speaker-1: The problem being in that D to C world is that a lot of people were really good at creating products and decent marketers, but they weren’t actually business people. They didn’t understand business. And so then they got to a certain point and they hit their ceiling, right? The law of the lid. And then they just couldn’t go beyond that because they don’t understand actual business, right? And so I think that that’s the that’s the sort of like call to action for a lot of A lot of smaller brands is like get educated on how all of this works together. And I think that’s really important.

speaker-0: Honest ECommerce is a weekly podcast where we interview direct-to-consumer brand founders and leaders to find out what it takes to start, grow, and scale an online business today. Hey everybody, welcome back to another episode of Honest ECommerce. Today I am happy to welcome to the show not only an amazing agency owner, but a friend, someone I know in real life. We’ve met at events, we’ve stayed in touch. Jordan West. Jordan was the co founder and It was CEO of Social Commerce Club, and then you guys did some horse trading, and now you’re at a new place. What’s the name? What are you doing?

speaker-1: Well, it wasn’t exactly horse trading. It was it was money trading, but we yeah, we were acquired by Putin in Mountain Gate Capital, Puttian one of the biggest global marketplace agencies. I sorry, the biggest independent global marketplace agency out outside of the Hold Coast, which is really fun. really fun to get to be a part of that. and we had grown into the biggest TikTok shop agency in North America really, really fast, along with that. And I have I it’s funny coming like, you know, I owned eight brands over the years. Owned a small marketing agency that was just like, whatever. And decided to go all in on on TikTok shop and started Social Commerce Club. It was about I think it was like about nineteen months ago, like that that I started it. Brand new agency. It was just like, all right, let’s do this. And and just kind of went all in.

speaker-0: Yeah. for everyone out there, the secret group chats that you think exist in the industry do exist. Jordan and I were in one, and I I was watching from afar his dedication to TikTok shop in the zeitgeist of like political moments around TikTok. And I was like, This is so risky. And I find myself being a very risky person in business. That’s why I have a business partner that is very risk averse. And like, even I was like, Wow, like. I hope this works out, but I wouldn’t do this. So I love I I I am proud to admit I was wrong and I’m happy to see the success that you obviously got out of sticking to your guns and and and powering through that moment.

speaker-1: It was a moment though where even if TikTok shop in or TikTok disappeared in the US, it was still a moment where it didn’t really matter because TikTok shop. I mean, TikTok is now in, I think it’s 29 geographies, or at least going to be. They’re opening up Canada in Q1. I’m a Canadian. it’s it it was one of those moments where we could see social commerce coming because it had been huge in Asia, right? Like we knew social commerce and the way that The way that creators sold was going to come here. we we a lot of brands were were testing it and trying it out w with affiliates, you know, not with a ton of success. And I really believe that that’s because of the the lack of actual of available tracking and UTM codes actually working or any sort of like way like that. But we saw what it was, right? And after owning eight brands, seeing all of that and and seeing the the principles kind of behind everything. It was very easy for me to see, this is how people will purchase. This is the next version of social media marketing. this is like, you know, we had way back when we had the Sears catalog come, right? Completely destroy these these, you know, Midwestern general stores. And and over and over and over again, we’ve had these new distribution means. The difference on this one, though, is that before brands could control their marketing, right? So, so brands could from the, you know, from the CMO spot. Say this is what we’re going to talk about. The problem is with social commerce, right? And with TikTok shop, it actually changes that entire conversation. And it and the creators now get to talk about the product however they want. And we work with, like you know, there’s a lot of brands I can’t talk about that we work with, but you can go and look at like logo lists. These brands are are trying to protect their brand image in a massive way, but they can’t, we can’t go through. On TikTok shop and say yes to every single piece of creative. It just doesn’t work like that. And so this is like a this is a wild time. And this is why I’m calling it like the social commerce singularity, because it’s this moment where it’s like, man, anyone can talk about a brand sort of any way and make money in that way if the brand is on TikTok shop. So then you see the Nikes and the Lulus and these big brands not enter the market, and you’re like, hmm, that’s interesting, right? I don’t think that they’re ready to to give up that power yet of This tight brand that they have created.

speaker-0: Yeah, I think that something that I mean, I always argue against this, and this comes up all the time, not just in in social, but even with web design, with landing pages, with just testing in general. People won’t launch or test a good idea because it isn’t quote on brand, which frustrates me to no end because On brand is a judgment call and not a binary thing. If the offer, if the value, if the way it resonates with a customer and the way that it creates value to the customer and and from there cr generates revenue from sales or whatnot, if it doesn’t look the best but it still does all those things, I would argue it is absolutely on brand because this thing is resonating so well. Maybe it’s it’s the fact that it’s more authentic makes it appeal more to your customers. So

speaker-1: Well, and it’s like on brand to who, right? you have thousands of avatars that are interested in your product that are your customer. So it’s like, well, on brand to which set of customers? That that’s the thing that TikTok shop does, right? Like is exposes you to all of these different avatars you didn’t really realize existed and these use cases of your products that you didn’t really realize existed. Right. We we work with a brand. We still still work with them, of course, after all these years. They were one of our first like big successes on the channel, really big shoe brand. And they sent us this shoe, and they’re like, hey, this we’re kind of discontinuing this. The shoe is kind of a bit a dog. We don’t know what to do with it. And can you sell it on TikTok shop? And we’re like, Yeah, sure. Let’s try. So we end up doing it, and the shoe ends up going absolutely viral, so much so that they have built an entire franchise around the shoe. Sydney Sweeney has repped this shoe. That is how big this shoe has has become because they didn’t know the latent, the the latent value that the shoe had until actual people were talking about it. And then it went out into the marketplace. Yeah. Like this is the wild thing. And this has happened time and time again. With we’re we’re the top apparel agency. We won top apparel agency in North America or sorry, in the States last year for TikTok shop. And so we work with a lot of really big apparel brands. And that is exactly what we are seeing. Right. There’s all of this, well, we thought this product would do well, but it’s actually this product. We sampled out this product, and yet somehow there’s this massive halo onto all these other channels of this product. Right. You don’t know. You can tell the market, right? You can try and like force people to buy the certain thing and say the message, but really the market is going to tell you back. Right. And it’s the brands that can actually listen to that. And again, we’re like we work with like massive brands where there’s like 27 people on a call. Right on a on an intro call. And you’re like, okay, this is like they’re taking this channel incredibly seriously as the market research channel and understanding all of this. That that that is w what I found incredibly interesting and why I like still love being in this space.

speaker-0: Absolutely. You said a word there and I’m not gonna let you gloss over it. You said sample or sampling. pretend like I am an idiot, which I am. What does that mean in in relation to like a marketplace such as TikTok and and sampling to creators? What what are you doing?

speaker-1: Yeah, really good question. So when so when you’re on TikTok shop, right, the way that you scale is with creators, right? With affiliates that are on the platform. There’s a bunch of different levels of affiliates depending on how much revenue they have driven for brands in the last 28 days, going from L zero, which is zero revenue, all the way to L7, that’s a million dollars and above. Right? Your goal is to sample out, right, your actual product, sample to them. The product or sorry to the the creator that you think will drive revenue for your brand. So that that that is the entire sampling mechanism. Now you don’t want to sample out to too many people. we had a a bit of a glitch recently where some software that we were using was supposed to sample to a hundred people and it sampled to six thousand people. that wasn’t good. that that again, you know, some of our software partners are are helping take care of that because that was a bit of a big deal. but the the sampling mechanism is really, really important to make sure to get out to as many creators as possible. Now, here’s an interesting thing, Chase, that you probably don’t know. Maybe you do, but TikTok shop, I really like to think about it. creator and content quality is really the Pareto principle of the Pareto principle. So 8020 of 8020. So think about it like this: you have a hundred creators. Of those hundred creators, 20 of them are gonna be okay. Right. You’re like, okay, this is decent content. Maybe they’re going to get, you five or 10,000 views on their content on the very first, on the very first video that they make. Now, they need to keep a certain amount of posting per sample. They don’t have to post when they get a sample, right? But to keep in TikTok shops good graces, they do need to do that a certain amount of time. We like to look for creators that are posting at least 70% of the time. Sometimes we’re going to send a sample and we’re not going to get anything from them. But that’s not our goal. Our goal is not to get a an amazing video from every single, from every single creator. Our goal is to find the gold of these creators. We sample a hundred of them. 20 of them are gonna be like, okay, right. But of those 20, right now it’s 80, 20 that again, right? So 20% of 20 is gonna be four. So four of these hundred are going to be phenomenal. And those are the ones that you wanna create a relationship with. You want to try to incentivize in a big way. You want to bring them into your community. You want to have one-on-one messages with them. We bring them into a WhatsApp group and then we one-on-one message them within WhatsApp. But we’re trying to get as many videos out of them as humanly possible because the more videos that one particular creator makes, the faster learning loops that they have. So generally, we find the creators that make more videos, it’s like this chicken and egg thing, the more videos that they make, the better. Of a creator they are for your brand. And then the more invested they get because they’re actually generating sales, and because they’re generating sales and they understand what works and they make more videos. So it’s like that that whole thing of what we’re trying to do. And I think this is the agency moat, right? Is like TikTok shop is really hard because it’s all humans. There’s no like programmatic advertising. There’s no like big display network. You like have to talk to humans. And that’s the hard thing.

speaker-0: Yeah, yeah. I I I love the idea of sampling because it’s you know, still in you know, twenty twenty six people are launching new brands on the back of performance marketing, for lack of a better term, right? Through traditional channels, meta, Google, what have you, depending on your kind of where your your audience is going to be. But it’s so expensive to hit the velocity that you need in those channels where if you’ve got a product with a good margin, you’re essentially just giving up, you know, your your the investment that you’re making in a potential, you know, a lot of sales and a lot of awareness is the cost of that product, which was your cost of goods and shipping, right? and I’m sure you’ve got some math around it, but like, you know, what what kind of success stories have you seen for just go to market with n net new brands launching on TikTok shop.

speaker-1: So if a net new brand is launching specifically on TikTok Shop, they better have other channels, right? I would never launch a brand only on TikTok shop. I say to brands all the time, like TikTok shop is not going to be your profit center, but crazy, crazy research that just came out from Finaloop. so some wild data that they had. So Finaloop is a company for people who don’t know that does accounting, right? So it’s sort of like your centralized data accounting source. really, really great product. They have tens of thousands of brands that work with them. And they ran this report recently of brands that are doing a million dollars or more a year on TikTok shop in the last 12 months versus those that are not. The ones that are overall, over their entire brand, are growing their revenue 3x what the control are. So the brands that are doing that are their entire revenue is growing. Not only that, right, then you’re thinking, okay, well, maybe they’re losing a bunch of money because TikTok shop isn’t profitable. Well, it’s not the case. Their contribution margin is 3.5x what the control is. And their EBITDA, their profit at the end of the day, is 3.9x more than the control group. That’s how much they’re growing. Like that’s how, this is the TikTok shop effect, right? That brands don’t understand. A brand will come on and be like, well, we’re losing a bit of money per sales. Like, look at your whole business. You are on. the most incredible top of funnel advertising channel. And if you’re breaking even awesome, how much were you paying for Facebook ads before? Because now you’re on this channel that is absolutely has virality built into it where customers they don’t always go and check out on the channel. They go, a lot of them have Prime, right? However many hundreds of millions of Americans have Prime and go and they’re like, sweet, I can get that on Prime. Awesome. Or For we worked Portland Leathergoods for quite a while. We grew them from 40,000 a month to two million a month on the channel. The crazy thing is they called us and they’re like, we don’t really understand this, but we’re doing an extra $200,000 a day in retail and dot com. We can’t figure out why. And we’re like, well, we just went absolutely crazy on TikTok shop. That’s why. And so it halos onto all of these different platforms. And that’s the thing that I think, again, it’s it’s this weird time where brands are not understanding. We’ve lived in the triple whale era where we think we can measure every single click and interaction. It’s like, that’s ridiculous. That’s not how advertising worked for the entire millennia, right? That’s some software companies telling us that we can somehow measure this stuff. And it’s just not true, right? We can’t measure in that sort of way. We can measure these greater effects, though, right? And we can see these brands that are doing this. And we see it with the clients that work with us, right? That are like, that, that. These these big brands are leaning on this channel. there’s brands, there’s publicly traded brands that are treating this. And you can look into what they say publicly, that this is their number one growth channel. Right. That’s wild. These are billion-dollar brands. That’s crazy.

speaker-0: Yeah. the Halo effect is so real and it it it’s something the where we luckily we don’t have any clients like this now and we’re mature enough as a business to where we will politely decline to work with worry warts for lack of a better term, but it is people that can’t see the forest through the trees. It’s like you’re focusing so narrow on the wrong thing. you know, people that are watching, you know, ad like the return on ad spend in a daily, like hourly window, it’s like What are you doing? Facebook is changing their algorithm constantly. It’s like zoom out. Is this profitable or not? focus on more important things.

speaker-1: Yeah. I I absolutely. it’s it’s the whole even from five years ago, this ROAS discussion. It’s like, when did that matter comparatively to you growing your actual business and looking at how the entire business is working together? Right. And that’s the I think that’s the problem.

speaker-0: Hey everybody, just a quick reminder. Please like this video and subscribe if you haven’t. We’re releasing interviews like this every week, so don’t miss out. Now back to the interview. Well, Jordan, it’s because I saw on Twitter, I saw on Twitter that if I don’t have a five X ROAS, I’ve got a bad marketer and I need to hit up this guy.

speaker-1: Problem being in that D2C world is that a lot of people were really good at creating products and decent marketers, but they weren’t actually business people. They didn’t understand business. And so then they got to a certain point and they hit their ceiling, right? The law of the lid. And then they just couldn’t go beyond that because they don’t understand actual business. Right. And so I think that that’s the that’s the sort of like call to action for a lot of a lot of smaller brands is like get educated on how all of this works together. And I think that’s really important.

speaker-0: Yeah, if you don’t know what good looks like, Claude can’t tell you either you need to understand anything you’re delegating beyond just a cursory AI question and answer. It’s yeah, if you are starting to delegate parts of your business and but you don’t understand what good is, people will take advantage of you, or you’ll settle settle for bad results as well.

speaker-1: Totally. Totally. And then you don’t know who to hire and you don’t know which channel to go on. You don’t know why you’re going on the channel in the first place, right? And you don’t know exactly what the ramp up looks like. Like we for TikTok shop, just so everyone knows, like you will not make money. You will not probably not even break even for the first three to six months, depending. Like we have a TikTok shop forecaster at Social Commerce Club on our website. And if you go on there, it is wild how long it actually takes to break even, right? On the actual channel itself.

speaker-0: that’s to build the flywheel.

speaker-1: People will have told you over the years, don’t never go on a channel that’s not profitable, right? We only go on channels that are profitable. And it’s like, yes, I get it. But that’s not what this channel is, right? And there are brand now, there’s brands that work with us that are doing, you know, five million dollars a month. And of course they’re profitable at that point, right? Like, yes, the channel is profitable. is it their most profitable channel? Probably not, but it’s an advertising channel, right? This is the biggest marketing channel that you have. Right. So so remember that when you’re doing this, plus all of that content. That content travels so incredibly well. One of the things that that I was just looking at right now is putting together this process to actually move that content into CTV and linear TV ads because that UGC content works so well. And it’s not just UGC, right? It’s UGC that is designed to sell the product because that’s the only way that people get paid on the platform. So you can go and look and be like, well, this one the This one video produced $70,000 of sales in the last week. Sweet. You think it’s gonna produce sales somewhere else? Probably. So then taking that content, licensing it, moving it over to Meta. And you see how massive Tribe has gotten? Right? Well, Tribe starts on meta. The problem with all of that meta, all of those meta creators and influencers that are working on Tribe is they don’t know how to make content that works across the funnel. Whereas TikTok shop creators, it works really well. It’s like a Rubicon, right? The that content does not move. out of meta over onto TikTok, but anything on TikTok moves really well into other channels. Right. And again, it’s just it it’s just the type of channel that it is. It is the the sort of leading channel versus like, you know, a YouTuber’s content is not going to work necessarily the same way over on TikTok that it works that it works on YouTube. So that’s that’s what we see. And we see it across of course a massive amount of of brands.

speaker-0: Absolutely. Now, when we’re talking about getting into TikTok shop, you earlier said like launching just on TikTok, probably not a good call. You need your own dot com. You need to maybe explore another channel or two, and another another marketing engine perhaps as well. So coming into it like that, but if I am a brand. And I, you know, we have gotten over the that million dollar hump. We’ve finally had our first million dollar year and now we’re gonna look to add TikTok. So we have some velocity, we have some product market fit, our margin is is there. what what should we expect getting into the TikTok shop world?

speaker-1: So as far as sales are concerned, or just just general ramp up are you talking about here, Chase?

speaker-0: Yeah. Absolutely just set the expectations. Pretend you’re, you’re you’re you pick you’re on the sales call with some of these people and it’s like, is this a good idea for my brand? You know what I mean? And what what does success look like?

speaker-1: Yeah, totally. interestingly, I’m on very few sales calls, but the ones that I’m on are really exciting. Like I was on with you know, one of the biggest beauty brands that you can think of conglomerate in the world yesterday. That was really fun explaining to them. Here’s how we’re gonna ramp up, you know, it’s 10 brands in the first year, then it’s five the next year, and we just continually do this. And so let me walk you through what I tell them because it works for everyone, right? At the beginning, this is this is this flywheel that you have to get spinning. Right. And the only way to get this flywheel spinning is to get creators and great creators on board making a lot of content. So right at the beginning, you are going to run into one massive issue. You do not have any sales volume on the platform. So number one, GMV Max, which is the the ad platform that we use right now. And we we are beta testing, just so everyone knows, like a bunch of new ad platforms or a bunch of new ad types and campaign types through TikTok shop. They’re not available yet for anyone else. but GMV Max needs sales on the shop itself. We don’t know why. They have told us internally it’s 200 sales. So we use a company called Selico to be able to do that. So this is totally blessed. Selico is blessed by TikTok Shop. They’re fine with it. They go and sample out to 200 people who actually purchased the product. They can leave reviews or not, but that gets the flywheel turning. So You can even think of there’s a massive brand that we that we have started working with and scaling like crazy. They’re spending $60,000 a day as of today on GM V Max. At the beginning, this is a brand that everyone knows, every single podcaster talks about. Everyone, I’m sure you’ve you’ve drank it in the last little while. This brand was having a very hard time. We were having a very hard time as we were launching this brand, actually getting GM V Max to spend. And the issue was just that first 200 sales. And so once we had those first 200 sales, We had had to 10,000 pieces of creative, but it just was not spending. So there’s these weird motes that you have to get through. And again, you wouldn’t know as a brand to do this. Neither does like certain areas of TikTok. They don’t understand this stuff, right? There’s like these weird rules that somehow work. And so we have now done this, right? And so now this brand is able to spend 60 grand a day and just continuing to climb, continuing to climb. They’ll probably be probably be spending a hundred grand a day soon, which is just wild for brands at this size on the channel, right? So they can spend that and be and be breaking even very soon at a massive clip. So so first getting that. Secondly, a what a lot of brands and a big mistake that a lot of brands will do is they will just randomly sample out there, right? And be like, okay, well, am I doing this? To turn the flywheel, you need to take all of the noise that’s out there, Chase, and turn it into signal. Right. That is the big thing. So we do that through a blitz. And so what we do is we sample out to a bunch of creators. And so we have a huge creator network, was just looking at it yesterday. So L3 and above. L3 is $35,000 a month that these creators are making and above. These creators in our network, there’s about 6,000 of them. And so we’ll sample out to them first. And we’ll tell them, please do not post until this certain day. And we set a blitz date. So you and I are recording this on October 1st. Let’s just say that we’re gonna set our blitz date for October 14th. We’re gonna say post, get five videos minimum ready. On that time, we’re also gonna have a contest to get these creators to post a certain amount. So one of the interesting contests, this this produced 32 videos per sample recently, where we just said, hey, create if you create 20 videos, we’re gonna give you a bonus 250 bucks. And the videos have to be this, this, and this. And so we give them, they can’t be AI videos. They have to, they have to feature the product in a certain way. So the creators that did that ended up pushing way beyond because they were making so much money during the blitz. So during the blitz, everyone posts their videos during then. And what ends up happening is it takes all of the noise that you would have had and turns it into an insane signal. And then you pour ad dollars over top of that. And it just blows the brand up. And when it blows the brand up, now these big creators. Who are looking for their next big product, look and they’re like, holy cow, Portland Leather Goods. Holy cow, Portland Leather Goods just did a million dollars in the last seven days. I want to get on that product. And now you get these L5s and L6s and L7. We have got lot of L7s. They do a million dollars or more. They look at these product launches and they’re like, we have to work with Social Commerce Club on this. And so that’s where we’re really trying to pull brands in. And that’s the that’s the method, right? And again, like I have made So many YouTube videos about this, about the Blitz. So if you go search Jordan West Blitz, you will find all of these Blitz videos and the exact sort of way that we go through this. But that’s really it at the end of the day. And that that is our methodology. TikTok is now recommending that methodology to brands as they launch. But that’s how you get going on the platform. It’s not low and slow. It has to be concentrated. This is not a channel you can just dip your toes into. It doesn’t work like that.

speaker-0: that I that is such a a straightforward answer with you didn’t say, give us a call and we’ll explain it to how to do it. You just told us how to do it and I really appreciate the honesty there. now is there anything I didn’t ask you about that you think would you know, add value to this conversation or just resonate with our audience in general?

speaker-1: I think that the reality is one of the questions that we get the most is when do you hire an agency? Should you hire an agency? I recently made a made a YouTube video about this. the reality is for the majority of small brands out there, you cannot afford a good agency. That’s the problem. Like, so, so this is very similar, Chase. I’m sure like you you remember in the world of Facebook ads, right? 2016, 2017, all of these dudes pop up. Right. And you’re like, yeah, I got a Facebook ads agency. And you’re yeah, but you don’t know what you’re doing. you don’t actually understand the underlying marketing principles. And so for most people, most small brands, sub, let’s say, sub two million overall, I’m like, don’t do it. Don’t do it. Hire a VA, right, internally. If if you if people understood the amount, when we were we were showing off the amount of full-time equivalence. To one of these massive brand conglomerates yesterday of how many people they will have. It’s 13 people. That is how many full time equivalents they’re going to have per five brands. That’s mind boggling the amount of people you actually need. And so at the beginning, this is a new muscle that you need to exercise yourself. Don’t go and hire like a cheap, like $3,000 a month agency. It’s just not gonna be worth it. They’re not going to be able to give you the service that you need to have. Instead, understand this, right? understand, go get some training in this space and understand it in this space and start to become the best possible content creator you can for your brand. And if you can’t, then hire people to be great content creators on your brand pages. You can have marketing pages as well on TikTok shop. And those marketing pages point back towards your TikTok shop and you can have a certain amount. For brands doing $10 million or more a year on other channels, they’re called strategic key merchants. They’re given 19 other marketing channels. accounts that they can have. So you could have nineteen people making content for you, all pointing back to your shop. And you could be testing content that way instead of going the affiliate route. So become the best possible content creator for your brand. That’s the big thing.

speaker-0: Awesome. Thank you so much for sharing that. Now, if I’m listening to this and I’m like, Jordan knows what he’s talking about, I need to get a hold of this guy. Where should I go? What should I do?

speaker-1: The biggest thing is something we we literally just launched today is the TikTok shop audit. So if you are a brand that has done nothing, right, awesome. Go to go to the audit. It’s going to show you what your competitors are actually doing, the things to focus on there. So if you go to socialcommerceclub.com, just click, click instant audit. We have access to more information than anybody else in the space. and we have access to our playbook as well. And so you can run the instant audit and it will automatically come in. You got to fill it a couple of things. And you’ll automatically get that instant audit. That is the place to go right now. I think it’s going to be the highest value thing that I can think of for brands and give them the playbook, right? Like I talked a little bit about some of this playbook, but it’s just gonna go through again. I don’t really hold anything back. I just want to kind of out-educate everyone in the space because that’s how brands, that’s why brands come to us, right? Because of that. and so yeah, that’s that’s definitely the best place to go for social commerce club and

speaker-0: Yeah. Awesome. Jordan, thank you so much for coming on the show today and sharing all those amazing insights.

speaker-1: Thanks for having me, Chase.