisco, New York, worked in advertising agencies, some of the biggest agencies in the world, I just always ended up working on the product side.

Paul Jarrett [00:02:23]:
And fast forward, we raised some capital. We launched a subscription box. And now about 10 years later, we're actually solving the challenge that we had, like, 10 years in the beginning of the subscription box. So Always just been around eCommerce and kind of the forefront of CPG.

Richard Hill [00:02:41]:
Love it. Love it. So, it's all about a necessity really of, your previous roles, You know, go full subscription. Yeah.

Paul Jarrett [00:02:49]:
I I say, like, just a poor kid that grew up in a trailer park in Nebraska trying to figure out Gotta, you know, scrape by and and work for myself.

Richard Hill [00:02:57]:
Yeah. No. I love I love these stories. So, so obviously, Baloo. Now that's that's the brand now. And, ma'am, we're focused, you know, I believe, if I get my terminology right, you know, working with brand big brands, you know, and working on delivering and And, their subscription boxes to, you know, various, you know, types of, customers, you know, around the around the world. So I think it'd be good, you know. Obviously, we spoke to quite a lot of subscription businesses and subscription Yeah.

Richard Hill [00:03:28]:
For Goleman, businesses, you know, what makes you guys sort of maybe different to other providers? Yeah.

Paul Jarrett [00:03:33]:
Well, we you know, 10 years ago, we started with Blue Box, which was kind of the 6 subscription box. And I think early on, we identified like, hey. This is just kind of shipping. Right? It's multiple varied items shipped on a recurring basis. But If we kinda call it something like sample box or subscription box, now it's interesting as far as marketing goes. Right? Like, The whole the whole subscription box thing, that's been around for well over a 100 years. So it's it's nothing new. Right? It's just remarketed, rebranded.

Paul Jarrett [00:04:02]:
And so we launched with that, with BoolooBox, fortified premium vitamin supplement snack samples. And As we grew, and we grew up to 60,000 subscribers, 10,000,000 plus in revenue, I think it was under, like, two and a half years, somewhere in there. We got the attention of a lot of big brands, and, you know, they wanted to be part of it. They were interested in it. A lot of them wanted just to know how to do subscription. But, Really, what I would say that they didn't know what they were actually asking was the same problem that we add with our fulfillment in technology, which we when we first started with BillyBox, we crushed our first two 3PL, third party logistics. The people at store pack shipped for us. We had to acquire the third one just to keep it going because of the scale.

Paul Jarrett [00:04:50]:
Right? And, really, I think what the brands didn't know or what they're really ask asking for was, hey. I'm in innovation or marketing. I'm a big brand. I wanna do something that's a little edgy, but not too crazy. And actually, my problem is I can't get the thing in the customer's hands In the package and the way that I want, what are you folks doing that's different? And the answer was we were doing all of the hard stuff. You know, we're picking up the phone, calling places saying, what's your website? I like, what do you you know? Tell me tell me more. Tell me how to do this. You know? I mean, we go so far back That early on, we were one of the first users of Shopify.

Paul Jarrett [00:05:30]:
And I called them so much and bothered them so much that Toby, the CEO, I think he goes by Tobias. Right? But Toby is what I know him by. Toby was answering customer service, the CEO of Shopify. And he was working with me, and he was like, yo, Paul. I really think you should, like, just focus on building, like, a subscription payment app. And I'm like, what does this clown know? You know? And and I wish I would have listened to him and, yeah, great lesson there. But, you know, working with him and and working with the Shopify team, trying to figure out how to do things, it really just opened up this world of, like, if you're relentless enough, you you can get things to people the way that you want. It's just a lot of times you gotta Wow.

Paul Jarrett [00:06:12]:
That path forward and big brands. That was our focus. But what's exciting now is we're taking all the past 8 years of making subscription boxes for big brands, making our own subscription box, and now we're offering it to brands of any size to be able to Yeah. Deliver it Where they want to, how they want to, in the style they want. It's pretty cool.

Richard Hill [00:06:33]:
Yeah. It's it's a cool business, isn't it? They're I love these you know, I've got various subscriptions that I now I'm paying for. You know, when I get those delivered to firm brands, You know, you get a very, you know, very excited an exciting experience where, oh, it's that time of month. We're getting there. Oh oh, I get Right. My son will text us a delivery. I'm like, what is it? It's such a oh, oh, I got that. Whereas other ones, you know, come through, they get it very wrong, whereas a very, you know, brown box maybe, and Yeah.

Richard Hill [00:07:03]:
They haven't put that effort into the the packaging. You know, how you know, for our listeners, you know, how can a business really sort of add in an an element of pizzazz, You know, maybe personalization to that Yeah. Delivery and that package.

Paul Jarrett [00:07:17]:
Yeah. I think that there's 2 things that you can do. 1 is, Like, do it yourself. Right? And just because you hire a third party to work with doesn't mean you have to do all your fulfillment or you have to do all your software or anything with one an entity. Right? And I think that's a big mistake that people, like, think like, don't think forever. Right? Like, maybe you do simple picking back somewhere, but you do complicated gifts like a local place. Maybe you do subscription as, like, a local church or organization wants to do it, you know, at a low rate. Right? And I think the second thing is everybody what from what I see, and I used to be this way, like, logistics and shipping, it's, like, Super intimidating.

Paul Jarrett [00:08:00]:
Right? Like, there's, like, big knuckleheads like me roaming around, like, yeti in a giant warehouse. Right? But it doesn't have to be. And you just have to ask, like, can I come to her? Can I come? And, you know, I think when you break down that and you really understand, like, Logistics is just, you know, fewer footsteps and getting it from point a to point b with fewer touches, fewer footsteps. Then you can kind of become dangerous. And I I see people, and I know this is the case because I was the same way. I steered away from logistics for, you know, the 1st 2 out of 12 years, and, you know, then it was obvious, like, we have to get involved, and we have to find the right partners or do it ourselves if we want things delivered the way that we see it in our minds. Right. And that that I think is the key thing.

Paul Jarrett [00:08:45]:
Like, start with the end in mind. Like, what do you want the person to it might not be A big customized experience. You might be the brand that's like cheap, cheap, cheap. Right? But visualize and think about that end user and start to work your way backwards. And That's what we've really hung our hat on is, you know, we're focused right now on what we call hybrid hub and spoke logistics. And really what that means is We can empower because we learned the hardest way possible with subscription boxes and big brands. Right? Like like, we didn't know any better. Right? Like, we did the hardest things possible in this world, the world of logistics.

Paul Jarrett [00:09:22]:
Right? And because we've done that Now we understand that the ability to offer unlimited sales channel distributions to brands of any sizes, Have them get it in the box they want, the way that they want it, whether it's a gift or subscription. That's what we've been focused on, and it's it's really cool to see, You know, one of our one of our brands just posted in the last 3 months. They got 50 different independent physical bricks and mortar retail locations. So not a big brand, just 50 different ones, and they're supplying we're supplying, the product to Buzz. And it's a really cool strategy of, You know, forget Amazon, forget Shopify, forget all of that. Go call the local independent dealers to sell your product, and it's been really fun to watch. But, yeah, we We cut our teeth on the hardest thing. We definitely were treading water for a couple of years working with big brands trying to

Richard Hill [00:10:14]:
What are some of the, so when we're thinking about these, Two of these deliveries arriving at our customers. You know, what are some of the standout things that you're seeing at the moment that are a bit of a Inspiration, a wow for our listeners. I mean, I've been I think there's, you know, so many people doing everything at the moment, isn't there? And then it is trying to

Paul Jarrett [00:10:32]:

Richard Hill [00:10:33]:
You know, build that, loyalty with the customers, you know, and then and create that wow, like, more. You know? And I think, you know, I remember doing sort of, we we have a thing in our business where we send what we call a purple envelope. You know? It's not it's not quite as a say it's not quite as exciting as what you're talking about.

Paul Jarrett [00:10:52]:
It might work, though. Right?

Richard Hill [00:10:53]:
Yeah. Well, it does work. Yeah. I'm I'm lying. I should I hope there's no other agencies listening to this, but we sent a purple envelope. You know, and on that post, a big fairly big purple envelope. If you get a purple envelope in the post, you are opening that purple envelope. Yeah.

Richard Hill [00:11:05]:
True. And it's Quite crudey, old school, lumpy ale, but, you know, it works. You know? Sending certain I'm not gonna say what's in it because I wanna give away all this trade. Yeah. But what are some of the things you're seeing that our customers could relate to from maybe you know, for them to send things out in their businesses, their subscription businesses, or in their just day to day, you know, shipping. Yeah. What would you say?

Paul Jarrett [00:11:32]:
I would say there's there's a couple of things that I see, and I and I wanna be respectful with my words. But I also, like, I I don't I don't like doing these things without kinda, like, spitting the truth. Right? Like, being honest and being, like, yep. Like, this is this is what's happening. Right? Here's probably the number one thing that we see. In the pandemic, there were a lot of softwares and a lot of services that popped up, and hats off to them. Right? And and I think, You know, I I always say, like, ship fill in the blank. You know? There's there's multiple ones like the company names.

Paul Jarrett [00:12:02]:
And, I think they all have their place within the ecosystem. But what I would say is a lot of those companies are kind of built on a model of, kind of Uber for fulfillment and shipping. Right? And sometimes you get a bad Uber driver. Right? And what do you do when that Uber driver is kind of babysitting your product? Right? And so what we hear is a lot of frustration with Kind of the dawn of the 4PL software type things. Right? And that that's kind of a bummer, but what we see is There was a lot of education and a lot of people cut their teeth using those services, and now they actually know what they need and what they want. And they're not afraid to go out and and search for it. So that's definitely the first trend as people are kind of trying to get out of those things. And I think it makes sense because a lot of those services aren't flexible.

Paul Jarrett [00:12:55]:
Right? They just fee every time you wanna change something up. Right? And that's that's hard. And and it's I respect it. They got their business model. Everybody else does. But Unless you're shipping kinda one thing really basically, I think that's really hard to make sense for a lot of companies. The second thing that we see Actually, kinda goes back to exactly what you're talking about. And we've been preaching this for a decade, and probably also because our background, the o the co owner and I, who happens to be my spouse.

Paul Jarrett [00:13:24]:
We came from the ad agency world. And we have a firm belief that if your product has the correct margin, Or is on track for the correct margin that you need to start looking at all of your deliveries as a fancy direct mail piece. Right. Now what does that mean? We we say kind of marketing like a pirate. Right? Like, you activate them, you, or you acquire them, you activate them, You retain them, you use them for referrals, and you make sure you make the correct revenue. Marketing like a pirate, Dave McClure, you know, r AARRR. Right? And so if you have a delivery box, I don't care if it's subscription or if it's just a basic box, you should be utilizing that To, at the very least, say, here, hand this coupon to your front. Right? Yeah.

Paul Jarrett [00:14:13]:
And that's probably the biggest thing that we see people missing is Using that mechanism as a referral system properly. And, man, you're getting you're getting free direct marketing, free free advertising. Some people will say, like, customer experience, But I think that's the wrong word. I think the word is, a proper marketing tool that doesn't go overboard is what you should view your shipments as.

Richard Hill [00:14:35]:
Yeah. It just gets missed so many times, isn't it? It frustrates the hell out of me when I order. Yeah. It's more it's great. It's like

Paul Jarrett [00:14:42]:
a Yeah. Worse, it's more expensive. But What's the ROI on it if you don't know if you don't try? Right?

Richard Hill [00:14:48]:
Yeah. Yeah. Some people get so right with it, and some people are just so off. And I think they're just, There is I think they're just maybe I think, to be fair, it's normally the smaller, mid sized brands or the smaller brands that get it wrong because they're just so busy, focused on acquisition. I'm not really, you know, thinking about that long term stepping back. Hang on a minute. Now if we just got our guy to buy 5 times and recommend 5 friends, You know, it's very basic marketing, isn't it? It's obviously very, very That's, cheap to do that in comparison to win 10 new customers and via acquisition and just keep burning them. Just giving them a nice experience and tying in that brand story to that experience, loyalty schemes, you know, loyalty tiers.

Richard Hill [00:15:29]:
There's all sorts you can do. You know, I I love it. It's nothing bad when you open a box and it's like, hey, Richard. You're, you know, you're you're Yeah. Got 700 points. One more order and you're gonna be at the platinum club. It's like, oh, these guys know what they're doing. If they're if they know exactly who I am as a customer, they put that much effort into that piece and that's just on a box.

Richard Hill [00:15:48]:
You know, I've got a lot more faith in that brand than they're actually on brand. You know, a certain level that tells me that they really give a shit about how their their customers Tension a long term strategy, which means they'll be there long term in theory. Yeah. Yeah. It says a lot about our company, doesn't it? It it absolutely does. And I think it's It's so easy to think someday or when

Paul Jarrett [00:16:10]:
the margin is there or people it is an afterthought. And, you know, we are kinda preaching, like, why not grow your brand and grow sales through the last place anybody thought to look with logistics? Because if you can deliver Anywhere. Like, maybe you sell a batch of gifts to a to a school. Right? Maybe you do, take returns and ship them out and have them sold at secondhand stores or whatever it is. Right? But that will never happen if you don't Connect with the customer. And, really, you wanna kind of, like, train people to, like, be okay with paying a little bit more maybe on your website or develop a Strategy where you have different products. You have different bundles. You know? You sell that thing on Amazon.

Paul Jarrett [00:16:54]:
You sell that thing on Groupon. You sell that thing on TikTok, but at your website, That's where, you know, maybe it's the lowest margin or maybe it's the higher. It doesn't matter. It's all just a game of metrics. Right?

Richard Hill [00:17:06]:
Yeah. Yeah. No. That's that's a great tip. So I I just wanted to introduce you very quickly to our sponsors, Prisync. Now Prisync is a competitive price tracking and monitoring software that can dynamically change a product's prices on all sales channels. They work with brands such as Samsung, Sony, Suzuki to increase their online revenue. Now if you run Google Shopping, which I know a lot of you absolutely do, this software is absolutely key to accelerating profits.

Richard Hill [00:17:30]:
One of the reasons I Recommend pricing to my clients is because you can find out your competitors' pricing and stock availability all in one simple to understand dashboard giving you a huge competitive Vantage. Now if you have any inquiries and questions about this software or you're ready to get cracking, we have worked out a very, very special deal for our listeners where you can A 3 months trial and then 25% off for the 1st 3 months. Head to eCom eCom complete the inquiry form, and we will connect our listeners to the pricing team. Right. Let's head straight back to the episode. For those that are listening that are maybe thinking of adding in, You know, a subscription box or improving their existing offering, or just really personalizing that experience. You've obviously seen in the 8, 10 years you've been doing this, all the things not to do, you know, and and the and the changes in the industry. And, You know, what are some of the sort of bigger challenges or issues that you've seen that our listeners need to avoid?

Paul Jarrett [00:18:29]:
There's the The number 1 things that people need to avoid, and then there's probably, like, the number 1 things that people ask about. And it's fascinating how different they are. Right? So, You know, we hear, like, the things that people worry about is, like, what does my box cost? What is my shipping rate? What is you know, basically, whatever in a Google search kind of pops up. Right? Now the things that they actually should be concerned about is the the first thing that just is mind blowing. They don't think about different channels and customer service. Right. Sure. You can do a subscription box, but, like, the biggest challenge is you're gonna have a significant more amount of people saying, where's my box at? Not because the box is laid.

Paul Jarrett [00:19:07]:
It's just that's How the customer is that subscribes to things. Right? So how are you gonna handle that? Right? Turns. Right? Do you even need to pay to get a return? A lot of times it's just cheaper to leave it there, but you also need to set up things To to sniff out the people that are, you know, stealing from you. I'm doing that. Right? The next thing I would say is, people kind of assume that software or whatever is gonna get them the best shipping rates or their partner is or whatever, and and It is not. In in the US, it is hand to hand combat, face to face, negotiate. There is only I'm I'm it's kinda interesting because I've I've just been letting the cat out of the bag in logistics because I'm kinda being I'm kinda got tired of just being told, like, Oh, don't say that. Don't present that.

Paul Jarrett [00:19:56]:
Don't share that or whatever. And you're like, this is why everybody hates to talk to 3 pls and fulfillment companies. Like, I hated it. And it like, I see how, you know, the idea is, add fees and and try to make more margin. And I think that's broken, old, silly model. And so the 2 the one thing that another thing that I share is the only 2 things To actually get your shipping rates down, I'll I'll say actually 3. Number 1, you gotta pick up the phone to DHL, FedEx, UPS, USPS. Go meet with your post office, postmaster general.

Paul Jarrett [00:20:30]:
Have a conversation with them. Right? Tell them what you're trying to do. Do not negotiate on your current prices. Show them the projections. Sell the story to them. Let them know if we make a chance on you, like, here's maybe what it is. Right? So, Also, like, do that with your 3 p l. Go independently shop and get the prices yourself.

Paul Jarrett [00:20:50]:
Keep them honest. Right? All their blah. Right? The second thing is you're probably, in reality, negotiating the sales rep's commission is the first thing. Right. So so, 1, you gotta get face to face. I don't care what anybody says about software. It helps, but do not it's not viable. 2, I understand that you're kind of negotiating that sales rep's commission, so you probably wanna come to an understanding of, You know, as we make more, you know, that's how they're gonna make subscription is a great way to sell them.

Paul Jarrett [00:21:20]:
And then the third thing is you have to be able to project The amount of trucks that are going to be coming to your warehouse. Right? And one of the you know, we have a 100,000 square feet. We have, Yeah. 30 plus clients. And one of the reasons that we do push and focus a little bit on subscription and kitting and bundling is because that allows us to future forecast and to tell FedEx, like, hey. You know, if you come at this time, if you do this, That's 7 trucks, not 9 trucks. Right?

Richard Hill [00:21:51]:
Yeah. Yeah. Yeah. And if

Paul Jarrett [00:21:51]:
you can those are those are the actual 3 things that you can do to reduce your rates. And that Those things are the reason that logistics 3 p l's, 5 p l's like us exist Yeah. Is because there is no way that you can be great at software, great at the consumer package good, and great at logistics. And what do most People that we talk to not realize they're a logistics company. Right? They have a CPG. They have all those things, but, like, The logistics thing, like, that's where you that's the foundation. Right? And so, yeah, it's really fun working with these brands that are scaling, And they're shipping, you know, 0 to a couple thousand a month. And then sharing with them all that knowledge that we've learned with big brands over the years, because There's little things like ship 2 of your product, not one of your only sell 2 of your product, not 1 because you had different weight ranges.

Paul Jarrett [00:22:47]:
And it's it's it's 100 yeah. We're having we're having a really good time right now.

Richard Hill [00:22:51]:
That's great. I think, if you're with us now, I would, pause And, step back 5 minutes and just have a relisten because I think just some of the things you said there. I mean, just simple things like, You know, I think quite often a lot of people when they're negotiating, they don't pick up the bloody phone or they don't have a conversation with that individual. You know, like, oh, just an old school building a relationship with the individual. I think what you know, when you're saying about that, you know, painting the picture about, Now, if you're in a subscription business, obviously, the idea is that those people are buying off you every month. Obviously, there's some well, we'll come to that in a minute, but, Ultimately, you can forecast, you know, quite in the future with certain you know, with your order book and your order ramp up rate, You know, your retention rate. So based on x, y, zed, we can see in 12 months, you're gonna be doing 4 times the amount, and that's 4 more trucks a week or day or whatever it is. You You know, so if you do me this now, you know, you look, I'll show you the the facts, the hard figures of the scale that we we've managed to achieve in 6 months or 2 years.

Richard Hill [00:23:52]:
Well, we're gonna a well, our targets are actually tenfold. You're pitching, you know, ultimately, like, you would be pitching your business for investment. You're pitching, Yeah. I know that that growth of that ramp of, opportunity to them. Obviously, as a eCom, You know, you've got options out there, different 3PLs, different, you know, companies to work with. Getting to know those people, you know, taking them for whether that's a pint or a, you know, A proper business lunch Yeah. Is as if born as the, you know, as those, suppliers of whatever it is you're selling. Yeah.

Richard Hill [00:24:23]:
Yep. Yeah.

Paul Jarrett [00:24:24]:
I we we do these interviews in our warehouse intentionally because I say, look. There's there's a Yeah. That's mister Knaussi

Richard Hill [00:24:32]:
show them that was a video running or it's the real

Paul Jarrett [00:24:34]:
No, man. That's That's the real deal. That is the real deal. And, you know, really, what's what is the goal is don't have Kanarski walking around the warehouse, trying to find your stuff or whatever. Like, how can we simplify that process? And what we see is people just they think it's a software. They think it's something. They forget there's Food's on the ground. Right? And it Yeah.

Paul Jarrett [00:24:55]:
Yeah. It's not easy or it's frustrating. Like, it's just you know, it it it just costs more money. And simple things like, food CPG, probably 15 to 20% ish of, your MSRP should be going to, like, store pack ship. If your Product doesn't expire, probably closer to, like, 10 to 18%. Right? If it's really complicated, you might get around 20 to 25%. And just like little things like that, like, you know, keep your facility honest, and and I don't like the smoke and mirrors Attitude of the logistics industry, and how do you how do you smoke it out? Show up face to face. It cuts it.

Paul Jarrett [00:25:34]:
It's such a basic thing, but we all, you know, would rather click a button than duck. Right? Yeah.

Richard Hill [00:25:40]:
Absolutely. Yep. So We've got a subscription business. We are doing very well. You know, we've got however many depending on what your definition of well is and and a successful business. But That old retention piece trying to stop people canceling at month 3 or month 7, whatever your sort of drop off may be. It's gonna vary. Obviously, if you're a coffee addict like me, I'd never cancel them subscriptions.

Richard Hill [00:26:04]:
I'm like

Paul Jarrett [00:26:05]:

Richard Hill [00:26:05]:
Hardcore. 3 or 4 subscriptions are dropping to my house every week. But certain things and certain products, you You know, it's trying to get people to stick and stay. You know, what are some of the, things you can recommend to our listeners to get people to stick on there? Yeah. To keep buying their subscriptions. I know it's gonna vary and depend quite a lot, but in itself,

Paul Jarrett [00:26:23]:
I have a very different

Richard Hill [00:26:25]:
I have a very different things you've seen to get people to stick.

Paul Jarrett [00:26:29]:
Yeah. Okay. So I I, I get a lot of presentations about this topic, and I also get a lot of hate about this topic. So this is polarizing what I'm about Say, maybe you don't want them to stick. Oh. Right? Like like, why why do you want them to stick? So you can spend more money trying to get them to stick around. Right? You know, when we had our consumer I'll I'll give an example. When we had Bulubox, And we started off with, you know, 8 months retention, and it went more subscription.

Paul Jarrett [00:27:03]:
You know, we were number 6. By the time we kind of sunset that program, There was 14,000 plus subscription boxes on the market. Right? And now you you go from a buck for customer acquisition to, you know, 20, 30, 40, 50 bucks. Right. But what we figured out was, hey. Maybe we stop fighting the churn, and let's just Look at it for what it is. After about 3 months, people are tired of getting vitamin and supplement samples. Okay.

Paul Jarrett [00:27:30]:
Yeah. We know those metrics are solid. Like, what do we do now? Yeah. Maybe what we do is we launch our own brands, And we sample it with the other brands, and then we coupon people to come back and use their rewards points to get a full size vitamin on repeat delivery. Right? And maybe we push that model to other brands. Right? And the the the thing that people need to pay attention to is What is your what is your margin? Right? And what is the customer acquisition cost to lifetime value? And what is the payback for when you make back that customer acquisition cost? In the software industry, they call it CAC to LTV payback ratio. Right? And so I would argue that, you know, when you get your marketing down and based on how many months people are staying, You're actually trying to get the CAC to LTV payback ratio to work out. So you make about 3 times more than what you paid for somebody.

Paul Jarrett [00:28:29]:
But I would just say, like, man, if you're breaking even or profitable, just keep that subscription going because you can start to look at it like a direct mail piece. Right?

Richard Hill [00:28:38]:

Paul Jarrett [00:28:39]:
And now talk to your customers. What do they want? Right? Do they want other products? Do they want different flavors? Whatever it is. So I think if you get anybody to subscribe for more than 2 or 3 months, that's incredible. And it's very rare that people I I know somebody with a 3 year lifetime value for a consumer packaged good, but they can never keep up because there's so much And it's like a design home type of thing, and there's just so much high touch with it. And that's that's what we see as the inverse relationship is the more time that's spent On the subscription packing and making it customizable, the longer the retention, but that can get out of hand. So I think it's more about What's your CAC to LTV payback ratio? Do you have subscription? Do you have individual purchase? Do you have gifting? Right? And and I view it as one tool Of many that you should be doing. Right? Yeah. That's exciting, isn't it? That's making my, my brain, go on overload there.

Paul Jarrett [00:29:41]:
Yeah. I always feel like, you know, if you have a subscription, you're essentially sending a monthly catalog. Right? Now what are you gonna do with that? Right? Well Yeah. Talk to your customers, see what would get them to keep coming back to you. And it might be as simple as, like, they really wanna hear about the founders and their story. That Yeah. That might be what it is. Or it might be, oh, This is just a pit stop for them before they get prescriptions, you know, and you can't supply that.

Paul Jarrett [00:30:06]:
So maybe you talk to the prescription companies and do, like, a data exchange type of thing. Yeah. So there's value. You just need to Yeah. Find it. Right?

Richard Hill [00:30:15]:
Yeah. Yeah. I see, not quite the same, but I see, And a lot of the various subscriptions I've got, you know, the complimenting brands are putting their details in there, you know, just to call my coffee and the next thing I know, I've got a food hamper, you know, or a food, you know, like a meal plan Yeah. Company, flyer. And then the next week, I've got a wine company. You know? So, obviously, they're doing Yeah. Maybe a, like, say, a data exchange where you, you know, you put our Flies in yours, I'll put half your fliers in ours and that type of thing. You know, doing an exchange, but probably probably not a month one because, you know, you've got, You know that 2 or 3 2 or 3 obviously depends on the brand of the product.

Richard Hill [00:30:53]:
Yeah. Or or the industry more so. But they do that data exchange. Now I'm only picking up new customers from, somebody else's database and vice versa. Yeah.

Paul Jarrett [00:31:01]:
Yeah. Yeah. Yeah. And What another big thing that we see people kinda make the mistake of is, like well, not mistake, but they just don't think it through maybe. You know, if it is a coffee subscription, like, it's one thing to just send, You know, we always say good, fast, or cheap. Pick pick 1 of them. You know, people say pick 2, but for subscription, pick 1 of them because you can't be all 3 of them. Right? Yeah.

Paul Jarrett [00:31:21]:
So if you're cheap, maybe the packaging is low grade. The call you know, you're just going for cost effectiveness. Right? Fast might just literally be that. It's like same day delivery. Good might actually be your subscription Isn't about your coffee. It's about the tools. And how do you do a French press? And how do you do and and I see we've worked with coffee brands where, You know, their 1st kit, is actually about roasting the beans. Right? Yeah.

Paul Jarrett [00:31:52]:
And so, like, yeah, it's just You can think about it so many different ways, and the reality is you actually are fighting Netflix in subscription. Right? You are fighting Disney. Right? Yeah. So yeah. You gotta you gotta really yeah.

Richard Hill [00:32:08]:
It's gotta that's quite a tough game, isn't it? Trying to, You know, who's which subscription's gonna get canceled 1st, yours or Netflix? It's not gonna be Netflix,

Paul Jarrett [00:32:16]:
is it? Yeah. Whoever whoever has the better emotional benefit will win. You know what I mean?

Richard Hill [00:32:22]:
I think Netflix is getting too good. Yeah.

Paul Jarrett [00:32:25]:
I, I canceled Disney recently because we got Mark Rober, I think is his name. My kids started watching something on YouTube, and they have an incredible subscription box. I I never buy, so I have access to as many as I But it was a really interesting science project box, and he's got the YouTube videos to back it. And, you know, I my kid's guy is he's 7. He's got a budget. You know? I'm like, what do you want? What do you want with this? And he took the box. You know?

Richard Hill [00:32:52]:
Yeah. Yeah. Yeah. I think on that coffee on the coffee example, one of the firms I deal with, you know, each each month, you know, they're sending, like, 2 or 3 different roasts, But they're from different regions and different family, you know, farms, I guess, or car farms, I thought. So, you know, you get a note card saying, oh, this is this is, from Paraguay. This is the Blanco Law family. They've been here 40 years, and their family is this this there's a little picture of the family on the back of the car. Yeah.

Richard Hill [00:33:19]:
So you're, like, emotionally, you know, it's cool. In and out. That background, the the history, the

Paul Jarrett [00:33:25]:

Richard Hill [00:33:26]:
Family legacy of this farm in the middle of wherever it may be, and Oh. Oh, that's cool. I found myself googling that have a little oh, yes. There it is. You know? Google Maps. Have a look at their farm. You know? Yes. Yeah.

Richard Hill [00:33:37]:
It's quite Yeah.

Paul Jarrett [00:33:38]:
That story and buying it. Love that. Yeah. I love that. That's exactly what we're talking about. I'd like I mean, you can get into the soil, the beams. What's the what's the one copy where it's like cat droppings? Have you ever read about that?

Richard Hill [00:33:49]:
Yeah. Yeah. Nice. I think it's Vietnamese, maybe, you know, thing. Yeah.

Paul Jarrett [00:33:53]:
I I had one, but they didn't tell me until after I drank it.

Richard Hill [00:33:58]:
Oh, yeah. I went out to be in I was drinkable. No. It's not. I was in Vietnam. I was in Vietnam about 10 months ago. And, yeah, that is a real thing.

Paul Jarrett [00:34:06]:
Yeah. Also, that Turkish coffee is so cool. We saw that. Yeah. Yeah. So so many fun things you can do.

Richard Hill [00:34:13]:
So we sat here in February 2024. What advice would you give to business owners right now, eCom store owners? You know, we've had, well, I would say, you know, on the surface, very challenging 2023. What would you say, to business owners now?

Paul Jarrett [00:34:30]:
In the midst of chaos, there is big opportunity. And I think what we see There's a lot of chaos right now, and whether it's manufacturing, lack of raw ingredients, whatever, like, the The the pandemic I call it the pandemic hangover is still happening. Right? Yeah. But, also, what I see is, Really interesting things you can do at Chatt GPT. Really interesting things. So there's kind of like you know, there's these little nuggets that are out there, and I know I know a kid in Lincoln, Nebraska. I don't know him. I'm trying to find him.

Paul Jarrett [00:35:10]:
He sells $1,000,000 on TikTok of t shirts. And and, you know, like, why aren't you on TikTok? Right? Like, that's, like, one of our focuses is, like, social media selling. Right? And so I think that you need to tune out the noise, and you need to focus in on who your customer is and what Problem do you solve for them, or what value do you bring for them? And then I love it because it's a lot of ground and pound right now. Like, show up at your manufacturer. Like, tell you know? Because it's kinda going up and down the supply chain right now. And so I I think it's a super fun time. I would also say, Beware. And and I love big brand box retailers, but I just don't think it's a good strategy anymore to go Shopify, Amazon, Target.

Paul Jarrett [00:36:00]:
Okay. You know, whatever. I think you need to start with ecommerce and build, independent stores. Right? Like, built like, create a demand for retail buyers to buy you, but I just it's manufacturers are really starting to get a lockdown on big brand retailers. Like, going straight from the manufacturer to the retailer, and that's tough to compete with.

Richard Hill [00:36:23]:
Yeah. No. That's brilliant advice. I think tough times are are good personally as well. You know, I think it's Yeah. A great opportune I think it creates opportunity. You know, there's a quite a There's a lot of change. Yeah.

Richard Hill [00:36:34]:

Paul Jarrett [00:36:35]:
There's never been more of a sorry. I'll do it.

Richard Hill [00:36:38]:
It's Alright. You go. You go. You go.

Paul Jarrett [00:36:40]:
There's never been more sales channels opportunities. That's that's the good news. Right? Like, TikTok, Etsy, like, whatever it is. And nobody is saying you have to sell under the same brand everywhere. Right. You can have multiple brands, multiple Shopify sites, and that's the opportunity that I see. So sorry.

Richard Hill [00:36:58]:
Yeah. Now I was sort of, similar vein. I think when things can be a bit tricky, and, you know, maybe there's a element of panic in the streets almost maybe, and and I think it create it creates opportunity, you know, where there is maybe, you know, more challenges, where where that's on supply, so then building that relate if you're The kind of person that then spends time building those relationships like you talked about whether that's with your logistics company, whether that's with your supplier, and you've got that personal touch, The personal skills, whereas maybe, you know, your competitors just start passing money back and forth and not building that relationship. You've got the edge, Potentially. Obviously, you still got a bit you know, I know, obviously, money is a is a big part of this process, so we have to you know, we've gotta we've gotta keep things moving, but, ultimately, I think, You know, when things get tough, there is a lot of opportunity out there. And, you know, certain certain industries come to mind at the moment where I know there's quite a few sites that We're aware of them sort of folded and closed. And, but that's created opportunity for people then for you know, to either mop up demand or buy their assets. Yeah.

Richard Hill [00:38:00]:
You know, and just I, obviously, they can do what they want with them, whether that's, you know, to if it's a, you know, as simple as buying a domain name that's well ranked or buying a whole warehouse full of stock or, you know, the opportunities, you know, there there there seem to be very, Many at the moment, I would say. Yeah. Just with the with the shoot with the potential shipping increases, around the world at the moment with the various things that are going on. You know, it's, you know, so full plan in that stock. You know, those relationships you've got with your manufacturers overseas, you know, they could be the difference between having stock and not having stock right now for those that on building those relationships or aren't able to order and forecast. Yeah. So okay. So Back to subscriptions.

Richard Hill [00:38:41]:
Last couple of questions then, Paul. So crystal ball time, the future of subscriptions. Every man and his dog's gonna have a subscription. Yeah. And if you haven't, you should have 1, I reckon.

Paul Jarrett [00:38:54]:
Yeah. Well, again, you get a port in the United States.

Richard Hill [00:38:59]:
So how are you gonna get ahead 12 months now? Well, 12 months from now, what are maybe some of the things that the standout subscription firms are gonna be doing? The standout sort of Experiences on that delivery. What are they gonna be doing?

Paul Jarrett [00:39:11]:
Yeah. I think there's, like you know, it's it's hard to gauge with technology and the the the curve. Right. Because things are just magically happening overnight. Yeah. Like that. You know? So I think the number one thing is, like, stay on top of the trends. Don't jump too early.

Paul Jarrett [00:39:26]:
Don't jump too late. And know that there's it's gonna feel a little risky if you're trying something new. Right? I also think that we will see fairly soon 2 pretty big not even pretty big. It's just gonna kind of we're gonna wake up one day and go, oh, woah. When did that happen? But I think what's going to happen is, based on your data at checkout, people are gonna kind of already know what you want. Right? So I view kind of, like, the opportunity of having support from manufacturers, etcetera, etcetera. So when somebody goes to purchase, you know, it isn't buttons anymore that you select. It's saying, like, based on your data, this is probably what you want 3 months, This price.

Paul Jarrett [00:40:10]:
This price. Right? Or you're just gonna be able to say, like, you know, I want it delivered this time. I want it this big. I want it this many repeat deliveries. Like, I just see that opening up more. And I think the next thing is, payment systems are just gonna be, like, 100%. You know, it's like You got your Google Pay and your Apple Pay and, like, that's that. Right? And so when you think about what that looks like, Then you can start to kinda back into, like, what should you be thinking about and doing now? Right? So I don't think it's, like, necessarily the death of subscriptions.

Paul Jarrett [00:40:42]:
What I would say is The evolution is the checkout button and the payback button are going to kind of think for you, and you can tweak it. And you better make Damn sure that you have the ability to support that or else, you know, you're gonna get kinda left in the dust pretty quick. And that's Yeah. That's tough physically To be able to deliver for those opportunities, and the people that hit it are gonna win. You know?

Richard Hill [00:41:07]:
Mhmm. So I'm just thinking the best way to summarize that would be so just super deep, personalization that's layering in AI. Yeah. It's quite scary too, really.

Paul Jarrett [00:41:21]:
You know, that's what everybody thinks. Right? And and what I what I would say is, You know, the Internet was probably scary for people with catalogs. Right? Like, every like, it just it depends how you look at it because, you You know? We're using AI right now, and we did a chat g p t plug into our CRM. And it's the smallest thing, and it is mind bending. Yeah. How you could just ask questions. Right? And that's not a big deal. And that's $20 a month and not a couple YouTube videos, and it changed the game for our sales team.

Paul Jarrett [00:41:49]:
Yeah. So, like, maybe maybe, you know, it's just like you look at it as a threat or opportunity, right, and and Zig when everybody else is zagging.

Richard Hill [00:41:58]:
Yeah. A bit like the previous question, really. Yeah. Opportunity everywhere. So thank you for coming on the show, Paul. Absolute pleasure. Appreciate it. I like to Finish every episode with a book recommendation.

Richard Hill [00:42:09]:
Do you have a book to recommend to our listeners?

Paul Jarrett [00:42:11]:
Oh, man. I've been reading weird UFO books, so I can't recommend any of those. Right? I would probably say, Disappoint Entrepreneur by William Outlet, Bill Outlet. That's probably the one And, honestly, the workbook's great, but it's always a good gut check. There's about 22 steps of things that you need to be aware of As you're running a business or launching a business, and I think Bill Outlet, disciplined entrepreneur, is just always a good gut check to make sure you don't have any, potholes coming up.

Richard Hill [00:42:42]:
That sounds great. That's not one of, we've had before. That well, that's really pretty good. Yeah. No. We'll get that we'll get that linked up and ordered.

Paul Jarrett [00:42:48]:
Yeah. Head of the entrepreneurial department at MIT. I got Spent a week with him and, Brian from HubSpot, and it was just Yeah. Phenomenal. It was so yeah. It was wild.

Richard Hill [00:43:00]:
Well, thank you for coming on the show, Paul. For those that wanna find out more about you, more about Baloo, what's the best way to do that?

Paul Jarrett [00:43:06]:
Yeah. We got Bulugroup eCom. We have pauljerritt.com. But, you know, if you made it this far, first, thank you. Thank you, Richard. And I'd say, just drop me an email. It's just paulat Bulugroup.com.

Richard Hill [00:43:17]:
Fantastic. Well, thanks for coming on the show. Thank you. And I'll see you again soon. If you enjoyed this episode, hit the subscribe or follow button wherever you are listening to this podcast. You're always the 1st to know when a new episode is released. Have a fantastic day, and I'll see you on the next one.

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