Profit Peak - Interview with Carla Penn - Kahn

Ryan Martin (host and founder of Remarkable Digital, an eCommerce SEO and PPC agency, interviews Co Founder of Profit Peak, Carla Penn-Kahn.

Carla, with her wealth of experience and entrepreneurial lineage, brings to the table a fascinating narrative of seizing the digital age by its horns, starting with her e-farmers market venture.

Carla's LinkedIn content is a goldmine of expertise, and if you're not part of her audience yet, let's just say your feed is missing out on some serious e-commerce acumen.

This episode peels back the layers of e-commerce success, examining the vital role of unit economics, pricing sustainability, and the intricate dance with shipping costs that can spell triumph or disaster for online businesses down under.

Through Carla's lens, we dissect the delicate balance between meeting customer expectations and maintaining profitability, unraveling how the average order value is not just a number but a compass that directs your business model towards sustainable viability.

Listen closely as she imparts wisdom on navigating the choppy waters of product pricing and shipping logistics with the grace of an industry titan.

As we wrap up, Carla unveils Profit Peak. 

This analytical powerhouse is changing the game for businesses aiming to stay profitable and allure potential acquirers with its real-time insights. 

It's a tool that brings two years of historical data, customer behavior, inventory health, and profit and loss statements into sharp focus, arming entrepreneurs with the clarity needed to scale and succeed. 

Join us for an in-depth exploration of how Carla's groundbreaking strategies and Profit Peak are charting new territories for e-commerce ventures, ensuring their profitability and readiness for growth or acquisition.

Join 'A Remarkable Newsletter' for weekly high performance marketing and content actionable tips.

Transcript

Ryan Martin: 0:01

Welcome to the Ecommerce Australia Podcast.

Ryan Martin: 0:05

Welcome to Ecommerce Australia. I'm your host, Ryan Martin, founder of Remarkable Digital. This podcast is aimed at those who have their own online business, e-commerce professionals looking to keep current on the trends, and for anyone interested in learning more about the world of Ecom. For those of you seeking direct assistance, remarkable Digital is just a call away. Our mission is to be remarkable, doing great things for great people and great businesses, and I understand how much choice you have and how many podcasts are out there, so I'm truly grateful you've tuned in. Please let me know if you have any questions, comments or topics you'd like covered. Let's get started.

Ryan Martin: 0:42

Welcome to the Ecommerce Australia Podcast. Today's guest has a very impressive CV, since she moved on from Credit Swiss back in the day to start her first online business as a marketplace for artisan food products from around Australia called e-farmers market. She's also started, sold and created numerous e-commerce businesses in the homewares and online kitchenware space, which we'll touch on in this episode, to now her current business, utilizing AI and making all e-commerce businesses profitable, which sounds hard to do, but also very, very great indeed. So welcome to the podcast. Carla Penn-Kahn.

Carla Penn-Kahn: 1:18

Thanks for having me. I appreciate it.

Ryan Martin: 1:21

Looking forward to learning more about your e-commerce journey, as I mentioned, since starting from Credit Swiss. It would be interesting to get how that started and then got you into e-commerce. And then, obviously, I come across you because of your great content on LinkedIn. So, as a first call to action, if anyone's not following Carla, give her a follow on LinkedIn because her content's fantastic. But let's start. How did the e-commerce journey start for you when you were back working in that financial services sector?

Carla Penn-Kahn: 1:49

Yeah, it was really interesting. One of the last deals we worked on was with the Maya Family Office and we did the public listing on the ASX of Maya and at the time the team that I was working on was talking a lot about opportunities for Maya and one of those opportunities being e-commerce. So they saw that e-commerce was starting to take hold in the US market and department stores were starting to do well in that space and Maya really piqued my interest for the e-commerce.

Ryan Martin: 2:17

Nice, and what year was that? Because that's yeah, it's probably not that long ago. But when you talk about Maya looking at e-commerce as a channel, yeah, it'd be interesting to know 2010. 2010,. So 14 years ago yeah, that's fascinating. So 14 years ago they identified that e-commerce might be a thing.

Carla Penn-Kahn: 2:34

They did and they had really no idea how to go about e-commerce back then and I suppose their strategy has really shifted over the last 14 years and they're getting it right now. It's probably their largest store.

Ryan Martin: 2:47

Yeah, for sure. And yeah, sometimes those big retailers you know they take time to be able to turn that big ship around, but yeah, it's, e-commerce is one of their main channels. So, going from that and planning a seed into then starting your first e-commerce business with e-farmers market, how did you pick that first category and build that first store?

Carla Penn-Kahn: 3:10

Really it was a lot of trial and error. I loved going to farmers markets and I thought how do we digitalize this experience? In hindsight, it was not a good experience to digitalize because you were dealing with perishables. You were dealing with a very immature freight system as well. In Australia, australia Post 14 years ago was not as slick as it is today when it comes to parcel delivery, so it was probably before its time and I was really flattered when I saw a number of years later Australia Post themselves started to try and do in its own farmers market online, but even for them it didn't work. So it was a great learning experience and a first way to get into e-commerce.

Ryan Martin: 3:48

Yeah, brilliant. I'm sure there were some lessons into that. What did you build that website on?

Carla Penn-Kahn: 3:53

That's a good question. I think it was a Magento store back then and e-commerce businesses always ran on Magento from that point forward, so that was our first toe in the water.

Ryan Martin: 4:04

Okay, nice. And even now we look at marketplaces, they're quite common. There's a lot more infrastructure and a lot more tech that helps build out a marketplace for your e-commerce store. But I could imagine back in those days it would have been a lot harder to get suppliers and then customers to the website and make that all happen.

Carla Penn-Kahn: 4:22

It definitely was. It was fortunate as well, though. That was a time when organic actually was a main strategy, so there wasn't a lot of paid requirements in order to get in front of customers, so we had the benefit of being a first mover with organic traffic in SEO. However, the actual logistics and the supply chain side was what really led us down.

Ryan Martin: 4:41

Yeah, okay, yeah, and again, all those things have since improved, although there's still logistic challenges and moving through COVID and all that. But yeah, no doubt it's a lot easier now than what it was back then. From the banking background and then getting into e-commerce, did you work? I've seen on your LinkedIn there you mentioned working with some high net worth individuals. Did that plan a bit of a seed for you in terms of wanting to start your own business and choosing e-commerce the platform or the vehicle to do so?

Carla Penn-Kahn: 5:09

It definitely influenced my thought process around e-commerce. But in terms of being an entrepreneur myself, I'm probably unique in that I'm a fourth generation female founder. So my mother, my grandmother and even my great grandmother in the 1930s had her own business, so it was always an aspiration of mine.

Ryan Martin: 5:27

Oh, that's fantastic to hear. Let's learn a little bit more about that. So what sort of businesses have been going through the generations?

Carla Penn-Kahn: 5:32

So my parents, my mum, founded a FinTech long before FinTech was ever a term. So she had a banking treasury software. Interestingly, I used it at Credit Suisse. It was still in circulation then, before that. My grandmother had a gym when she first moved to Australia from South Africa. She's mid-80s and she's still exercising every day Pretty amazing.

Ryan Martin: 5:55

Good luck.

Carla Penn-Kahn: 5:56

Yeah, amazing. And then my great-grandmother had a retail store in South Africa and at a time when women were not really working ever it was not even a thought process, but she was entrepreneurial and enterprising even then.

Ryan Martin: 6:08

Oh, that's awesome. Yeah, what a.

Carla Penn-Kahn: 6:10

Legacy to continue. Hopefully my daughter does the same.

Ryan Martin: 6:13

Yeah, exactly what a good education to pass through each generation and then continue on. So you were working with Credit Suisse, but you always wanted to go out and do your own thing at some point. You were just waiting for that right opportunity.

Carla Penn-Kahn: 6:26

It was the right opportunity and I wanted to get a bit of knowledge around how a business runs and get a bit of basics and knowledge and foundations and really understand what it means to be part of a team, what it's like to build a team and learn from people who had done it before. And often people say, well, you could have learned that in one of your family businesses or working for a smaller business. But I really feel like it gave great grounding working with people from a lot of different parts of an organization as well.

Ryan Martin: 6:55

Yeah, no doubt you can learn something from any area, really, can't you, if you keep the ears open and the mind open. So let's get on to the evolution of e-commerce since 2010. You've been a founder and you've built some really awesome businesses, which we'll touch on, but what have you seen as the main changes between 2010 and 2024?

Carla Penn-Kahn: 7:18

I would say what hasn't changed.

Ryan Martin: 7:20

Okay.

Carla Penn-Kahn: 7:21

You know everything's changed. When I first started, you know, we were building websites for desktop. We didn't even think about a mobile-first strategy. We were very much focused on SEO and organic traffic. Paid wasn't really a major avenue it was probably 10 or 20% of our businesses when we first started and we were able to generate incredible revenue even in a market with not a lot of e-commerce penetration yet.

Carla Penn-Kahn: 7:46

From a retail perspective, you were able to build traffic off SEO and link building and strategies that now today you would say are black hat and not ideal for the Google algorithm. And we also were building at a time where you didn't have socials. That social presence was still very much new to how people were looking at brands and looking at revenue streams. So everything was a lot easier from that perspective, but equally harder from the perspective of you didn't have as much market penetration and awareness, so you couldn't scale up as quickly as you possibly can today. But you also didn't have the maturity in the ecosystem, so you never had a lot of support networks. You never had a lot of events where you could connect with other e-commerce founders. You also didn't have as strong infrastructure so Australia Post Network today in terms of moving parcels around the country is revolutionary compared to what it was 14 years ago.

Ryan Martin: 8:44

Yeah, I could imagine, and some of that was forced change, I guess during COVID and all that kind of thing. But so did that mean for you then back early days you had to do a lot more above the line advertising, or was there some social media just wasn't to the level that it was now.

Carla Penn-Kahn: 9:00

There was some level of social media. So we found communities really interesting space for us. Early on we were able to build organic communities, private communities where people shared recipes and products, and it was really more community-based rather than an advertising play on the social side. And then we also found that with the rise of marketplaces, the market really changed. So back when I first started you know that was the early days of Deals Direct Catch wasn't even really a stronghold yet in the market, and then Amazon hadn't even thought about coming to the Australian market, so it was a completely different ecosystem that you were trading in.

Ryan Martin: 9:38

Yeah, I could imagine and like even building that center community. I feel like it'd be interesting to get your take on whether that's still a strategy that you've been utilizing in your businesses up until you started with Profit Peak. But do you still feel that building a community is paramount to e-commerce success?

Carla Penn-Kahn: 9:54

I definitely do. I feel like a community is a way for you to interact with your customers, and there's no better way to meet your customers or exceed their expectations than to actually understand them and speak with them. And the community allows you to engage on a really intimate level with your community and with your customers. And even for us, in building Profit Peak. One of our core pillars is going to be building an e-commerce community of people who use our platform and can share knowledge and share ideas and create advocacy within our community for the brands in our ecosystem, because really the best learning happens when we put our heads together and we share knowledge.

Ryan Martin: 10:32

Yeah, that's a great answer and it's interesting. Now I've done sort of 50 episodes of this podcast and some really key takeaways around that building that community and even like creating a Facebook community group as opposed to a page, because you can't advertise on that community group but you can get a lot more engagement and speak to your customers a lot easier and build that community, which then builds your business and builds that trust as well. So sometimes we can get lost in being quite transactional on how do we get new people and new traffic when, if you talk to your existing audience and build your existing community, that's a much more profitable way to keep those sorts of metrics you know cost per acquisition. New customers keep those metrics down.

Carla Penn-Kahn: 11:18

Absolutely. And there's also the whole piece around creating brand advocates. You know, if you have a rich community, that community is going to tell five or 10 friends about your brand because they're highly engaged. And that's word of mouth. That's good old fashioned referral business that doesn't actually cost you any money.

Ryan Martin: 11:36

Yeah, exactly. And again, you know we probably don't touch on word of mouth as much as we should, but you know, you know through good, genuine testimonials and reviews, and you know, even if you're marketing for a service-based business, word of mouth is always the best type of referral, and e-commerce should be no different. Really, it's just how do you get that word of mouth out on an e-commerce business and getting people talking about your product. So, yeah, it's a really interesting point. You mentioned you had a few. Whilst you've built some great businesses, you did mention to me before we started recording that you had a couple of e-commerce failures as well. What were some of the lessons that you took out of some of the failures, or some of the learnings? Let's call them.

Carla Penn-Kahn: 12:18

Yeah, absolutely. Look, e-farmers market would have been a great example of a business that didn't have the infrastructure and supply chain there to support it. Equally, we try different things along the road that did and didn't work, but I think what's really cool is finding what works and trying to focus on what is working in your business rather than focusing on the failures, because if you focus on the failures, you never get to the wins because you never try anything new. So I think that's something important I would like people to take away with their journeys.

Carla Penn-Kahn: 12:48

One of the things is getting your unit economics right.

Carla Penn-Kahn: 12:51

So it's really a lot of people think well, if I get this first delivery and I test it and the unit economics aren't right, eventually I'll get the unit economics right. Sometimes that's just not the case. You need to be operating in a space where the category that you're trying to dominate has the right unit economics available to you, and you need to have a clear pathway if you aren't starting with the right unit economics to get to it, because it's very hard to change customer expectations on price. If you're $50 today and you become $100 tomorrow, and $100 is where you need to be to have the right unit economics, it's going to be very hard to retain any of the customers you've acquired so far and allow them to be those brand advocates for you. So the number one thing for me is getting your unit economics right, because that's something you can control. You often can't control the advertising costs or the CPA. You can certainly optimize for them, but the unit economics is where you actually have the control from day one.

Ryan Martin: 13:49

That's a great great point and you know, getting that right obviously sets you up for success from the start. Where does that conversation come into the journey? When starting an e-commerce business, Is that one of the first things that you would look at and understand what price we need to be, what margins we need to make it to make it sustainable? What are the competitive products Like? How do you go about getting that unit price correct or the unit economics correct?

Carla Penn-Kahn: 14:15

Sorry, I think the first thing is obviously coming up with the product in the right category, because the category also sets expectations on average order value as well, and where you can price the product. And once you have product pricing, you then need a focus on margin. So what is the gross margin that you can achieve? And that all comes down to supply chain optimization as well and negotiations with factories or suppliers. However you plan to import the product or manufacture, the next step in the equation will be what does it actually cost to freight this product?

Carla Penn-Kahn: 14:47

So a lot of people think about e-commerce buying in the same way as they think about physical store buying.

Carla Penn-Kahn: 14:54

So they forget that there is this massive cost layer which is shipping. And in a country like Australia, we have a shipping monopoly and Australia Post sets the price threshold, so you don't really have options to optimize shipping. So you really need to take into account what is the cubic of my product and what is it going to cost me to send this product all over Australia, because Australia is not a large enough market where you can just focus on sending to Metro cities, and we even saw in Australia Post report this week that e-commerce is growing in the regional areas, less so in the metro areas, as people have gone back to in-store shopping experiences, and that's because so many of those rich retail experiences in the regional areas have closed. So our regional customers have no choice but to shop online. And if you don't have modeling around shipping to these remote regional areas, you may think you've got a great gross profit margin and then, once you take out shipping costs, you actually realize I didn't make any money getting this product into my customers' hands. But those are my customers.

Ryan Martin: 15:54

Yeah, exactly, it's such a common topic around shipping and logistics and even from a lot of the e-commerce brands that I deal with day to day and also ones that I've had on the show it's always trying to figure out that shipping what price do we charge? How do we do it? How do we not lose money from shipping? What are customer expectations around shipping, which I feel like changes constantly as well? So, yeah, shipping's a thing that can obviously make or break your e-commerce store.

Carla Penn-Kahn: 16:25

Absolutely, and that again comes back to average order value. So, if you take into account, when you're thinking about the category that you're dealing in, is the average order value able to have some component of shipping recovery built into the product price, or is it a low dollar value product and then you aren't able to actually include any freight recovery in your product modeling? So all these factors need to be taken into account when you're starting out and deciding what category you want to play in, what product, and really focus on controlling what you can control. Otherwise, you get into a bit of a tailspin in the e-commerce world where you're trying to control factors and variables that you can't control.

Ryan Martin: 17:05

Yeah, that's a great point. What do you look at in terms of that? Speaking of the average order value, is there business ideas that you've tested or looked into but thought, no, that average order value is not high enough to make an e-commerce store work. Would that be one of the things? Would the AOV either consolidate your idea that, yes, this is an area that we want to go into, or that it's not an area that you would succeed with e-commerce businesses?

Carla Penn-Kahn: 17:33

Yeah, absolutely so. One of the challenges that we had being in the kitchenware space is we were selling other people's brands. So we only had so much margin available to us selling other people's brands and we obviously were operating in a competitive pricing market. So we always thought let's go down the white label strategy. What products are our best sellers? Well, they're cooking sets. Well, the problem with cooking sets is they weigh about 10 to 15 kilos, and then the cost of rating those cooking sets all around Australia. Will we actually make any money at the end of the day? And every time we modeled we thought this is just going to be like an incremental $1 of contribution margin for a whole lot of effort and a whole lot of capital investments. So we could never import just 12 cookware sets. We'd have to bring in $500 or $1,000. And then, once we took into account the cost of capital, the shipping cost and the margin that was actually available to us to be priced competitively, we felt like it wasn't the right play for us.

Ryan Martin: 18:34

Okay. So how did you get around that then? Because obviously you had what was it? Kitchenware Superstore and Everton, which looked like they did quite well. So how did you get around those sorts of logistics and those sorts of numbers?

Carla Penn-Kahn: 18:48

To be honest, it was once we got to scale. Once we got to a level of scale where we were on great pricing rates with the freight carriers Australia Post that really helped us. But equally, we would negotiate with suppliers. We had a lot of buying power at the end and we were able to say to our suppliers this is the contribution margin per product. In order for us to continue selling your products, we need more support. It's getting to that power where you can actually negotiate and control what you previously couldn't control. That's really important to get your unit economics right.

Ryan Martin: 19:22

Yeah, nice, that ties in beautifully to that first point around unit economics, as you mentioned. Up until that point of scale, was it a stressful period for you to try and make profit from that store? Were there other things you tried? Were there levers you could pull to get a bit extra margin? Did you try and increase that AOV up to a point where you could start to make more money? Or what were some of the conversations that were going on?

Carla Penn-Kahn: 19:46

Yeah, I think because e-commerce changed a lot. Initially we were supported by the fact that we weren't spending a lot on advertising. While we didn't have the advertising expense, we didn't have the same level of margins from our suppliers. Then, as we scaled, we obviously had the support of increased buying power, but equally, advertising costs started to go up exponentially. We really saw that with COVID Going into COVID, we were acquiring customers for 50 percent less than we were coming out of COVID and I know, for even some brands it's 100 percent difference in cost.

Carla Penn-Kahn: 20:21

That's really because businesses like Maya came into COVID not really 100 percent right in their strategy for our category, the kitchenware category in e-commerce. They came out of COVID with an incredible strategy, priced competitively, offering a great service. That just really pushed up bidding with the algorithms of the advertising platforms. We really saw as a result CPA change.

Ryan Martin: 20:47

Yeah, that's fairly common in terms of the conversations we've had as well. Just the competitive nature, those big enterprise clients. They had to do something and they had to do it pretty quickly. That forced a big spike in traffic and CPAs and logistic cost, freight costs, all that kind of thing. I guess since COVID too, that's come down a little bit now and expectations are so high that we're going to try and hit last year's numbers and metrics. It's just not quite the case at the moment.

Carla Penn-Kahn: 21:15

No, it's definitely a challenge and we all want to see our business do better than the year prior. I feel like, for the e-commerce sector, we have to really focus on back to those unit economics and what we can control. If we can't control the CPA to the level that we need to, what other dials can we look at? Can we look at how we retain customers If we can't look at how we acquire them as strong as we like to? And then how can we look at improving our supply chain?

Carla Penn-Kahn: 21:42

Optimizing for freight I didn't touch on it, but one of the strategies we employed to really optimize for freight in our business was we looked at our packaging. Okay, we looked at, not shipping air. A lot of businesses are still shipping air. The packaging that they place their product in is a lot larger than the actual product itself. Your freight, of course, is based on cubic metrics. If you're sending a lot of air around the country, you're paying for freight that you don't necessarily need. Equally, there's an environmental impact there as well, because there's only so much space in a truck, on the rail and in an aircraft. What we really invested in was tech in the packaging side to make sure that every parcel that left our warehouse was in a box that was correctly sized for the products inside. We really optimized packaging to get that freight cost down and it significantly reduced our cubic metrics as a result.

Ryan Martin: 22:34

Okay, that's fantastic, isn't? It Probably leads in nicely to profit peak, which we'll touch on shortly around that, but that's a really good strategy From a customer expectation point of view. Did you have any pushback that the packages and their orders weren't getting to them quick enough, or was that just through clear communication that that was a case? Or was it still getting there in the same time frame as air would?

Carla Penn-Kahn: 22:59

It was still getting to customers in the same time frame. It was actually a really good sales messaging for us. We would place inside every box that left our warehouse with compliments slip explaining to the customer that the box was made to order for them for their specific order. It sounds like it's a slow process, but we were making up to 100 boxes every five minutes. Wow, it was automated machinery which we were lucky to be able to tap into. What we would say to the customers your package has been thought about from an environmental perspective, we have thought about your footprint, our environmental footprint, and we're optimizing our packaging for the environment. It really became like a sales motion for us and a differentiator in the market, because customers would constantly tell us that our competitors were sending oversized boxes for small amounts of product and they didn't like it. They knew the environmental impact of that.

Ryan Martin: 23:53

Yeah, fantastic. Is that something that you led with from a marketing point of view? Was that sustainability and offset the carbon footprint? Was that something that was in your messaging or was that just a little bit more subtle in terms of hey, this is what. Thanks for ordering. This is how we're doing our shipping logistics.

Carla Penn-Kahn: 24:11

Because of these reasons, it was definitely loud and proud and that was a way that we realized very quickly that we could differentiate not just from our competitors within the kitchen, where space, but equally with the department stores and Amazon.

Ryan Martin: 24:25

Yeah, very true. That's a conversation that's quite topical at the moment with Amazon, and you know I just how quick and efficient they are shipping. And then we you know I was having a great conversation with Brendan Gillan, who I've had in this podcast a couple of times, around Timu the other day and the challenges that Timu are creating for e-commerce businesses as well. So any kind of advantage you can use, any kind of, you know, messaging or or leave, you can pull to get an advantage whilst benefiting, you know, the environment, is obviously a good thing to do.

Carla Penn-Kahn: 24:58

Absolutely, especially when businesses like Timu don't get great press around their environmental footprint or their sustainability. It's a way to you know, achieve results.

Ryan Martin: 25:08

Yeah, exactly, it's a good point to raise actually just around that, and you know how can you separate yourself from a big, you know, like Timu. So what about? You've exited quite a few businesses in that e-commerce space. We've got a lot of listeners, an audience that you know small, medium businesses in that e-commerce space. Have you got any tips to exiting or making a great exit or making your e-commerce store something that you know will lead to a nice exit at some point? Have you got some tips into how they can get ready for that?

Carla Penn-Kahn: 25:45

Definitely, it all comes back to unit economics again. You really need to have a strong economic engine behind your e-commerce business in 2024 and I believe that will be the same in 2025. A lot of e-commerce businesses were able to exit, you know, pre-covid or during COVID on a revenue multiple. So they had the advantage of saying, hey, we've built up this infrastructure and we have all this revenue You're gonna acquire us on a revenue multiple, which meant a lot of businesses, including us, scaled on the back of hopes of a revenue exit.

Carla Penn-Kahn: 26:16

Ultimately, now the market is really shifted and businesses in the e-commerce space because it's also more mature now and the big guys already have the infrastructure in place you really need to have a business where you have brand equity, you have the right unit economics within the brand portfolio of products and you also really need to have a customer base that you can show up, engage with your brand. So you need to have those retention Statistics and metrics in place. You need to be able to show that your customers love your brand and I think a lot of people acquiring brands these days actually say, hey, can I talk to some of your customers and find out why they love your brand? So you really need to create going back to that community. You really need to create those brand advocates to support your sale and exit.

Ryan Martin: 27:02

Yeah, that's fantastic advice. How do you grow your brand? So, when we're talking about brand strategies, you know building that community. Is that talking to them? You know engaging with them consistently, is that doing some branding? You know, across social and paid advertising, what's the best way that you have seen businesses grow their brand?

Carla Penn-Kahn: 27:24

I think the best way to grow your brand, in my experience, is actually exceeding customer expectations. So the first step to exceeding your customers expectations is to obviously engage with them and listen to them, and then exceeding their expectations isn't just about product and price, it's also about service. So often we forget in e-commerce that we're actually offering a service and that service doesn't stop once the customer receives their package. You want to create that unboxing experience which creates that fuzzy feeling inside the customer that they're really excited to receive their package. I know a door beauty is done this really well over the years with the simple Tim Tam my kids will see in a door beauty box arrive on my doorstep and the first thing the kids say is who's getting the Tim Tam? And then I have to cut it in half. You think I'd learn by now and I'd have some time in the cupboard to. You know, to avoid arguments, however, we cut the Tim Tam in half. So simple things like that that create a brand.

Carla Penn-Kahn: 28:19

You know that feeling of that warm, fuzzy feeling when you engage with a brand, even if it is online and it is a digital brand, is really important and that's the first step to creating those brand advocates and building that community, and then, furthermore, when a problem arises, it's about taking ownership as the e-commerce brand.

Carla Penn-Kahn: 28:37

I hate nothing more than when I've had an issue with a package and the business on the other side just said, oh well, it's Australia Post. And it's like well, no, actually you've hired Australia Post. Australia Post has failed me, so I'm still unhappy with you as a brand, not just Australia Post. So let's think about how we can actually make that customer have that warm, fuzzy feeling towards us again and, rather than throw them away as it was just about experience, I don't need this one customer. How can I turn this around and create a brand advocate out of what was an unhappy situation? And when you can do that, it's amazing how loyal the customer becomes, and that was something we really put in place at Everton, and kitchenware was making sure that any negative experience resulted in a brand advocate.

Ryan Martin: 29:27

Yeah, that's, that's brilliant advice and yeah, I see that with some really strong brands that they also do get negative reviews, because that's just part of part of business and part of life. You can't control everything. The way that they handle those reviews often, as you say, turns a negative into a real positive and people can see that genuine nature of wanting to help them. So I see that a lot in that e-commerce space. But also what I'm getting from you after spending 45 minutes chatting to you is just that generational kind of knowledge that you've had passed down really stems through and e-commerce is just another business essentially, but it's good old fashioned service off the back of that in a digital business but community, understanding your actual unit economics in your business and then giving good old fashioned service even though you know we're behind a, you know a website or a digital medium. So really interesting to kind of learn that you know the. The principles that have helped businesses for hundreds of years are still going to help businesses for hundreds more. Absolutely.

Ryan Martin: 30:31

Now let's get on to what you're you're working with now, so profit peak. When did you start that? It looks like it's still in beta testing at the moment, but people can sign up for to be part of that trial. How did that come about? I'm assuming it's because you're so focused on unit economics and shipping charges and and how to remain profitable. What's been the journey so far, with profit peak?

Carla Penn-Kahn: 30:54

That's literally how it started. So we came out of COVID and we said you know, we used to be able to understand our unit economics in a spreadsheet, we didn't have so much cross platform ad spend happening and we weren't in such a competitive e-commerce environment. So we were able to make assumptions that we felt were healthy assumptions about our business. And coming out of COVID we realized that any assumption we were making was no longer a healthy assumption, so that margin of error was too wide for us to run a profitable business. So we ultimately sat down with our developers and we said these are all the data points that we're trying to understand. What APIs can we build and what connectors can we build to actually bring all this data into a single platform for us, our own brands, and understand our unit economics in real time?

Carla Penn-Kahn: 31:45

And I don't want to understand just my top line numbers. I actually want to understand my inventory. I want to understand, on a product level, what is the contribution margin per product? How much inventory do I need to hold for that product? Is that product a key product or is that product an add on product? Or is that product actually part of that 20% in my inventory portfolio where I can probably divest and move capital more efficiently into products that are actually serving the business in a positive way and generating contribution margin. So we really wanted to understand the metrics in our business and we could not find any SAS provider who had the ability to do this for us. So we literally whiteboarded and started building.

Ryan Martin: 32:27

Nice. That sounds like a lot of work, but I guess that's why the business is now where it's at. And so when will that be launching? I'm assuming you've already used it for your e-commerce businesses, but when does that become available to the wider public? And then the next question is more around attribution, which I'll save that for the next question.

Carla Penn-Kahn: 32:50

That's always a juicy one. So, in terms of the product that we built, we ran using the product for a couple of months and then we showed it to some other e-commerce founders and CFOs and they were like, when can we get access to the product? And that's when we realized it was time to focus full time on Profit Peak and the internal software that we built and actually bringing that to market to help other e-commerce businesses become profitable. And what we decided in November was let's just get a few customers into beta, let them play, let them give us feedback, and we've been doing that for the past couple of months and just really collecting a lot of insights and understanding what moves the needle for different e-commerce businesses, because what moves the needle for a baby business is very different to what moves the needle for a fashion business and, again, it's very different to what moves the needle for our kitchenware business.

Carla Penn-Kahn: 33:38

So we're doing a lot of learning at the moment and iterating on the product and we plan to be an open, plug and play product by May. So that is the goal. We are bringing in more waitlisted customers at the moment. So feel free to reach out. If you're operating on Magentua Shopify, we're ready to plug and play. You can use it for 30 days for free and we'd love your feedback and we'd love to know if we can actually help you build a more profitable business.

Ryan Martin: 34:04

Yeah, fantastic, it sounds like a bit of a no brainer. Give it a try and see if it can help, you know, give you a much better line of sight across all those different cost centers, and if you like the way that rolls out, then you can continue on. Is it then go to like a monthly? Is it a typical sort of SaaS model in terms of going to a monthly ongoing fees and an annual fee? What's the sort of pricing structure?

Carla Penn-Kahn: 34:28

Yes, so it's price based on number of orders. I know, as an e-commerce founder, I hate products. Pay price based on revenue. I do not want to be constantly forking out more money to use the same product and see the same value. So we really want customers to see increased value way more than they increase in price with us. So the product will start at $399 a month and that will give them full clarity over their business in real time. Plus, it will provide them with attribution all the way down onto that product infantry level and that's what makes us really unique in the market and it will also enable you to understand what levers you need to pull in order to be profitable and, equally, you can find levers to drive more revenue. It really depends on the goal of the business.

Ryan Martin: 35:15

Yeah, that sounds outstanding. That'd be. I can see that this getting a lot of uptake quite quickly. When we talk about attribution, how does your software kind of keep that attribution going over the different cost centers? And I was on the website earlier and I think there's a dashboard for influencer marketing and a few different channels there. With privacy updates going on all the time and the removal of cookies and all these sort of privacy I guess laws coming into effect, how will ProfitPee continue to be able to show the correct attribution?

Carla Penn-Kahn: 35:53

So it all comes down to server side tracking. If you have server side tracking deployed, you can actually collect the data that you need for your business. What I also think is really important is that businesses and we needed an independent source of truth so you can get server side tracking into GA4. However, that server side tracking still has GA4's own version of conversion overlayed, so there really is no independent source of truth and, at the end of the day, we often forget that Google is there to drive its own revenue, so while it is driving revenue for e-commerce businesses, they also have to drive their own revenue. So it's really important to get an independent voice, an independent source of truth into your data and by owning your own first party data, you also unlock incredible insights into your business across so many other facets, whether it be inventory, whether it be customers, whether it be segmentation, whether it be advertising on other channels and really leveraging that knowledge to drive results for your business.

Ryan Martin: 36:54

Perfect, that sounds incredible. Yeah, good luck with ProfitPee, thank you. Yeah, I'm looking forward to following the journey. It's all happening pretty quick then, if you're going to be live by May.

Carla Penn-Kahn: 37:05

Yes, hopefully. I think so far, we're seeing our brands on board, are seeing great results. We have businesses both in Australia and Southeast Asia using the platform now and what we love is that they're saying, finally they've taken a deep breath and they've been able to exhale, because they actually know what's going on in their business and they don't feel like they're flying blind. And I know how I felt when we first built the platform. It was a bit like putting on my glasses for the first time and going, wow, I can actually see what is happening. I'm not waiting 24, 48 hours for data to action. I can actually action right now.

Ryan Martin: 37:42

Yeah, and I think anything that gives business owners a dashboard and just clear data in terms of helping them make decisions. I think we're almost at this stage where we're getting so much data from so many different sources. As you said, it's hard to actually pinpoint the single point of truth or what is the most likely truth with some of those attribution programs. So to understand that is really good. And then, if we go back to one of those earlier points around exiting your business, using a product like Profit Peak will really help when they're wanting to exit the business and understand what's happening and give the potential buyer a greater level of detail and clarity on the business as well.

Carla Penn-Kahn: 38:24

Absolutely, and we see Profit Peak. We actually have one customer at the moment who's said their main reason for using Profit Peak for the next six months is because they want to get to an optimal exit, and one of the things that they said to us is they can see already that they could just give login access to a future acquirer and they could do. 95% of the businesses do diligence using Profit Peak because they have all the two-year historical data in there. They have everything they need to understand customer acquisition, customer retention, inventory, health, profit and loss statement. Everything is there that they don't even have to open up millions of different systems to get answers and do high-level DD.

Ryan Martin: 39:02

Fantastic. Well, it sounds very exciting, so congratulations on getting to even to the beta level and looking forward to watching it roll out. Really appreciate your time and your insights here around people scaling their e-commerce businesses, understanding that economics is the key to being profitable and having a successful e-commerce business. And the other thing was really building that community and taking a lot of, I guess, old-fashioned or business methods that have worked 100 years and ensuring that you still apply them to your e-commerce business for success as well.

Carla Penn-Kahn: 39:38

Absolutely. Couldn't agree more.

Ryan Martin: 39:40

Thank you and I look forward to following the Profit Peak journey throughout the year.

Carla Penn-Kahn: 39:45

Thank, you Thanks for having me.

Ryan Martin: 39:47

No worries.