Josh Wood from Ozbo – Podcast Transcript

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Shaun Ryan: [0:14] Hi, I’m Shaun Ryan from SLI Systems, and this is the E-Commerce Podcast. Today, I’m talking to Josh Wood, co-founder and VP of Operations at Ozbo. Welcome, Josh.

Josh Wood: [0:24] Hi. Thanks for having me.

Shaun: [0:25] Yeah, well thanks very much for coming along. Now, traditional question to get us started here. What was the first thing you ever bought online?

Josh: [0:30] I actually did my homework on this. I, I’ve been listening to your podcast for a while, so, I bought a book about Santa Claus in 1998 from Amazon.com.

Shaun: [0:40] A book about Santa Claus. Wow.

Josh: [0:44] Yeah, it was actually my, my favorite book growing up. It was out of print, and Amazon had a copy, so I, I bought one for my, my grandmother actually.

Shaun: [0:52] Wonderful. So how about your most recent purchase. What was that?

Josh: [0:57] Just today, I bought some strut inserts for a 1984 Toyota Supra that I’m restoring in my free time, if, if I ever get free time. It’s something that I’m enjoying working on, so…

Shaun: [1:13]Excellent. Where did you buy that from?

Josh: [1:15] Jcwhitney.com

Shaun: [1:16] JC Whitney, okay, great. And how was the buying experience?

Josh: [1:20] Fine. The, the hardest thing about buying parts for, for this car are, most of the ones in the United States have rusted away. It’s, it’s fairly rare. I think there’s less than 5000 of them left in the country, and so finding actual parts that’ll fit is a challenge.

Shaun: [1:38] Yeah. So that’s more about finding them anywhere on the internet rather than just on that particular site.

Josh: [1:44] Right. Yeah, it works out that a lot of places that sell auto parts actually are all drop-shipping from the same warehouses.

Shaun: [1:53] Yep.

Josh: [1:55] And so they’ll tell you that it’s in stock, and then you order it, and then two weeks later you find out that no, it’s not in stock and it’s no longer being made. So this was my fourth or fifth attempt at ordering this part, different versions of it. And they sent me a notification that its shipped, so…

Shaun: [2:11] Woo hoo. [laughter]

Josh: [2:12] I have high hopes that it will actually show up this time.

Shaun: [2:15] That’s disappointing though to be told that it’s in stock and you don’t get it.

Josh: [2:19] Yeah, yeah it is.

Shaun: [2:22] So Josh, could you give me a little bit of a background on yourself and Ozbo what’s your story?

Josh: [2:28] Sure. So, myself, I started in ecommerce development as an offshoot from web development, which I did because I was into creating 3D models in virtual reality. So I started that in about 1994. I started website development just as a way to show a portfolio of my own stuff I was doing in virtual reality. And then I went to work for a firm that is an architecture firm doing visualizations of their buildings and stuff like that. And then that evolved in a career of just web development and then around 1996 or so I really focused on ecommerce web development. I did that for about ten years or so as a consultant for people working for a consulting firm. And I got really burnt out on the whole idea of the amount of money I could make was directly tied to the number of billable hours in a week.

Shaun: [3:32] Yep.

Josh: [3:34] And then I looked to go and work for a company where if I was helping them sell something I could actually benefit directly from my ecommerce experience. I went to work for a manufacturing company. And then met the owner there. And the two of us co-founded then Ozbo.com about four years ago.

Shaun: [3:52] Excellent and I do want to find out more about Ozbo.com obviously. But tell me about your virtual reality stuff. What were you doing back then? That sounds interesting.

Josh: [4:02] Well I was going to school for architecture at the time and … so it was … I, I’m horrible at drawing by hand. And I had a bunch of ideas that I wanted to express, but didn’t have the technical expertise as far as hand drawing and illustration to actually get them out. So I turned to 3D modeling very, very early on, this is probably the year Toy Story coming out and all that kind of stuff. And so I started doing virtual reality using VRML, which was the Virtual Reality Mark Up Language, came out, like, with HTML 1.2 or something like that. Sun Microsystems actually linked to my blog cause I was one of, like, ten people [laughter] who can actually do viewing with, with their tools. And on a lark, I saw that one of the other links was this architecture firm so I reached out to them and said, “Hey, I, sort of do the same sort of things you guys do” and I had … I was employed there within a week. So I left college and just went straight to work on visualization. And we did, like, visualization of the city of Philadelphia and virtual reality. We had a huge room where you, you could have goggles, and could actually explore the city, and, and, you know, sensors on your gloves and all, all kinds of stuff. It was pretty cool technology for the time.

Shaun: [5:28] Cool, I bet. It does sound cool. Anyway we, we should get back to e-commerce since this is the e-commerce podcast, but that’s, that, I mean it, I love that sort of stuff. So tell me about Ozbo. So what was the … what was the driver behind Ozbo? Whats special about you guys …what do you do?

Josh: [5: 45] Well there’s, there’s a couple of things that, that are pretty special with us. We, we know that we have experience selling things, the experience in developing e-commerce sites. My, my partner has an experience in marketing and sales.

Shaun: [6:00] Yeah.

Josh: [6:02] And we looked at how well the sales were going for, for the company I was working for at the time. You know, I took their sales from, lets say, a quarter of a million dollars to over a million dollars in six months or so. And that was with maybe 20 SKUs. And I said, just a imagine if we had 20,000 SKUs. You know, now it’s 200,000. So we, we looked at areas where we thought that there was some room to grow, and we could create an e-commerce site that people would like, and people would want to purchase from.

Shaun: [6:40] Yep.

Josh: [6:43] And we started off in the pet supply and lawn and garden arena. And we’ve been growing out to groceries, and hunting and fishing, and sporting goods, and teacher’s supplies. Basically, what we want to do is, we want to find consumable products that people are using everyday, and we want to give them a fantastic experience. Because we know if you buy dog treats today, and you know, they come to your house really quickly, and you paid a great price, and, and every point of the process you had a great experience. More than likely than not, you’ll, you’ll come back and purchase from us again. So, we’re not involved in any sort of electronics or apparel. We just look at stuff that people use in their home, or, or outdoors, and they use all the time, and, and they love. And we’re constantly looking to expand our selection, and give better and better pricing, and better, better experiences to people.

Shaun: [7:42] Interesting. So, and the, I mean the nice thing about consumables like that is that they do keep coming back. So, if you can get happy customers, and they continue using you, you’ve got a really nice model for building recurring revenue, basically from each of your customers, right?

Josh: [7:59] Right, and – and one thing that we both feel really strongly about is the whole idea of actually being able to reach out and talk to someone. So, on every page of our site we post our 800 number. We’re still a fairly small company – there’s, you know, 20 employees or so, so it’s not 24/7 phone support, but, you know, it’s from 9:00 a.m. to 5:00 p.m., Monday through Saturday and we’re constantly looking at expanding that to – to give, you know, people the opportunity to talk to us, you know, at greater and greater hours, but when they actually call they’re – they’re talking to someone who actually works for Ozbo, they work in our offices which are attached to our warehouse, and it’s not a call center. The people that answer the phone are people that can actually help you, and if the warehouse says there’s one in stock they can actually get up from their chair, go out, and make sure that it’s there and – and get it shipped out, so…

Shaun: [9:01] Right. So, it – it just enables you to provide a different level of service than some of those much bigger operations.

Josh: [9:07] Correct.

Shaun: [9:09] And – and, so how many – how many products do – do you currently stock?

Josh: [9:13] Currently we sell just shy of 200,000 products…

Shaun: [9:17] Wow.

Josh: [9:18] and some of those items are located within our warehouse, and some of them are located within our partners’ warehouses, but every single order that goes out goes out from our warehouse. So, even if it’s something that we’re not stocking or we’re temporarily out of stock on, we will have it into our warehouse within 24 hours and it’ll go out the same day it arrives in. So, we turn everything around. We don’t do any drop shipping, and more often than not, you know, we’ll have six or seven suppliers for one customer’s order.

Shaun: [9:54] Okay. Interesting. So what year did you start the company?

Josh: [9:58] We started in 2008.

Shaun: [10:01] 2008, right. And so, how’s your growth been going, you know, since you started?

Josh: [10:08] It’s, it’s been phenomenal. So, 2008 we started, and, and really it was September of 2008, so we caught a little bit of the fourth quarter. And from that time, we started out in a three thousand square foot warehouse grew to sixty-five hundred square feet. Now we’re in seventy thousand. In, by year three, we made the Internet Retailer’s second “Five Hundred” list. We came in at 501, just missing the, the main IR list. And now this year, in under 4 years, we are now 451. And we are growing multiple channels, as well as our own site. And we’ve grown, you know, double and triple-digit growth, depending on the channel.

Shaun: [10:55] Wow, congratulations. That’s a great story. So, so 200,000 products. That’s a lot of products. So, what are the challenges you have running a store with that many products with, you know, such a small company?

Josh: [11:10] So, so our biggest challenge is if it’s an item that we’re not…like we don’t actively have in our warehouse and we’re partnered with a distributor that we rely on to provide that item, when they tell us they have it and then we try to get it, and they tell us now they don’t have it, that is by far our biggest challenge. It’s something that we’re working on, on a daily basis. We’re filling our warehouse right now with the items that are most likely to sell. We look at all our sales data and forecasts and stuff like that. And look at, okay, what historically have we been out of stock on? What do we have the highest number of orders for? How can we make sure that every customer is a happy customer. And, and, you know, that’s, that’s what we’re doing right now. That’s, that’s the biggest challenge is we would love to have all 200,000 items in stock and in our warehouse every day.

Shaun: [12:10] Yeah.

Josh: [12:11] And it’s just a matter of growing to allow that to happen. We’re, we’re self-financed, and, and we’re growing based on cash flow and investments from, from my partner. So without the luxury of having millions and millions of VC money that we can go out and just get everything we need all at once, we have to grow smart and, and grow conservatively enough that we keep everyone happy as far as our customers because we know that they can go anywhere.

Shaun: [12:46] Yep.

Josh: [12:47] And we want them to come here.

Shaun: [12:49] Yeah, and it’s kind of interesting, when you don’t have the millions of VC money, it means you pay a lot of attention to exactly … I, I’d argue more attention to how you spend the money that you do have. And I, I think, as a result, you may end up spending it a lot more wisely.

Josh: [13:07] You’re probably correct, but it also, right now, is significantly getting our growth.

Shaun: [13:14] Yeah.

Josh: [13:15] We have a bunch of projects that we would love to turn on all at once, and instead we have to do one …

Shaun: [13:20] Yeah.

Josh: [13:22] wait to recap our money [laughter] and do, do the next. But, but we’ve, we’ve found some great partners from a technology standpoint. We actually use SLI for our search and have used it for three years and, and absolutely love it. So we’re, we’re finding some, some really great partners, and we’re finding some that weren’t so great, but they’re no longer with us.

Shaun: [13:44] [laughter] I’m pleased to hear you’re happy with SLI. So, so what other partners are you working with that are, are working out well?

Josh: [13:52] So, so we’ve had phenomenal success with MyBuys for personalization that just started in the spring of this year and has really helped our website improve quite a bit. With having 200,000 products, we have no idea an individual customer what they’re most likely to buy when they come into our site…I mean it could be anything from a dog bone to a cleaning kit for a hunting rifle or you know a rubber gas grill.

Shaun: [14:24] Yep

Josh: [14:26] So, their personalization and their profiles that they have really help us with that, also because we sell at multiple market places. We look at our sales there across the board and we’re able to see…okay well..well here’s something that sales really well at buy.com and we haven’t really sold any of it over at Ozbo…you know, why is that? Let’s look at you know this product on our own site…why are we not getting the traffic? Why are we not recommending this?

Shaun: [14:56] Yep

Josh: [14:57] and then we can feed that data to both MyBuys on the personalization front but we also feed it to SLI so that your learning search learns not just what’s going on at our website but all of the sales that happens across all of the channels.

Shaun: [15:14] Excellent

Josh: [15:15] That’s really worked out well. We’ve also just recently signed up with 500 Friends for doing loyalties and rewards points. We feel pretty strongly that it’s going to be something that separates us from other places where you can go and purchase and even other market places. And we’re rewarding people with points just for signing up and every box that goes out lets them know that “hey, you just placed your first order with us, here’s 500 points, come back to Ozbo.com and redeem them”. They redeem them…they find out instantly that hey this 500 points that’s good for free shipping on the next order and they’re already there anyway, so why don’t you start buying?

Shaun: [16:04] Right.

Josh: [16:05] We’re still in the fairly early stages, we’ve only launched about a month ago. But we’re seeing some positive results from that, so that’s pretty exciting.

Shaun: [16:14] Excellent. So what else, you know, what’s coming up for you? What are you working on over the next, sort of, 6 to 12 months?

Josh: [16:21] Biggest thing is improving our online site, as far as product descriptions and images. It’s a real struggle with a catalog the size of ours, and so few people that actually work on our website. We look at a lot of data automization and optimization, constantly trying to fare it out, better information from our distributor partners, from manufacturers, because we know that it’s a huge barrier right now to purchasing on our site. Our descriptions and pictures aren’t nearly what they could be to effectively sell. So, that’s the biggest project, and one that’s ongoing and even if you only spend five minutes per item, making it better, it’s still a million minutes worth of time before you’ve updated the entire catalog and have to start over again.

Shaun: [17:21] So, it’s a big challenge, eh? How’re you gonna to do that? Are you looking at automated ways, or are you looking at automated ways of determining what you should be focusing on?

Josh: [17:29] Well, we’re looking at automatic ways. There’s some pretty cool technology out there. Unfortunately, a lot of it is very expensive. And in the grand scheme of things, it’s not very expensive, but it’s very expensive for a small company.

Shaun: [17:44] Yep.

Josh: [17:47] So, we still have it on our want list, and as soon as we can afford it, we’re gonna buy it. In the meantime, we’re certainly looking at the signals from all of the places that we get orders from and we compare. If we find out that in orders coming in from buy.com for a certain item all the time and we never sell it on Ozbo and they’re the same price and we can look at what that description and what that picture looks like on buy.com. We can look at where ours doesn’t look nearly as good and we just prioritize based on sales velocity and say, “okay, this week we are gonna work on these 30 products.” And that’s actually more than 30, but you get the point. And we will contact the manufacturer and get updated pictures. Start writing our own copy so that we’re not affected so much by the panda update. Which really hates the whole idea of duplicate copy. And we’re just working and working and working away. And it never seems like it is going to end.

Shaun: [18:58] No, with that, 200,000 products. I imagine you’re expanding your product like as well, right?

Josh: [19:03] Yeah, yeah at the beginning of this year it was only 100,000 products that we needed to update. [laughter] We’ve doubled our product catalog in about seven months.

Shaun: [19:16] Yeah, so that problem’s growing exponentially by the sounds of it.

Josh: [19:20] Yes it is. [laughter]

Shaun: [19:23] Interesting problem. And so with the Google Panda update, did you see a hit to your site when that came through?

Josh: [19:30] We didn’t. I’m always a big believer in just go full white hat. Lets not even try anything tricky. We’ve seen what not playing by the rules can do to much larger companies than us. Last December JC Penney was penalized because suddenly they were the most relevant site in the world for black cocktail dress and a whole bunch of other things through link building. We’ve seen Overstock penalized for trying to do link exchanges with .EDUs

Shaun: [20:05] Yup.

Josh: [20:08] And when they get slapped down, you see what it does for sales and how much it affects them. But their punishment is somewhat temporary, they come up, you know, 3 or 4 months later when Google lifts off the penalties and you know, they are back in an even playing field. You know as a small company, we don’t have that luxury, you know, if we’re doing black hat or even grey hat stuff and we get caught, chances are, it could be years for us to be fixed. So, when updates like panda come out and other Google updates, we tend to see our rankings actually improve and our competitors drop down.

Shaun: [20:48] Great.

Josh: [20:49] The fact that we’re writing our own content, you know, and have been all along, only helps that.

Shaun: [20:57] Yeah, interesting. You know I think its a good philosophy to try and be as white hat as possible. I think, some of those other techniques, its only going to give you a temporary gain until Google gets on top of it, if they work and you risk so much.

Josh: [21:10] Exactly.

Shaun: [21:12] So I think time is about up here. This is a fascinating story from virtual reality to a fast growing E-commerce business. I admire your entrepreneurship and, and I wanna thank you very much for sharing your story with us today.

Josh: [21:31] Oh, it’s my pleasure and I’m actually going to be doing a talk at Shop.org, in a little less than a month about using search to improve your site and how you can increase conversion and all kinds of great things that you can do with search. So, if any of your listeners are going to be at Shop.org, I encourage them to stop in for the talk. It’s, it’s the Big Idea Expo, September 11th, I think I’m from like, 1:15 to 1:45 or so.

Shaun: [22:04] Excellent, good luck with that presentation and thank you again for your time today. That was very interesting. So, that was Josh Wood, Co-founder and Vice President of Operations at Ozbo and I’m sure Shaun Ryan at SLI Systems and that was the E-commerce Podcast.