Sascha Deri from Alternative Energy Store – Podcast Transcript

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Shaun Ryan:  [0:02] Hi, I’m Shaun Ryan from SLI Systems and this is the Ecommerce Podcast. Today, I’m talking to Sascha Deri, co‑founder of Alt E Store. Welcome, Sascha.

Sascha:  [0:13] Well, thank you for inviting me. I appreciate it.

Shaun:  [0:14] Yeah, and it’s great to have you here. Now, traditional starting question: What was the first thing you ever bought online?

Sascha:  [0:21] I was wondering about that. I think the first thing I bought online, as mundane as it sounds, is I think I really needed to buy a book from Amazon back in the late 90’s. That’s one of the first things I bought online.

Shaun:  [0:34] Can you remember what it was?

Sascha:  [0:37] Oh, Lord, no. I definitely can’t. I wish I could.

Shaun:  [0:42] So, what was the most recent thing you bought?

Sascha:  [0:46] There’s sort of a nice circle in that. I think the most recent thing I bought was an electronic book on Amazon.com. They have something called “Amazon Kindle” where you can download books electronically. Ironically, the latest book I bought was a business book called “Inspire: How to Inspire Customers”. I bought that electronically and downloaded it to my Amazon Kindle.

Shaun:  [1:11] It’s a wonderful thing, isn’t it? The Kindle.

Sascha:  [1:13] Oh, it’s really handy. Great for long trips and airports.

Shaun:  [1:17] Yeah. Well, I don’t have one. But, I use it on my iPhone. They don’t sell them in New Zealand yet. But, it’s fantastic.

Sascha:  [1:26] You can actually use it in New Zealand. Yeah, you can download it to your computer and then download it to your Amazon Kindle.

Shaun:  [1:34] Yeah, yeah. I’ve got a couple of friends that do that. But, it’s just not quite as seamless as when you can do it all wirelessly. But, it’s wonderful. I take it the buying experience from Amazon for the book was fairly seamless and easy?

Sascha:  [1:53] Yeah, they make it extraordinarily easy, especially if you do it on the wireless. You just, literally, type in the search for your book, and you click “buy” and within a minute or two, you have a book on your Kindle.

Shaun:  [2:03] Yeah, wonderful, isn’t it?

Sascha:  [2:04] It can’t get better than that, yeah.

Shaun:  [2:06] So, Sascha, can you give me some background about yourself? How did you get to be where you are today?

Sascha:  [2:11] Sure. My academic training, I’m an engineer and a physics major; electrical engineering and physics. I’ve always been interested in ways in which technology can be used to benefit humanity and benefit the world. [2:31] After a stint in the telecom industry for several years, which never felt quite fulfilling, two of the partners and I started up this company. We saw it as a great fit for how we can combine our geeky know‑how. We had already done an online business before in telecom doing voicer IP. I guess we were too early because it wasn’t successful.

[2:59] We learned a lot from that business and I thought this was an excellent opportunity for us to do something which I always had a passion for, renewable energy, and provide the products and the education at a much lower cost, but a strong value to our customers anywhere in the world.

[3:18] Well, the problem that we confronted was one of people had a lot of misconceptions of what renewable energy can or can’t do or how well it works. A lot of those misconceptions have now melted over time as we see more and more people doing it.

[3:34] But, the big hurdles for doing renewable energy, for most people, were one was education and one of price. We think we’ve really helped on all levels. We developed a model in which we could offer the products at a lower price than most of our competition and be profitable ourselves.

[3:51] And, it always was a priority to educate our customers. We provide as much free education and knowledge up front on our website as possible and anybody can access it anywhere.

[4:01] So, we basically followed that model, and really found and really followed it within the last ten years. We started up in 1999 and have grown tremendously every year. This has probably been the toughest year of all of them and we seem to be doing just fine.

Shaun:  [4:18] Yeah, that’s great. You’re definitely in a hot business and the fact that you went into in ’99 shows you’re well ahead of the curve and that’s commendable. It’s amazing to have that sort of foresight. So, tell me, what are the top sellers on Alt E Store? What are the main things people are buying? Electric Solar Kits? Or, what are they?

Sascha:  [4:45] The top things are certainly, in some ways, the most expensive things which are the solar electric panels or “PV”, as we like to call the PV modules, the solar electric modules which produce electricity from the sun, of course. We sell more of those than anything. [5:03] And then after that are the different components that support a whole system that usually is used for a home. We have a fair amount of customers that use it for projects. It might be they’re powering a WiFi set up that they have too away from the A/C lines. So, they want to power it. Or, it could be a project, or it could be part of a larger product.

[5:26] We have customers who make buoys and every time a hurricane comes through, it wipes out the buoys. These are buoys where the lights and electronics are powered by the solar panel. Every once in a while, a hurricane comes through and wipes out the buoys and they need more panels from us.

[5:46] So, we have customers of all types. Predominantly, they’re residential on our retail side of things. We are now selling wholesale to installers in the US. Basically that’s the PV.

Shaun:  [5:59] Excellent. And to be clear, you are a purely online store? You don’t have any physical stores?

Sascha:  [6:06] That’s right. We have no physical storefront, although we have three physical offices.

Shaun:  [6:11] Yep. And so, why do have the three offices? Is one a distribution center?

Sascha:  [6:17] Actually, our distribution center, our warehouse, is located in a fourth location close to our headquarters. Our headquarters is located in Massachusetts. We have an office in Costa Rica where I’m actually talking to you from right now, and one in Columbus, Ohio. [6:37] There has certainly been benefits to being in two different locations. So really, the strongest reason has been there’s three different owners in the business and we’ve formed offices around each of the three locations.

[6:51] Since we formed the company we’ve always had a distributed model where we can work from anywhere. In fact, we originally started where everybody was working their homes and what we found is that what we really needed to, in fact, have offices because people working in a centre together, we found that they were more productive, they enjoyed the company, their communications.

[7:12] Though we live in an electronic age, we found that communications seem to be more fluid, of course, when you have somebody sitting right next to you, or a few footsteps away. So, we actually went and started forming an office, or several offices, instead of the original model which was to work distributed.

Shaun:  [7:28] Yep. I can see exactly how that’s evolved. That’s really interesting, actually. Well, there’s a few things I could ask about that. But, I want to get back onto the business. You mentioned that you spend a lot of time educating customers. How do you do that? Do you have articles? Do you have video? Is there a forum? How does that education happen?

Sascha:  [7:54] Sure. You named most of them. But, we started off with just articles. We would write articles, we would ask industry experts to write articles to write articles for us. [8:06] We have grown and blossomed to the point where the education part of our business is now a formal division of our company called the “The Alt E U”. We actually now got to the point where we’re providing accredited training for professional installers, or even VI wirers who really want to do it right, which really was a big thing for us.

[8:27] So, we want to encourage the do‑it‑yourselfers, if you’re going to go ahead and install stuff, to please do it safely and successfully. We want to really maximize their experience and we think education is a big part of that. If they can do it successfully, they’ll tell their friends about it and say, “Hey, check out what I did and these guys helped out.”

[8:43] So, we provide, we continue to write more articles. It’s in our “learn” section of our website. There’s tons of “how to” articles and now, there’s articles about how to do the installation. There’s articles about how to size systems, dimension systems, and miss and facts behind renewable energy.

[9:01] We now provide webinars, which are entry level webinars on all the different technology. We support wind, solar air heating, solar water hearing, solar electric systems and just general real energy basics. We now provide those webinars for free online. We used to charge $15 per course. They’re now free for anybody to view anywhere.

[9:25] We also see on our website that we have a number of educational videos, which are little video clips of how does this work? How do these connectors work? Or, how do you measure if your solar panel is really working or not working? And those are things that we constantly work on and are adding as time goes on. We’re trying to use multiple media formats to educate folks.

Shaun:  [9:47] It’s a growing trend I’m definitely seeing across the retailers I talked to where there’s more use of video and more use of building a community around whatever it is they’re selling and yours is a perfect example of that. [10:05] I imagine, again, very passionate about it and there’s also plenty of opportunity to build a business around whatever it is that you’re selling for the installers, for example.

Sascha:  [10:14] Exactly, yeah. And for us, it was a new venture to go into live classes. So, in our headquarters and also in the Ohio office, we’ve offered live classes and that’s part of our professional series of classes. It is certainly part of the business cycle, the life cycle of a customer. [10:36] The first part of it is the educational bit and we really want to support them. What we found is that as much as we provided free articles and so much information for free or very inexpensive, ultimately a lot of people really want to get their hands‑on experience and training that a live class would provide them. So, we started doing that.

Shaun:  [10:52] Right. And I presume you charge for those live classes, right?

Sascha:  [10:56] Oh, yes. Yes, we have to charge for those unfortunately.

Shaun:  [11:00] But, all the rest of the content on the site is free?

Sascha:  [11:04] Yes, that’s right.

Shaun:  [11:06] Fantastic. So, can you share with us, what size is this business? How much do you do online per month?

Sascha:  [11:16] How much of our business is online?

Shaun:  [11:17] Well, no. I understand you’re 100% online. But, how much do you actually sell per month? What are your revenues?

Sascha:  [11:26] Oh. Well, I’d say it’s over $10 million.

Shaun:  [11:29] Fantastic.

Sascha:  [11:33] And about 50% of that comes from online and 50% of it comes from folks calling us over the phones.

Shaun:  [11:40] So, the phones are a big part of your business. So, do you have a catalog as well?

Sascha:  [11:46] Yes, we do. We just had a new one come out that we’re very proud of, that we think does a better job than ever. Starting from perspective, what is the type of system? What will be in it? Diagrams it in a very much more intuitive way as opposed to just being a straight catalog of products and prices. [12:02] It really tries to teach the person, demonstrate to them, how would you put together a system, and what would it be made up of and how do those different things work? So, we’re very proud of our latest and greatest physical catalog.

Shaun:  [12:14] Yeah, I want to see one now. So, the educational process that you have on this website is flowing through to your catalog. That’s great to see. So, how do you attract new customers to your site? How do you grow your business?

Sascha:  [12:32] Sure. To some extent, we very productively spend money on our current customers informing them through things like the catalogs, and that doesn’t grow our customer base as much. But, it certainly reinforces the revenue stream. [12:52] The major ways in which we attract people to our customer is with online advertising. It’s predominately Google but, to some extent, Yahoo! And MSN. We do an affiliate’s program. We also do some trade magazine advertising in our industry.

[13:17] We certainly found that print advertising has a much poorer ROI than online advertising. I know a lot of people in the advertising world who would be really mad at me right now for saying that out loud. But, it’s true and you can track it much more easily.

[13:32] And I think that’s one of the benefits of an online business is you can track your ROI. So, you can snip things that don’t work quickly and turn up things that do work quickly, whereas that’s really hard to do with the prints advertising world.

Shaun:  [13:45] Yeah, you just don’t have that trace ability. So, what are you working on in your website? What are the opportunities you have coming up? What are the new things that are coming up?

Sascha:  [14:02] Sure. Well, the big thing we’re trying to do is we’re really trying to look at the whole customer life cycle when they choose to go with renewable energy. Everything from learning, to installing, to having installed it and sharing their new found knowledge with other folks out there. [14:18] And you’ll see in our website, the tabs along the top are growing slowly into every step that we see in the customer process. So, we want to try to service the customer all along the process of being just generally interested in renewable energy, to learning, to making a purchasing decision, to installing, to troubleshooting and then ultimately to sharing it with a community of other folks in the industry, or the folks that are just interested in this in general.

[14:47] So, we’re working on a number of projects to try to streamline that. There’s some gaps there that we think we can strengthen and try to make the customer’s experience simpler. And that’s really one of our focuses, is how to make renewable energy easier for our customer base and, again, it comes back down to education, simplifying things.

[15:06] I’m an engineer by training, but I was once a product manager in the telecom industry. Part of my job was to go between engineers and the customer. The customer often knew far less than the engineers did and sometimes the engineers had a hard time understanding the customers.

[15:25] So, my whole thing was to translate between the very technical to the usable features, or usable functions of a product. That same thought process comes into what we do in renewable energy is there’s a lot of geeky, and nerdy and over engineered things that can really confuse people.

[15:44] Our target, our goal, is to simplify it. Not to make it so that people are installing or putting together that are dangerous or wrong, but to smooth out the technical jargon, and make it easier for people to correctly size a system from the get go and also not to make any mistakes that are possible when you go to install a system.

[16:08] Sometimes mistakes could be expensive, sometimes they could be dangerous, and sometimes it just can be a big old waste of time and lead to people feeling frustrated: “Renewable energy doesn’t work.” Well, they installed a solar panel underneath a tree. So, we need to make sure they don’t do that.

Shaun:  [16:26] This is great. So, one particularly interesting part you mentioned is encouraging your customers to share their experiences with their friends. How are you going about encouraging that?

Sascha:  [16:40] Well, a big part of that is the forum on our website where a lot of people interact, and share and debate how things should be done or not done. So, that’s a big part of it for us. [16:52] Another part is the reviews. We’ve got, I think, close to 1, 000 reviews now on our products, which for a small company like our own is significant. But, people are sharing real experiences, bad and good, about how the products work, and how it works for them and what things they encountered that were issues.

Shaun:  [17:18] I was just going to ask you because I’m also interested in seeing what technologies you’re using on your website. Did you develop the review technology yourself, or did you use a third party for that?

Sascha:  [17:32] That’s a good question. Our IT guys are the ones that put it together and I’m not sure how they put it together, or if they used a module. My belief is that they ended up putting that in there themselves.

Shaun:  [17:43] No, that’s great. So, do you know, what are the biggest headaches you have in terms of running your website? What are the problems you have that you’re trying to solve at the moment?

Sascha:  [18:01] Oh, man. There’s a lot. I think the biggest one is the function over form. As far as the biggest challenge, there’s a constant battle of optimizing our websites for search engines and making them attractive so they really understand what they sell, and that’s been an uphill battle for us. [18:26] We have, I would say, put more energy in designing our website to be useful to our customer over trying to attract search engines in a certain way. We do both. But, it’s a constant balance.

[18:46] Do we put our energy into servicing our customers better? Or, trying to trying to attract customers in the first place? And you have to do both. So, that’s probably the biggest challenge.

[18:55] The other part is understanding what works and what doesn’t work. I think one of the things that we’re just beginning to take advantage of, which we could take more advantage is AV testing. Testing out one page, versus another page, versus tweaking it here. Does this communicate to customers? Because the customers are spread across the globe, literally, it’s hard to interview them and say, “What works best?”

[19:18] And that AV testing is a wonderful way to quickly get feedback. “Well, if we do this type of page and change this, how do people react to that? Do they click off the page or do they come back?”

Shaun:  [19:27] Yeah, it’s a fantastic way of fine tuning a website. And you touched on the fact that you have customers across the globe. Obviously, people with different cultures are going to react to different things. Do you just have the one website, or do you have different versions of the website for different countries?

Sascha:  [19:46] We have, essentially, the one website with a slightly tuned Spanish version, which if you come to us from another country that speaks Spanish, we present with you with a slightly varied version, different version of our website. But, it’s essentially one website. [20:05] And the reason for that is that 90% of our business is in the United States and about 95% of our business is probably United States and Canada, which all pretty well speak English.

[20:18] So, it hasn’t been something that we needed to really worry about. It’s certainly been a temptation to open up into Europe. But, the way the manufacturers work with us, many won’t allow us to sell to Europe.

Shaun:  [20:33] Yeah, I understand.

Sascha:  [20:34] We have to keep our hands off.

Shaun:  [20:36] But, you do ship into other countries overseas?

Sascha:  [20:39] Yes. We’ve actually shipped to every continent including Antarctica.

Shaun:  [20:41] Fantastic.

Sascha:  [20:45] So, we’re very fortunate.

Shaun:  [20:47] So, it sounds like you have a fantastic business. You said that this year’s been one of your hardest. Do you see that things are improving for you?

Sascha:  [21:01] If you had asked me that two months ago, I would’ve said, “No. I want things to get better [inaudible 00:21:05] .” But, about two months ago, oddly enough, some things have changed and I hate to say it out loud. I’m afraid I’m going to jinx things. But, things seem to be turning around and I hope that’s the economy that’s turning around because it feels like it. [21:21] So, since November of last year up to probably about June and maybe part of July, things were rocky. Things were tough. We saw a small shrinkage of our business and we’re used to anywhere from 10‑70% growth rates on our annual basis.

[21:39] So, we were fortunate. I think we only suffered a very small percentage decrease in sales so far this year to date versus last year. I’ve heard, certainly, other companies, other industries suffered very severe shrinkages. So, we’ve been fortunate on our part. And I can say that it does seem things have picked up. I don’t know how long it’s going to last. But, I hope it does.

Shaun:  [22:03] Yeah, that’s definitely what we’ve seen too, particularly over the last two or three months.

Sascha:  [22:09] Interesting.

Shaun:  [22:09] Yeah. You’ve been in this for a long time, ten years, which must make you an early adopter or visionary in this industry. Have you seen the rise of a lot of competition?

Sascha:  [22:30] Yes, we do. We have. When Yahoo! Stores became a possibility for people, we saw tons of competition just roll out using the Yahoo! Storefront. When we came on board, Yahoo! Store really didn’t exist and we had to use our own merchant engine. We had a lot of people that do checkouts and such. [22:53] So, since the advent of that, we saw a lot of people come online. However, that peak, that seemed to have peaked about two years ago and now what we see is that a lot of companies, there’s a lot of little, small companies, they’ll sell it for 3% sub pars with 3% margin.

[23:10] They could be around strongly for six months and then in about a year, they dissipate and within two years, they’ve evaporated. I think that plays into the amount of energy, and effort and proprietary work we put into not only what’s behind the scenes, but what our customers see.

[23:29] There’s a constant content and additional stuff; the thought, the complexities of how the products work together. Our sales staff, who are very technical folks, are constantly updating the tips that we can give to customers, they put random spec pages in. We’re constantly finding errors and sometimes there are errors in the manufacturers.

[23:52] So, it’s all this work; an intense level of cerebral work that’s put into tweaking the website to make it just right to make sure the customers are going to have the most successful experience. Now, I think the distance between somebody who is just going to plop an online store and sell gear that happens to be renewable energy, they’re doing it successfully to what we are. I think the distance is very far.

[24:16] Not to belittle the competition, but I think the guys who are just coming on board just selling products are going to have a much harder time than five years ago.

Shaun:  [24:25] From what you’re saying, it’s a lot more than products. The whole education and experience that you have is going to give you a strong advantage. So, you should be around for a long time.

Sascha:  [24:37] We hope so.

Shaun:  [24:38] I imagine, I know that another company in this space in New Zealand and I know that they have no problems motivating their staff because you have a noble cause. I mention that’s the case for you guys as well.

Sascha:  [24:55] Yeah, I feel very fortunate. Of course, there’s no coincidence that everybody we hire is very passionate about renewable energy, has a real love for it and that’s why we’re here. That’s probably the most convincing reason that most of us stay here because I think we all feel that we’ve finally matched our careers with something that’s important in our lives. [25:16] We’re doing something that we think is productive and positive; influencing the world in a positive way and there’s few jobs out in the world where it seems you can do that. We feel very fortunate.

Shaun:  [25:28] That’s a wonderful thing and highly commendable. Well, Sascha, I’ll wrap it up here. I just want to say thank you very much for time today. You’ve shared with us your passion for the business and I’m sure our listeners got a lot out of that. So, thank you very much.

Sascha:  [25:45] Sure. Shaun, it was a pleasure talking to you, and thanks for talking and look forward to rolling out our products and services in a way that can really can help out customers more in the future and make it even easier than we’ve ever had before.

Shaun:  [25:58] Excellent. Thank you very much. I’m Shaun Ryan from SLI Systems and that was the Ecommerce Podcast. Tune in next time. [26:05] [music]