69. Rupesh Sanghavi: Growing A 9-Figure eCommerce Business

The Brand Builder Show
The Brand Builder Show
69. Rupesh Sanghavi: Growing A 9-Figure eCommerce Business
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It’s not every day you get to sit down and talk with the CEO of a 9-figure eCommerce business.

However, this week I did!

Rupesh Sanghavi heads up ErgodE, a global eCommerce business that ships millions of orders every year and last year generated $150 million in revenue.

In this insightful episode, we talked about:

  • The operational challenges (and solutions) of a growing business
  • Managing inventory at scale
  • Working with Amazon warehouses and 3PL’s
  • Using data to inform your decision making

And, you guessed it, so much more! Enjoy.

Episode Links

Additional Resources

Talking Points

00:00 Introduction to Guest: Rupesh Sanghavi

00:49 Background of Rupesh

06:31 Marketplaces where Rupesh sells his products

09:09 “Exotic Amazon” compared to US Amazon

11:14 Challenges with getting a listing translated

14:13 Revenue goals for Rupesh

16:38 Importance of data-driven decision making

22:20 How technology has helped with inventory management

23:30 Inventory management for brands that you own vs brands that you sell

25:16 Managing inventories and warehouses

29:36 Tips on how you can continue to succeed in Amazon

31:09 Future of e-commerce

33:12 End goal for Rupesh’s company

34:17 Where to find Rupesh

Ben Donovan  00:00
If you want to grow a big business, then today’s episode is a must listen for you. We’ve got Rupesh Sanghavi on the show today, and he has built a significant size business. And he’s going to be teaching us how he did it and how you can do the same to. So welcome to another episode of the brand builders show. And welcome to today’s guest. Rupesh, welcome to the show. Thanks for coming on.
 
Rupesh Sanghavi  00:21
Thank you for having me, Ben. I really appreciate it. Thanks. Appreciate it. Thank you.
 
Ben Donovan  00:26
No, I appreciate you taking the time out you sound sound like you could be a very busy man. So I do appreciate you taking time out. And I’m looking forward to learn lots from you today. Just to give us a bit of context so people can understand your background, your areas of expertise, could you catch us up on how your entrepreneurial journey has traveled so far?
 
Rupesh Sanghavi  00:47
Sure, absolutely, it’s been a phenomenal journey. When that I’m, I love every bit of it so far. started almost by as an accident in 2007, when I was searching for a book, college book at that, and stumbled upon an item that was selling for $40 on eBay was selling for $1,600 on Amazon. And I grabbed it, I grabbed that book and sold it immediately for that flies, and I couldn’t be happier, it was a matter of scaling. From that point on. And scaling we did. We like I mean, I like some initial years, I always thought our business is changing every year, we mean we are we have been through loads of business changes as the marketplace changes and the landscape around what we do changes. So, we have been at forefront of E commerce selling across the world selling millions of items, millions of skills, we have 12 brands now, hundreds of people across multiple offices seven to eight offices. So we have grown from where we started with selling one books. And thanks to e commerce that it is it has grown I mean, we have grown with E commerce and now it has become I mean, this is what as a company we do.
 
Ben Donovan  02:35
So you are like a holding company that owns these 12 different brands.
 
Rupesh Sanghavi  02:41
Absolutely so, we are a holding company or a parent group of companies that holds digital brands, which is relatively smaller portion of all we do. So our business is I will say, Think of us as a brand accelerator and brand aggregator. Brand accelerator in terms of brands are the that we don’t own. But the ones that we help them develop their online presence through various means and through selling on the internet. So the those are the brands that may not have a full scale digital capacity to grow on their own, or may not have a volume, we help them grow without any upfront fees or any kind of service fees, absolutely zero, not even Tom’s condition, nothing absolutely zero service fee, we just take brand as a whole, we acquire inventory at a wholesale value and we sell it retail and that’s in that process, we grow the brand.
 
Rupesh Sanghavi  04:00
And then we ever Yeah, then the second circle is the well brands that we have acquired. So whenever we like after working with brands as a reseller, if brand ever comes to a point where they would rather exit the business by selling it to a company that would take it to the next level, we are we are in line for that. So we find ways to grow. I mean we find a way wish to acquire that brand and then grow under our own p&l. And that is we have acquired 12 companies
 
Ben Donovan  04:39
and these 12 brands, you’ve acquired them all?
 
Rupesh Sanghavi  04:42
Absolutely. We have acquired all of them under percent equity ownership.
 
Ben Donovan  04:48
Yeah. But rather than starting the brands from scratch, you’ve bought existing brands?
 
Rupesh Sanghavi  04:54
Correct? Yes. So we find it easier to grow through acquisition than building it from scratch.
 
Ben Donovan  05:02
Yeah. Why is that?
 
Rupesh Sanghavi  05:05
It’s matter of whether we want to do zero to focus our energy and resources on zero to one or one to 10? And we would rather go for one to 10, than zero to one.
 
Ben Donovan  05:17
Yeah, that makes sense. In terms of the journey of that, then so you were reselling products, like on a wholesale basis for these brands. And then they decided they wanted to sell. And that’s where you had that relationship with them. So we’re able to acquire them through that. Have I understood that correct?
 
Rupesh Sanghavi  05:34
That is correct.
 
Ben Donovan  05:36
Yeah. Okay. So that must have exposed you to some potentially good deals?
 
Rupesh Sanghavi  05:40
Oh, absolutely. Like, I mean, we are fortunate to have been working with over 1000 closer to 1500 brands across the United States. Primarily, our vendors are based out of US, we have some international vendors. And I’m fortunate that I have personally participated in many trade shows, visiting various brands. And, to me, trade shows are the landscape of creativity. I’ve seen so many unique products and exciting ideas. So yes, I’ve been we have been exposed to many products across multiple categories.
 
Ben Donovan  06:27
And what sort of marketplaces Do you sell those products on?
 
Rupesh Sanghavi  06:31
So our primary selling when new is the Amazon, which is the highest grossing when you but other than Amazon, we sell across 90 Plus marketplace, in US and worldwide. And so, I’m sorry, I’m just putting Okay, so I we sell across 90 Plus marketplaces are around us and worldwide, which would include Walmart, Sears Wayfair, our target. There are multiple marketplaces that we sell across. And also we have 16 of our own websites where we sell for different vertical, for example, cute baby buy, for baby products, add to cart for pet products, and so on. And then we have 12 brands with brand website, the ones that we have acquired. So we sell across another 30 of our own websites as well.
 
Ben Donovan  07:41
Wow, amazing. It’s quite some operation you’ve got going on there. And definitely, definitely lots of questions. I want to ask off the back of that. Yeah, lots of directions we could go in, but just initially on those. You mentioned Amazon, is it just Amazon US or is it global?
 
Rupesh Sanghavi  08:00
Correct. So we sell across Amazon global. Almost, I mean, even exotic Amazon, I will say, be it Saudi Arabia or Amazon, Singapore, or Amazon, the UAE, Turkey, you name it, we are present across all Amazon. In fact, at one point, and even now, we were so well known across Amazon global circles that every like few months before Amazon launches in a new country, they reach out to us because the size of our catalogue and our capacity to quickly ramp up that country.
 
Ben Donovan  08:48
Okay, you, you, you mentioned some I like your terminology. Exotic Amazon location sounds good. What if there any of those that are particularly strong that you’re particularly surprised by? Or are they all much smaller than US?
 
Rupesh Sanghavi  09:09
They’re all significantly smaller than us even the second page is probably half the size of us. So they’re all much smaller and kind of growing. Definitely we grow with Amazon in the local market. One notable exception is that we have not been able to do well in China. I think there is Amazon China, but that is something has always eluded us. So other than China, I think we have done reasonably well with all Amazon growth, or to a different degree. But I mean, a word of caution that even though it’s easy to think that, I mean, like you will be able to take a successful products or a well selling products from us to international. It’s not that easy. Not that fast. It takes time to build a brand across, outside, outside main Amazon. And also it takes some sort of investment in terms of localization of listings, in terms of reviews in terms of inventory, logistics, management, technology. All of it takes some time and some patience to develop Amazon International.
 
Ben Donovan  10:37
Yeah, I was my next question was going to be what do you think are the main considerations for sellers looking to expand internationally? You mentioned the obviously listings inventory. You’re the localization of both of those. Are there any specific challenges you can speak to the sellers need to be aware of, obviously getting a listing translated, with keyword research done in the local marketplace? Who would would be one? And obviously, getting inventory into the marketplace would be the other obvious ones? Are there any other things to consider?
 
Rupesh Sanghavi  11:14
One is, okay, this is I’m doing experience sharing. That one is do not, I mean, the key is if do not make that nine mistake, thinking Amazon, sorry, Google Translate, or any kind of online translator will do the job. That’s a definite no, no. And even even when you do it, okay. It’s hard. Even when you hire a translator, make sure the hiring translator is kind of a little tricky. Make sure that you go like one goes through a well known agency or someone you trust, or for, or any kind of online marketplace for translation. I mean, I loved a fork and many other but for translation, what I what we have realized is that there are a lot of translate. People posing as a translator, will use Google Translate and will give you the output. You don’t know the language. And that is where we have been tricked a few years ago, and said, I hope nobody else gets to eat like I didn’t think that hey, like somebody from offer can use Google Translate. And actually, like, I mean, so there was a little bad experience, learn from it. So yeah, make sure that your task data comes from a reliable source essentially, is what I’m trying to get the message across.
 
Ben Donovan  12:44
Yeah. Do you find you have to create unique packaging or anything like that, say, for Saudi Arabia, Singapore, China, I would imagine you would what, what needs to be done for someone selling a product with English packaging into those countries?
 
Rupesh Sanghavi  13:00
So, I mean, there are some look, there, there are some countries where they require seller to ever do unique packaging, or you can put a little our translation book inside the box, and it does the trick. Most part, I mean, people are shopping. I mean, see if it’s not required, we don’t do it, because we expect that as long as we are selling the same product, as it is listed on listed on Amazon or local website, we should be good. And unless it’s an instruction manual or something that is necessary for them to use the product. I don’t think I mean, like we don’t, we don’t go out of our way to change packaging.
 
Ben Donovan  13:59
Yeah. Okay. Cool. Just to give people some sense of size. I know you’ve sort of mentioned this elsewhere, but in terms of revenue that the business is doing on the top line, what are you achieving now?
 
Rupesh Sanghavi  14:13
So last year, we crossed $150 million on the reselling side. And we crossed it, we crossed about $20 million on the brand side, brands, when I say brand side for us, it means the companies that we acquired, and we are growing from that. And like I mean, we certainly have to do much better this year. So the companies that we acquired is going to grow is expected to grow at a much faster rate, than our reselling operations, but that is the kind of volume we do.
 
Ben Donovan  14:54
Nice. Yeah. And so with that, obviously, we’ve come quite a bit of complexity. You mentioned Millions of SKUs is that mainly driven by the reselling side? Or are you stocking a lot of SKUs with your brands?
 
Rupesh Sanghavi  15:08
It is mostly reselling side. And those are the SKUs that we don’t necessarily have ownership of it. Because we are still bootstrapped. And we want to be very, very mindful about profit, as well. So we don’t just run down the price, we retain the price for wholesale for the brands online. And in a very similar fashion, we realize that it’s in the best interest of vendor partners and us not to take the custody of all the inventory, unless we have a specific plan for it. So we have a technology processes to set and sell the inventory without necessarily having to own it. And as long as vendor partners are working, willing to work with us, we have been able to pull that off quite easily.
 
Ben Donovan  16:10
Fantastic. You mentioned previously about the importance of data driven decision making. That’s obviously going to be very important for you with that many SKUs that much revenue, can you give the sellers that are listening some insight into why data driven decision making is so important and maybe some real world examples of how you know upskilling in that area is going to help someone grow their business.
 
Rupesh Sanghavi  16:38
Absolutely. So, I always since almost the foundation, I always consider us as a software or technology company first. And so, technology is an essential part of everything we do including data analysis and the one the one that helps us make the right decision as they say data is a new oil and about decisions that we made using data is almost all the critical decisions in the company bit of what I mean which I mean, let me walk you through the process that when we start signing visits, you sign up with a vendor partner an existing brand, the first thing that we do is to put that their catalog through our in house developed proprietary software, which will tell us that which inventory to invest and acquire and which inventory to work with vendor partner to sell it but not acquire. So, right from that as to where we invest inventory, then the next portion, once we have inventory that where we have invested and are not invested, we use a smart game theory based in house developed repricer to make sure that our prices are optimized to the market conditions. So that is also software plus data.
 
Rupesh Sanghavi  18:19
And that then of course, we spend our own money on the advertisement developing brands that even we do own and that brand, we have in ours AI driven software, which will kind of tell us that effective ways of advertising, sometimes just to share some of the numbers Ben, we have been able to achieve 2-3% of equals in some of the cases in rather vast majority of cases that we innovate. So, that way, we are very, I mean, we are very data driven organization, we care where we spend our money, and but it helps brand as well. And often, I mean once a brand starts growing, the next step is to, I mean, if there is a time when we have to acquire the brand, that is also we create a internal use case on how we are going to grow the brand. And not only that, we present that case to the potential seller and we make them part of the process. That is look. I mean, I have a huge respect for founder. And I would I mean we give them a plan. We explain them why we want via our proposal looks the way it does. And then we find ways to continue to work together because we don’t want founder to leave the company after selling us and we have been quite successful at that. So most of the key founders are still with us working in different capacity, because we create a win win situation for them based on our internal data analysis. So, these are some of the few some of the instances when they when the decisions are based on what we know and predict rather than what we think and feel
 
Ben Donovan  20:26
that you mentioned about deciding whether to resell or to acquire, what are some of the decision making factors, you look at there to see a business there is some as something that you would want to acquire?
 
Rupesh Sanghavi  20:40
Correct. So the fourth, when we start working with vendor, the fourth decision that we typically have to make is whether to resell the product, like resell the products, and acquire the inventory and resell or do not acquire the inventory and grow resell. It’s called direct to consumer type of business model. So the consideration when we have to make a decision is typically, we prefer a fast moving, I’m sorry, we typically prefer fast moving item, relatively small size to be in our warehouse as a part of our inventory.
 
Rupesh Sanghavi  21:26
So that is, that is the first decision we make. And when it comes to acquisition of the whole business, including their existing customer supply chain b2b Everything, that is a different type of decision most of the time. I mean, we let our vendor partners know that we are in the market and open to acquisition of the business. But the first talk or the hint has to come from the vendor partner that hey, can we talk about it? And that’s when we go and talk because we want them to sell business only when they are ready.
 
Ben Donovan  22:08
Perfect, perfect. Okay. And then in terms of inventory management, that must be quite a complex operation as well. I imagine. I imagine your technology solutions are helping you a lot there.
 
Rupesh Sanghavi  22:20
Oh, absolutely. So I’m sorry. Absolutely. So technology is at the forefront of what we do. And managing. So we have software that actually processes millions of data points every single day, in terms of price and quantity primarily, so that we know if price or the quantity and the vendor name changes, then we ensure that we are updating our system. So we make lots of API EDI calls. And when when I say lots, I’m really mean lots, and that is how we like the whole system works because our cancellation rate has to be less than 2.5% As per Amazon, and most other marketplace policy, and we’ve worked hard to ensure that we comply with that cancellation rate. So, absolutely. Our backbone is technology and we use it quite a bit
 
Ben Donovan  23:23
How does your inventory management operation differ from the brands that you own to the brands that you resell?
 
Rupesh Sanghavi  23:30
Oh, very thoughtful question when I should say so, anyway. So, the brands that we resell, we just have to make sure that inventory in when sufficient inventory is available for us to with sufficient inventory is available for us to be continued selling the item in one form or another when when it comes to When it comes to brand that we own we have to make sure that we account for the whole supply chain including the production times including transit time on the water. So we want to make sure that we do account for everything
 
Ben Donovan  24:28
and you’re using a custom technology for inventory management for the brands as well?
 
Rupesh Sanghavi  24:34
Correct. So, absolutely. So we have to when it comes to our own inventory, like when it comes to our own inventory, we have to be able to look at projected sell of anywhere from 90 to 180 days from today. When it comes to reselling part of the business, we are okay looking at the projection from time 260 days from today, or? Yeah, so that’s a major plus
 
Ben Donovan  25:05
At your scale, are you finding you’re having to work with a lot of warehouses? 3PLs? What are you doing on that front? Are you able to still send everything to Amazon?
 
Rupesh Sanghavi  25:16
That’s a very thoughtful again. Yeah. So Amazon is one of our major three pair that we work with because it gives us it gives customer Prime shipping, for free. So obviously, as much as we can use Amazon 3 PL, great. Everything else, I mean, everything else is managed through eight to 12. Three PL relationships that we have around us across multiple warehouse, we have one of our own. But that’s it. That’s it, just one relatively small warehouse, more of a shock absorber system of a last resort, as in when we need it. But most of our business happens through three PL meet beyond us, and between Amazon and other professional three PL.
 
Ben Donovan  26:12
So when you ordered a stock from a supplier? Do you typically get all of it center 3PL? And then drip fed into Amazon? Or do you try and send some to Amazon some to 3PL.
 
Rupesh Sanghavi  26:23
So typically, Our preference would always be to send as much to Amazon as possible, because it doesn’t make sense to add in additional steps and additional hands touching the inventory. In our opinion. We’d rather pay Amazon little bit more even if required to ship ability to ship almost everything to Amazon. So that is our preference. Because drip feeding is a concept that I mean, of course, we always have a some part of our inventory into three period because we still have to solve other marketplaces like Walmart, Sears, and so on. So we don’t necessarily, I mean, are out of inventory outside Amazon. But we don’t hold inventory to refer it to Amazon.
 
Ben Donovan  27:18
What about then when you started to grow, you’re on this topic, but I know a lot of our listeners will be keen to understand how you’re optimizing for this. When you ship to Amazon, I would imagine, correct me if I’m wrong. There’s not very often where you’re able to send everything into Amazon. So if your restock limits are not allowing you to send everything to Amazon, what is the optimal process? Is it splitting that ship and sending some to Amazon some to three PL? Is it sending every other shipment to Amazon? Have you found any good fit there? Or are you still testing that?
 
Rupesh Sanghavi  27:56
I think Well, I wish I had a better algorithm for that. But I think we see. I mean as a reseller of products, we always say how do we see, it’s all case by case basis, in my opinion, because sometimes we buy quantities as little as 100 120. And sometimes it’s 1000s. Okay, so when we have such a variation in the quantity that we can buy from a vendor, we we would prefer to buy only as much as we are allowed as per the Restore is the stocking limits, which by the way, Amazon as removed, as far as I know. And if it’s our own inventory, we work with factories to sometimes send a mix shipment to Amazon for that, like one container has multiple SKUs and sometimes even multiple brands. So that has helped us but it’s I think we haven’t found a common answer or common thread that works yet.
 
Ben Donovan  29:13
Yeah, Yeah, same. Okay, so Amazon then you are obviously doing a lot of volume on Amazon is becoming more competitive over the years. It’s a it’s a more mature marketplace. What are you doing and what can other sellers do to continue to succeed on Amazon as it does, you know, undoubtedly get more competitive?
 
Rupesh Sanghavi  29:36
I think Amazon is, I mean, to me, my answer might be different tomorrow but today, I think listings and that two listing with the infographic is my most favorite way to optimize Amazon. Because when you have a key points with the image, that image becomes far more effective at selling than images without infographic. So because the so I’m a big fan of infographics lately, and, of course, smart advertisement. I think we like it or not, Amazon loves minting money, obviously. And so advertisement has become a next opportunity field where the better performance marketer you are one of the better you are going to do. And we are fortunate to have a great team of performance marketers.
 
Ben Donovan  30:44
Fantastic. And then just to finish, what do you see, for the future of E commerce? There’s lots changing right now. AI, trends, lots of things going on in the space Amazon, again, a very mature marketplace, things are going to be very interesting over the next few years, what do you see for the future of E commerce any interesting trends that you’re keeping an eye on?
 
Rupesh Sanghavi  31:09
I think it leads at the visible or Ryzen. Right now, I think AI is going to be a key driver of everything we do, including listings, to images, to infographics to pricing to how we sell it, where we sell it, I think a lot of it would become far more commoditized for everyone. So that would make competition a lot more intense. And I think this ability to buy the product and make life better, is not going to go anywhere. I think that is the nearest like there is the most important trend I observed. I think anything with 3d printing is few decades away. So people are still not going to print what they needed to home. And they will rely on factory made products. And I think efficiency with which it will be sold presented on online is going to be very important. At one point, a live stock of like live selling was like took off quite a bit. And maybe it is still going very well in Asia. But I’m not sure if it will be as effective in Western countries. So I don’t see that to be a major trend going forward. But yes, AI and smart, smart listing smart money spend on advertisement is going to be the trend.
 
Ben Donovan  32:57
So lots of opportunities still have.
 
Rupesh Sanghavi  33:00
Oh, yeah, absolutely.
 
Ben Donovan  33:02
And what’s the end goal for your company? Is it to keep acquiring brands and then sell the business one day or you’re just going to keep moving forwards and see what happens?
 
Rupesh Sanghavi  33:12
Right? So right now, our ambition is to be like I mean, create a house of brand ambition is to cross a billion dollar top line with 10% profitability. So that’s our goal in next few years. And after that, it’s wherever market takes us. So we have few exit options on table now. And I’m sure we will have few a few more at that time. But right now we are focused on getting company to a top line that is a good rounded big number.
 
Ben Donovan  33:55
That’s awesome. I love it. Fantastic. Well, this has been very insightful requests, you obviously got a lot of experience and know what you’re talking about. So I do appreciate you taking time to come and share some thoughts and give some insight to your operation there. If people do want to find out more about you or connect with you in any way, is there any any place you want to send them to do that?
 
Rupesh Sanghavi  34:17
Oh, absolutely. I’m I’m very communicative and responsive I should say. LinkedIn is one of the easiest and best way to find me this is I mean Rupesh Sanghavi. It should be should easily take view there. Other than that, if I’m allowed I like my email address is also very simple, my first name at our goodinc.com. So my like anyone can reach me by email, as well as WhatsApp. I don’t know if you use it, Ben, but that’s another great mode of communication. And yeah, one can reach me through that as well.
 
Ben Donovan  35:05
Great. Well, we’ll leave the link to your LinkedIn, in the show notes as well. So people can easily click through into that, and connect with you there and, and take it further. And yeah, honestly, it’s been super inspiring. And so I do genuinely appreciate you taking time out. Thanks for coming on the show today. Rupesh.
 
Rupesh Sanghavi  35:24
Likewise, thank you very much for having me, Ben. And thanks for studying us so well and asking those intelligent questions. I really enjoy our conversation.
 
Ben Donovan  35:34
Thank you. I appreciate it. Fantastic, guys. Well, I hope you’ve enjoyed that conversation as much as I have, do connect with Rupesh on LinkedIn in the show notes below. And we will see you in the next episode. Same time next week. Take care.

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