Summary
In this episode of the Ecommerce Finance Podcast, Stephen Brown and Lauren Maillard catch up on what’s really going on in ecommerce right now. They look back at Stephen’s predictions for 2025 – what he got right (and wrong) – and dig into big changes like new tariffs, the end of the de minimis rule, and what the “Big Beautiful Bill” actually means for sellers.
They also chat about rising marketing costs, how AI is changing the way we search and shop, and what’s going on with TikTok. Plus, they dive into interest rates, economic curveballs, and smart ways to cut costs and build a brand that stands out.
Takeaways
- Stephen shares his personal health journey and its impact on the podcast.
- The word of the year for ecommerce is ‘tariff’.
- Tariffs have created significant challenges for ecommerce businesses.
- The de minimis rule is being phased out, affecting international drop shipping.
- The Big Beautiful Bill has both positive and negative implications for ecommerce.
- Marketing costs remain high, and AI is changing the landscape.
- There is a noticeable shift from Google to AI search tools like ChatGPT.
- AI is becoming a new sales channel for ecommerce businesses.
- TikTok’s role in ecommerce is evolving, with mixed consumer engagement.
- Interest rates and inflation are creating economic challenges for ecommerce.
What We Cover:
00:00 Introduction and Personal Update
02:33 Mid-Year E-Commerce Predictions Review
05:30 Impact of Tariffs on Ecommerce
08:39 The De Minimis Rule and Its Implications
11:35 Business Environment and the Big Beautiful Bill
14:43 Marketing Challenges and AI’s Role
17:33 The Shift from Google to AI in Ecommerce
20:24 AI as a New Sales Channel
23:16 Conclusion and Future Outlook
25:07 The Evolution of Ecommerce e Purchases
26:53 The Future of Ecommerce and AI Integration
28:48 TikTok’s Impact on E-Commerce
33:26 Navigating Economic Challenges in Ecommerce
40:40 Branding and Pricing Strategies in a Competitive Market
48:03 The Future of Ecommerce: Discipline and Strategy
Work with LedgerGurus
If you need help with your ecommerce accounting, reach out to us at LedgerGurus. We are an ecommerce-specialized accounting firm, and we can handle all your numbers so you can focus on growing your business.
Transcript
Stephen Brown (00:00)
Welcome to the Ecommerce Finance Podcast. I’m your host, Stephen Brown with LedgerGurus. In this episode, have Lauren Maillard, LedgerGurus Director of Service Delivery here with me to do a mid-year check-in on the state of Ecommerce Finance and what we expect for the remainder of 2025. Welcome to the podcast, Lauren.
Lauren Maillard (00:18)
Hey, thanks for having me. This is fun and exciting.
Stephen Brown (00:22)
This is our first podcast in like four months. I’ve been AWOL. Maybe I’ll start there. For the 100 fans that actually listen to the podcast. We started this podcast at beginning of the year, 2025. I am the host and I, in the beginning of March, I got hit with the flu, which then turned into a rare type of
shingles that actually hit me in the nerve cluster around the ear, resulting in facial paralysis, hearing loss in one ear and balance issues. Not to mention just being really tired. I was no condition to do the podcast. The team thinks that I am actually okay to podcast. I still feel like I have a slur when I speak.
Lauren Maillard (01:15)
Yeah, I don’t hear any slurs there, Stephen.
Stephen Brown (01:18)
We’ll see what the audience thinks. But my energy is back. My face and my hearing is not. If you’re watching this on YouTube, you’re going to see a goofy looking eye that won’t blink. It’s drooping. And obviously, my mouth looks weird. I’m going to talk out the good side of my mouth. So yeah, that was crazy.
Lauren Maillard (01:37)
So Ramsey Hunt, that’s the same thing that Justin Bieber had.
Stephen Brown (01:40)
yes.
Yes, the most famous case of Ramsey Hunt. you go Google Ramsey Hunt syndrome, you’re going to get like 50 results of Justin Bieber. And they’re all the videos are all about the same. They’re like three minutes of what it is, kind of that high level overview. Really helpful, but nothing down in the weeds.
Lauren Maillard (01:59)
So then are you number two? Justin Bieber and then Stephen Brown.
Stephen Brown (02:02)
I wish. I don’t know.
I got to scroll a lot. Yeah. So I started a YouTube channel because we YouTube here at LedgerGurus. And I thought there’s not a lot of like personal V-logging, sharing what it’s like to go through this condition. I’m four months in and still have a lot of issues. And so in my first week, I just felt like I should do that. And so I’ve been doing it for the past couple of exercising my YouTube skills.
you want to watch Ramsey Hunt Stephen and be bored about medical progress, that’s where it’s at.
Lauren Maillard (02:38)
Hey, I think it’s great that you’re doing that and bringing some awareness for others and it’s great. And we are incredibly happy to have you back. It’s pretty amazing that you’ve done, that you’ve had so much recovery so far.
Stephen Brown (02:52)
I am happy to be back. And it’s been a crazy year. I’ve been staying somewhat engaged over time. I’ve gotten better, but wow, what a weird year for ecommerce.
Lauren Maillard (03:05)
So I think we’re here today, right, to see if you are the ecommerce Nostradamus. Is that it? I’m going to go over some of your predictions for the year.
Stephen Brown (03:12)
I don’t know.
Yeah, so the inaugural episode was really 10 predictions for 2025. And I thought it’d be good to kind of check in, not on all 10, maybe we’ll do that at the end of the year. But just talk about some of these key things. I feel like I got them right, but it wasn’t hard to predict. Although some of these predictions did not turn out the way I thought they would.
Lauren Maillard (03:34)
really? What’s the biggest one that didn’t turn out the way you wanted it to? Or you thought it would?
Stephen Brown (03:38)
Well,
I think if I were, you know how the end of the year they do, ⁓ Websters does the word of the year? ⁓ If I was doing ecommerce Websters, the word of the year would be tariff. And the way that tariffs have turned out was not what I expected.
Lauren Maillard (03:44)
Mm-hmm.
Yeah.
I, well, it’s still, every time I look at the news, there’s something new with tariffs, especially today we’re recording and it’s July 10th. So there’s a lot going on.
Stephen Brown (04:02)
July 10th. Yeah. We’re kind
of in, in tariff transition week where the 90 day pause is over. I think what shocked us all was we were expecting something like the first term of the Trump administration, whereas he’s going to come in, he’s going to raise some tariffs. It’s mostly going to be focused at China. And instead it was like this nuclear bomb on the entire world. Um, especially with the initial announcement and we’re kind of moving into settling into what it’s going to be.
but it was a huge shock to the system.
Lauren Maillard (04:33)
Did you see the latest tariff to drop?
Stephen Brown (04:36)
I did not. What’s the newest tariff?
Lauren Maillard (04:38)
50 % on Brazil.
Stephen Brown (04:40)
Oh yeah, I read about that. Brazil is in the ire of Trump because of the previous president. He feels like isn’t getting treated well, so he’s putting some smack down on him.
Lauren Maillard (04:52)
I feel like if Trump can go after a friend like Brazil, then really everything’s open and on the table for him when it comes to tariffs.
Stephen Brown (05:00)
Well, the one that kind of shocked me, and this was kind of where I was like, okay, this is the baseline was the UK. The UK, understanding is we have a trading surplus. So we export more to the UK than we import. And that was one of the things they talked about is, we’ve got, um, we’ve got a balanced trade. So you think, Oh, they’re going to get a really great deal, but they still got a 10 % baseline tariff. And at that point is like, okay, 10 % is the floor. We’re not going to see, you know, I, I’m.
We haven’t seen anything lower than that. There’s the chatter about the EU having a 10 % tariff. But this week they announced a lot of the Asian countries and we’re seeing, you know, better than what he announced in April, but still like 20 to 40 % range.
Lauren Maillard (05:45)
I mean, we’re seeing him wipe out any price competition that ⁓ South Asia had, right? I mean, that’s really what’s happening there.
Stephen Brown (05:55)
Yes, although here’s what I’m understanding, especially with China, is they’re so good at manufacturing, it’s less about cost than it is about capability. But you’re still experiencing, as we’ve seen brands, we spent the last couple of months meeting with lot of brands, initially that 150 % tariff, whatever it was, they were just like, when it was like two kids in the schoolyard, they’re just escalating, escalating.
Lauren Maillard (06:19)
But yeah, it was crazy.
125, yeah.
Stephen Brown (06:26)
It’s
basically a blockade. But still, know, an additional 30%, additional 40%, that’s a huge hit to a seller’s margins. And I do think sellers can absorb a good chunk of those, but it’s really gonna hurt.
What have you been hearing as you and I and some of other team members on LedgerGurus have been meeting with customers? What are some of the conversations you’ve been having around tariffs?
Lauren Maillard (06:57)
Well, think there’s just anticipation of what they should do. And it’s kind of, you know, we’re kind of at a moment where they’ve got to decide and finish making any orders for Christmas. So what do they do? ⁓ You know, go ahead and, you know, I think the tariffs are here to stay, but you know, there’s some anticipation because it’s gonna really cut into their profit margins.
Stephen Brown (07:23)
Yeah, I think I also saw, I’ve seen a lot of kind of wait and see. And I think we’re past the wait and now we’re starting to see and it’s like, really now it’s time to act. And it’s not pretty. I think a really strong, a brand with strong financial performance can navigate through this. But I’m concerned about those brands that are really kind of barely above break even.
unless they take some aggressive actions that this could be the end of their journey.
Lauren Maillard (07:52)
Yeah.
if your margins are tight and there’s not really much you can do, go and find other suppliers. I’m not sure where exactly that is. ⁓
Stephen Brown (08:10)
Yeah, mean, I think Vietnam, this is the interesting one for me. Vietnam, the announcement was like 20%. And we’ve already seen a lot of manufacturing shifting there. That’s probably going to accelerate it. There was like this caveat, if they see any sort of shenanigans of China kind of trying to pass through Vietnam, they’re going to slap that down. But my understanding from talking to other customers, our customers in the past is Vietnam has been
being built up by both the Koreans and the Chinese who have good manufacturing capabilities. And they’ve developed some pretty strong manufacturing resources. I think Vietnam is, it already was shifting, but I think this is gonna accelerate its place as a manufacturing hub.
Lauren Maillard (08:57)
So along with tariffs, we have the de minimis rule. So that is now a thing of the past.
Stephen Brown (09:04)
Yeah, the de minimis was one of the things that I was looking at for the beginning of this year. And when you have both political parties talking about killing something, you know, it’s almost guaranteed. So they had already started with the Biden administration putting in the groundwork to end the de minimis rule, which allowed shipments under $800 to come in without duties or tariffs. And I think this created things like Shein and Temu and
Now they are going to have to operate more as traditional businesses. think TikTok Shop there’s probably a fair amount of de minimis sellers on there. And I do think, you know, I do wonder as I’ve read the news, there’s TikTok’s ecommerce, US ecommerce office has had a lot of layoffs. I’m wondering how much of that is influenced by the de minimis rule and maybe some of the advantages going away.
Lauren Maillard (10:00)
Well, just take a guess of ⁓ how the shipping volume for Temu and Shein has gone down in June.
Stephen Brown (10:07)
I haven’t seen that. How much has it gone down?
Lauren Maillard (10:10)
28%.
Stephen Brown (10:12)
from year over year or month over month? Month over month. I’m surprised it’s not higher, to be perfectly honest.
Lauren Maillard (10:15)
month over month.
Yeah, yeah.
Stephen Brown (10:20)
So, I mean,
one of the big announcements with the, you know, the kill, the death of Chinese de minimis was a couple, a month or so ago. And with the passing of the strangely named big, beautiful bill, they are phasing it out globally by 2027.
Lauren Maillard (10:41)
I think we still have a month though. Enforcement doesn’t start until ⁓ beginning of August.
Stephen Brown (10:48)
August, yeah. So I think there’s still going to be, you’ll see of de minimis exemption imports for two years. I think that’s, can’t remember what it was, like July 2027. So there’s time. I have mixed feelings about the de minimis rule.
Lauren Maillard (11:07)
Or why is that?
Stephen Brown (11:09)
Well, I’ll tell you where I think it’s good if you’re selling online and I’ll tell you where I think it’s bad. Let’s start with the bad. If you are doing a lot of international drop shipping, so you’ve got manufacturers and they’re drop shipping direct for you, your business model is collapsing. Well, know, if you’re not in China, you’ve got two years to figure something out. But if you’re selling…
Lauren Maillard (11:25)
It’s dead. It’s gone.
Stephen Brown (11:35)
through kind of traditional import methods where you’re having to go through customs and pay duties and tariffs and all that. Guess what? All your competition that was leveraging ⁓ low cost de minimis exemption strategies, they’re going away. So for those sellers that have been doing bulk imports, going through all the compliance, I think this is a really good thing for them. So I think it’s a mixed bag, the de minimis rule. Personally,
I kind of think it’s good. feel like it got abused. You’ve seen all, you know, one of the things I’ve read about, and you know this coming from a sales tax background, a lot of sellers, know, Chinese sellers in particular, they’re not registering in the US. They’re not, you know, paying sales tax. And so they have ways that are…
Lauren Maillard (12:07)
Yeah, yeah, I can see that.
They have unfair advantages, really.
Stephen Brown (12:29)
allowing them unfair
advantages. So I’m all for getting rid of the unfair advantages. But what’s hard is if you had a legitimate international dropshipping element of your business or if that was your entire business, you got to recalibrate.
Lauren Maillard (12:49)
Rethink.
Yeah, absolutely. So you mentioned the BBB, the big, beautiful bill. ⁓ You had predicted, you know, that this administration was going to continue to be really business friendly. Taking a look at it, what do you think? Is it?
Stephen Brown (13:09)
Well, I think if you’re not in ecommerce, it’s pretty business friendly. The tariffs are just crippling for ecommerce. if you look at some of the other, the problem with the big beautiful bill is it’s enormous. But there’s a number of provisions that are going to be really advantageous towards business. Some tax treatment around large purchases that used to have to be amortized where you could only recognize the cost of that investment over a period of years. can now
Lauren Maillard (13:20)
Yeah.
Stephen Brown (13:39)
put that on the first year, things like.
Lauren Maillard (13:41)
Yeah, that’s
your 179 and your bonus depreciation. So you can take all of those in the first year.
Stephen Brown (13:46)
Yeah. So we’re,
yeah. And they’re going to extend the qualified business income deduction in perpetuity, is really great. That’s only for pass through entities, which I think is awesome because the big guys, I’ve worked for big corporations and let me tell you, they know how to avoid taxes. My last company, I talked to one of our lawyers and he was showing me our corporate map, the entity map. And it was like,
It was like a maze. like the Bahamas and Ireland and Netherlands. And there’s all these weird kind of configurations you can do to minimize taxes legally. So they have the abilities to do those complex ⁓ corporate structures and the small guys don’t. So the qualified business income, I feel like, is a little tip to the small guys to say, hey, we’re going to reduce your taxable net income.
by the percentage. And I think that’s awesome. So I think there are some provisions that are going to be good for business, but unfortunately, I think the tariffs are outweighing those benefits to ecommerce.
Lauren Maillard (15:00)
Yeah, yeah, I would agree with that. So going on to another prediction, marketing. So you talked a little bit about rising marketing costs. What have you been seeing? You own a small ecommerce company.
Stephen Brown (15:19)
I don’t really see, yeah, so I have had my business partner on the podcast, Preston. I haven’t really seen anything’s changed for the better or the worse this year. It feels like it’s still kind of a grind, ⁓ you can get there. But it’s like the days of easy money, they’re just so long gone. And I still see a lot of brands that are struggling with their marketing efficiency.
but I don’t see it getting worse. So I’d say it’s about the same.
Lauren Maillard (15:53)
and you want that to kind of stay between 20 and 33%.
Stephen Brown (15:59)
think it really depends on your business model. I think you can make an argument to even go higher if you have one, the capital to spend more and two, have a lifetime value that really makes it worth making that investment. So that’s one of the things you gotta look at is lifetime value. Two, do you have the cash resources to do that? ⁓ And that works more with direct to consumer brands.
If you’re reselling on Amazon or Shopify store and you’re just doing Google AdWords, I think you’re going to need to be well below 20 % ad spend to…
create a reasonable profit.
Lauren Maillard (16:45)
So ⁓ we’ve kind of talked about it a little bit about ⁓ AI and how AI and chat GPT is actually changing ⁓ advertising and marketing for ecommerce firms. Do you want to talk a little bit about that?
Stephen Brown (16:54)
I don’t know what’s talking about today.
Yeah. And I’d to ask you a question too, at some point. I, last fall, I went to a conference and I’m, I’m sitting around a table in a really noisy restaurant in Las Vegas. Could barely hear. If I were to go there to this, this, with this condition, I wouldn’t have heard a word they said. It was one of those environments where you had to lean in to hear anything that was being said. But, ⁓ couple of my friends in the industry, Chad Davis, Geoff Gualano who’s been on the podcast, they’re talking about, I don’t even use Google anymore. And I’m like,
You weirdos. But since then, I haven’t completely stopped using Google. But what I found is I’m doing so much more in ChatGPT. And when I do use Google, I find myself using the AI results, which are at the top. And so I take back everything I thought about you, Chad and Geoff. You guys are just ahead of the times.
And I think we’re seeing a massive shift, at least with tech forward people, away from traditional search to more of the AI search. And this is going to change things in a big way.
Lauren Maillard (18:16)
Well, I’ve been doing kind of an informal poll of people around me and I’ve been asking them, okay, when was the last time you used Google? I’m like, I don’t know. I’d say 60, 70 % of the people that I interact with daily. So most of them here at LedgerGurus at work, Google’s done for them. They go directly into chat GPT and, ⁓ you know, mean, I myself, it used to be I’d go on Amazon.
Stephen Brown (18:37)
Wow.
Lauren Maillard (18:45)
and if I was looking for something. So just as last weekend, was cleaning out my Tupperware. Yeah, the funnest thing I ever did do on a weekend, but I was cleaning out my Tupperware drawer. And normally what I would have done is gone to Amazon, read all of the reviews. Instead I went to Chat GPT I told it what I wanted. I mean, it was bing, bing, boom, done. And ⁓ it was awesome.
Stephen Brown (19:11)
Did you get a recommendation
of something to buy?
Lauren Maillard (19:14)
It recommended a few of them. I looked in, read the recommendations, and then I just picked one.
Stephen Brown (19:20)
Yeah. I
did the same thing this week. I, I’ve been playing around with AI agents and so I had a custom GPT for my RV, which if you have an RV, you know, they are a nonstop repair and it used to be YouTube and Google and how do I figure out this, that, so I’ve been training an agent to be my, ⁓ kind of troubleshooter and it’s, it’s been awesome.
for one, but this week I had some brackets on the generator exhaust that had broken. Took a picture. I said, hey, I need to repair these brackets. I can’t remember what I said, but it spun up a couple of options. Obviously, it gave me whole bunch of, this is the one thing I think that I don’t love about ChatGPT is it’s really, ⁓
It’s like your chatty friend. Sometimes you’re just like, just give me a quick answer. And it just wants to blather on, blah, blah, blah, and tell you a million things. then, and so I was like, OK. And then at the end, it had two links to products. And I kind of did the same thing. I was like, oh, here it is. I literally, in fact, let me see if I can find it. It’s kind of interesting.
Lauren Maillard (20:24)
Yeah.
Stephen Brown (20:47)
And this is not what I expected when I was thinking about AI. I was thinking about AI tools as a cost saving technology. And instead, what we’re seeing is I think AI is the new, maybe the new sales channels. Yeah, so here it is. You can see it here. I just said, I need new brackets for the generator exhaust pipe. And it took a picture. You can see this ghetto rope holding it up.
Lauren Maillard (21:07)
Mm.
Stephen Brown (21:15)
Obviously, it gave me a blah, blah, blah, blah. You know, here’s blah, blah, blah. And then at the bottom, I like, oh, cool. Here it is. And this is the one that I needed. Clicked on it, ordered it, you know, done. And to me, that’s probably the bigger, that’s the bigger game changer. It’s like, oh man, like AI and ecommerce is not just about using the tools.
in your business to create more efficiencies, which I still think it is, but it’s now about a sales channel. And I expect eventually an ad channel as well. Like these companies would be fools not to open up an advertising model. And so I think it just makes sense, right? But I call it A optimization. think this is going to replace search engine optimization. How can you get your product
Lauren Maillard (22:01)
I’m sure they will.
Stephen Brown (22:13)
to be considered in the tool. A note on the other thing that I was thinking at the beginning of year, my partner Preston, we’re talking about things and he has been kind of winding down some consultants, some marketing consultants and just like, hey, I can do it myself with the tools and I can probably get a better out, know, more of the desired outcome. So we are kind of cutting costs there and…
Lauren Maillard (22:13)
Yeah.
Stephen Brown (22:42)
replacing it with AI tools. So yeah, AI is changing so quickly, it’s crazy.
Lauren Maillard (22:45)
Yeah.
Well, this afternoon I spent some time playing around in Co-Pilot with Dillion, who’s our head of IT here at LedgerGurus. And we were testing one of the agents and I’m so excited. mean, like giddy with joy. At the beginning of the year, I thought, sure, AI is gonna change things. But I was thinking, I didn’t have the vision of how it would help me as a professional become more efficient and effective.
and I just am so much more productive now, just using Chat GPT but now with the ideas and the agents that we’re working on, I’m really excited to see how we can continue to push forward. And I think that goes for all small business owners now. You’ve got resources and ways to reduce costs that we just didn’t even have. And I feel like we’re kind of at that tipping point,
Critical mass is about to be hit. People are gonna become really comfortable with this. And it’s exciting to see where it’s gonna lead to. It’s another way that the playing field is being leveled.
Stephen Brown (23:57)
Yeah, it’s going to be… I got my start at the beginning of the dot-com days. ⁓ And I kind of feel like this is the parallel I’d put with AI is this feels like 1999 for the worldwide web. Like it was just starting to really explode, but it’s still really… You go back and look at like websites back then and just kind of the web in general. It was just a very different experience.
Lauren Maillard (24:23)
Was it Firefox? What was the?
Stephen Brown (24:26)
No, that was, you’re like Netscape. That was the big browser.
Lauren Maillard (24:29)
What was that
webpage hosting? I don’t know, the old one. Fire something.
Stephen Brown (24:34)
Yahoo. ⁓
I know, I there was Geocities… Yeah…
Lauren Maillard (24:41)
Okay, I kind of have to go, to go, but
I feel like today with my first successful agent, it’s kind of like the first time I Googled something. I remember the first time I Googled something and yeah, it’s my first agent today.
Stephen Brown (24:57)
Do you remember the first thing you bought online?
Lauren Maillard (25:01)
I remember the first thing my sister did. It was actually from ⁓ Overstock.com.
Stephen Brown (25:07)
Okay. I think the first thing I bought was a CD on CDNow, I think. Yeah, it got bought by Amazon. I think my Amazon… I’m not sure. I have an Amazon transaction from 1998. I’m not sure if that… was a CD. I don’t know if it was CDNow, but that’s kind of where my internet ecommerce experience… Yeah, you can go back. So if you want to go back and look at your…
Lauren Maillard (25:15)
That’s long gone.
Now I’ve got to go back and look.
Stephen Brown (25:33)
your purchase history, it’s kind of fun to see what was the first year you bought something and what was it that you bought. Now back then it was like books and CDs. That was kind of like the big thing in the beginning of ecommerce. Unless you’re like ⁓ eBay, then you’re, who knows, you’re buying all sorts of weird stuff. It was the swap meet. It was the garage sale, right? And for those that were into that, that was like great. But for me, it was books and CDs.
Lauren Maillard (25:38)
You wanna head to that? I’m gonna have to do that now.
eBay is the garage sale of ecommerce.
Yeah, well, it’s I was super excited when we tested it and we saw that it worked. And ⁓ yeah, well, we’ll see where where we are in the next few months.
Stephen Brown (26:13)
Yeah, I mean, there are actually ways you can enable your store to be discoverable on chatGPT. That’s something I think every brand should be doing. ⁓ I think I’ve been reading that there’s talks about making it so that you could actually do checkout in chatGPT at some point. And I just think every AI platform, it’s just a no brainer. Like there’s, there’s money to be had there. We know that ecommerce
And average ecommerce advertising has been a huge part of internet search monetization. So I see no reason why that doesn’t carry forward in the AI platforms and tools.
Lauren Maillard (26:53)
I’m sure it will.
Stephen Brown (26:56)
All right, what else are you thinking about these days, Lauren?
Lauren Maillard (27:00)
⁓ well, you know, TikTok was on your list.
Stephen Brown (27:07)
Yeah, TikTok, haven’t, you know, it was really hot going into the end of last year. And I think even in beginning, you know, the big buzz was there was going to be the ban and Trump gave it a stay of execution. Did it again, but I don’t hear people talking about TikTok as much. ⁓
Lauren Maillard (27:24)
I think
that’s just because you don’t use TikTok, Stephen. You have some kind of, you’ve got something against it. I don’t know what it is.
Stephen Brown (27:33)
Well, my background before coming to LedgerGurus was information security. spent almost 20 years there. And TikTok was one of the apps that we would talk about in that world about being super intrusive. know, all the things that the threats and concerns that have been voiced in the government were actually being discussed in the information security community as legit issues. ⁓
Lauren Maillard (27:37)
Mmm.
Stephen Brown (27:57)
I, my big, on a personal level, my big beef with TikTok and kind of short video in general is just, it’s so addictive, but that’s great if you’re selling stuff because you’re going to have a whole lot of view time. And, ⁓ I guess my, my thing that I’m not seeing, cause I’m reading, you know, and consuming a lot of ecommerce news and content is I don’t see a lot of discussion around advertising on TikTok. ⁓
It doesn’t feel like it’s the same level that it was last year. And I think part of that might just be the uncertainty. Is it banned? Is it not? ⁓
Lauren Maillard (28:33)
Well, we
know what’s happening now. Have you?
Stephen Brown (28:37)
Well, yeah,
I’ve heard, I’ve read a little bit. think you’re more up on it because you’ve got the TikTok addiction going full strong.
Lauren Maillard (28:43)
Yeah, yeah, yeah.
I do. I have been so anti-social media and then I’m a full on TikTok addict. I don’t know what it is. ⁓ I do say I don’t think I’ve ever bought anything from TikTok, which, TikTok is QVC and Amazon put together. It’s that social commerce and they do a really good job of pulling you in. ⁓ I think what has surprised me is I was kind of looking at some numbers.
and 14 % of Americans use TikTok. Wait, gonna make some noise with that. But it was…
Stephen Brown (29:24)
Is that all? 14 %?
It’s mostly Gen Z.
Lauren Maillard (29:31)
So probably, but it was 35 % growth year over year, which I thought was pretty crazy. Yeah, I don’t see it going anywhere.
Stephen Brown (29:36)
Yeah.
I will say
the algorithm, I looked at it a couple of years ago and was like, peace out, this thing sucks. Then I was doing a little bit of testing because we did a TikTok episode, ⁓ one of our early episodes. And so was like, I got to get down and do some research and not look like, you know, a boomer. No offense to boomers. Hey boomer, that doesn’t know what he’s talking about. And I definitely thought the algorithm was better, but I, again, after that I was like,
The last thing I need is more social media in my life. And so I got off.
Lauren Maillard (30:12)
Yeah.
Yeah. I think it’s, ⁓ it is very addictive, but what’s really, I think kind of interesting is there is that halo effect, right? So I’ve never bought in anything off TikTok personally, but I will go to TikTok. I will, you know, I will do some searching on there and then I’ll go to Amazon and I’ll go in and cause I am comfortable with, with Amazon. know when it’s going to be, you know, when it’s going to be delivered,
Stephen Brown (30:35)
Yeah. Yeah.
Lauren Maillard (30:42)
I know that there’s some security or it seems, shouldn’t say I know there’s security. I’m not a IT person at all, but it’s, I trust it. You know, everyone knows Amazon.
Stephen Brown (30:52)
Yeah.
Yeah, there’s comfort transacting with Amazon. And Michelle, who did the TikTok episode with me at the beginning of the year, talked about this, that there is a halo effect. I think for TikTok, the jury is still out. I think if you can get the ban settled and stable, I would expect that will continue to evolve.
My experience when I got on there, I actually went to the marketplace and it felt kind of really, I don’t know, it didn’t feel like you had like, yeah, it felt cheap. That was my experience, it felt cheap. So I think if it can stabilize bigger brands, more reputable brands, I’ll probably get on there. One of things that Michelle said is it’s very impulse buy style because it’s like scroll, scroll, hey, that looks good, buy it. It’s got a great checkout process and then move on.
Lauren Maillard (31:23)
cheap.
Wow.
Well, one thing I haven’t looked into, but I do want to look into and understand a little bit more is they will push the same thing massively. You’ll see it absolutely everywhere. And you’ll see that big thing for, I don’t know, a month maybe, and then it’ll be on to the next big thing. But there are some big brands on there. I I see them anyways. And what was interesting,
Last time I was on, it did say that I could hook it up to Amazon and order Amazon through TikTok.
Stephen Brown (32:19)
Yeah,
that’s my understanding as well as Amazon integration. don’t know. Algorithms are interesting things. I’m still trying to teach the Facebook algorithm to send me the right stuff. I’ve made the mistake. This is the problem of serving ecommerce companies. And we have a decent amount of women’s brands that ⁓ I always forget. I’m like, dang it, I clicked on it and I’m not an incognito. And now it reinforces the Facebook pixel that, I’m a woman.
And so I’m constantly getting served up like leggings and women’s apparel. And I’m like, I’m not a woman more running stuff, less women’s clothing, but.
Lauren Maillard (32:57)
You
just say, I’m not interested, and then you’re good.
Stephen Brown (33:00)
I’ve
tried that. just, cannot get the Facebook algorithm to, I’ll go like, give me more running stuff. Cause that’s kind of one of my passions and it won’t, it’s really frustrating, but well.
Lauren Maillard (33:14)
We all know you
bought some woman’s leggings to go running in there, Stephen. You can just admit it.
Stephen Brown (33:17)
⁓
Got my Lululemons. Although guys wear Lululemons now too, so hey, I shouldn’t judge.
What else do you think about?
here’s something I’m thinking about. What do we do for the rest of the year? ⁓ rates. Yeah, so it was looking super good going into this year, right? We had an interest rate cut at the end of last year, and there was predictions of many cuts. And then I think we’ve seen a lot of inflationary economic policies.
Lauren Maillard (33:30)
⁓ actually interest weights. Do you want to touch that maybe first?
Stephen Brown (33:54)
Also, we have a Federal Reserve that is very conservative and slow. They were slow to raise interest rates when things heated up at the beginning of COVID and then they’re really slow coming down. And I think they have some legitimate concerns, but it is unfortunate because for sellers, there’s not a lot of great options in terms of working capital loans for inventory.
and it’d be really nice if we could see interest rates go down, but I’m…
I think I’d be surprised to see one cut this year at this point. I think there’s just too much inflationary economic policies. Everything I’m reading about the big beautiful bill is it’s going to be very inflationary. ⁓
Lauren Maillard (34:41)
Well,
add on to that right, the dollar’s weakening too. That’s not going to help inflation either.
Stephen Brown (34:46)
Yeah,
that’s something you brought up. talked about the other day, you brought this up and I was like, yes, it caught me off guard in our DTC brand, Sole Toscana. ⁓ There’s kind of this double whammy. Whammy number one is the tariffs, but whammy number two is we’re seeing the dollar weakening. And so even if you didn’t have a tariff, your product costs are going up just because currency exchanges are are disadvantageous.
And that sucks. mean, that’s usually something you hear about from like Wall Street when I used to work for Fortune 500s. You know, they would talk about…
They would talk about, ⁓ sorry, the dog distracted me for a second. The pitter-patter. ⁓ I worked for some public companies and so obviously I was very in tune with our quarterly earnings and they’d always talk about, see if I would get on, blah, blah, blah, exchange risk, blah, blah, blah. And you’re like, what the heck? Now that I’m kind of in this seat doing what I do, it’s like, yeah, yeah, currency exchange is a huge issue.
Lauren Maillard (35:33)
little yeah
Yeah.
Stephen Brown (35:55)
And the problem is like these big fortune 500s, have some things they can do, right? Cause they’re usually selling globally. So they can keep foreign currencies there. You know, if they have ⁓ operations, can, you know, use the sales to fund operations in those countries. But you know, small seller like is typically, you know, they’re not selling into China, you know, or, you know, like our brand, it’s an Italian.
product, we’re not selling in Italy, we’re selling an Italian product into the U S so it’s not like I could, I’ve got euros that are, I’m gathering in Italy or anywhere in the EU that I could then use to buy my inventory. And so what happens is you have this exchange risk and I don’t, I don’t have an easy answer for a small seller, how to deal with that other than you just have to plan on decreased buying power and
use the different levers that you have to address that accordingly.
Lauren Maillard (36:56)
⁓ So I’m just thinking a little bit about you and Sole Toscana and how are you guys gonna manage it? What do you guys do?
Stephen Brown (37:06)
Well, I think there’s a couple of levers you have to pull. And I think a lot of people have been sitting on the sidelines. Lever number one is raising prices, which isn’t great when, you know, people have already experienced a lot of price increases over the last two years, but that’s one thing you can do. We can try and get better pricing from our manufacturing. ⁓ easier said than done. We can, so we are talking about pricing.
And we’re actually looking at both sides of the equation, like should we lower price and see if we’d increase volume? We are definitely looking at cost cutting. we’ve been cutting some, you know, it’s a pretty small business, less than a million dollars in revenue. So we’re looking at contractors and software. That’s, if I was a bigger brand, I’d really be looking at my payroll. I’d be looking at, know, there’s, different places you can optimize fairly quickly.
⁓ So I think we’ve been doing expense cutting primarily so far because that’s easier to do than, you know, your fulfillment, your…
cost of goods, and then we’re constantly talking about marketing spend, constantly. Like, it’s like, and I think any brand that isn’t constantly scrutinizing and discussing marketing spend is missing the boat because that is kind of one of the primary levers of a ecommerce business. And you just need to be watching that very closely because it’s so easy to a lot of money and not get a great return.
Lauren Maillard (38:46)
I feel like that could be a really big segue into your experience with Profit First. Have you talked about Profit First on here? I don’t think we have time today, but.
Stephen Brown (38:55)
No, no,
Preston and I, that’s on my list of episodes is to do a profit first episode. So stay tuned. We’ll do one of those in the future. But ⁓ yeah, as a preview, you’re basically focusing on being profitable first and then kind of building in your expense model from there versus the other way around, which is just a spend, spend, spend. And then you’re like, I don’t have any profits and crap. So
That’s a good teaser. I need to get pinned down, Preston we can tell the story of how we took a business from losing money to making money using ProfitFirst.
Lauren Maillard (39:34)
I remember when I was doing my Mac, doing some math problems and really focusing on how it’s smarter to cut costs than to get revenue, you know, for the bottom line. So I think it’ll be really interesting to hear about your experience with Profit First.
Stephen Brown (39:52)
Yeah, mean, spending, it’s one of those things, you know, those levers are what I’m thinking about as we look at the end of the year is you’ve got to have, if you haven’t pulled one of those levers already, you probably need to because the tariffs are coming in and we’re seeing like increased cost of goods. ⁓ Expenses is one of the easiest ones to hold. Raising prices is easy, but you have to consider decrease in volume and impact to your customer base.
Maybe this is a good transition into what we’re thinking about for the second half of year. I expect a lot of price increases across everywhere in the second half of the year. It kind of sucks, but Christmas is going to be a lot more expensive this year. It’s going to have to be.
Lauren Maillard (40:40)
I was kind of surprised to see ⁓ when it comes to inflation or services, it’s gone up about twice as fast. ⁓
Stephen Brown (40:48)
Hmm.
Yeah, we feel that. You want to talk about cost increases, come run a services business. We’ve seen payroll costs just skyrocket the last few years.
Lauren Maillard (41:01)
Yeah, yeah, it’s not a pleasant thing to be thinking about right now. It’s definitely something that we’re needing to budget for and we’re needing to plan for and that we’re, you know, having to come up with a strategy of how are we gonna pass that cost onto our clients or if we don’t.
Stephen Brown (41:19)
Yeah, and I think that’s a problem with every business, whether you’re services or ecommerce. You’re like, I’m having increased input costs and they’re squeezing my margins, in some cases making my business unviable. How do I navigate through that? you know, price increase as painful it is, it works, right? I mean, we are a big QuickBooks shop and I’ll tell you.
the kings of price increases are into it. They raise prices every year, like clockwork, Ridiculous amounts, I don’t know, but it’s like, just, they’re, in SaaS, you see a lot of that in SaaS, the good SaaS companies, good tech companies, see a lot of, Netflix is a good example, right? How much did you pay for Netflix when you first got it?
Lauren Maillard (41:50)
oof
Stephen Brown (42:12)
That’s about what I think we paid. Now, what is it, like 21 bucks for the basic plan?
Lauren Maillard (42:17)
I don’t know. I don’t care. I’m not getting rid of it
Stephen Brown (42:20)
Yeah, exactly. That’s one of the challenges though, like knowing where your position is with the customer is really important. Are you a nice to have or are you a Netflix where you’re like, well, that sucks. still going to, you know, I’ve got to see my, I don’t know what the hottest show is on there right now, but, or just.
Lauren Maillard (42:41)
I should know, but I don’t, because I’m not going to get rid of it.
Stephen Brown (42:43)
Yeah.
Yeah. So, I mean…
Lauren Maillard (42:47)
But I
will say, Stephen, when we’re talking about not wanting to increase costs, one way you can really shoot yourself in the foot is by thinking, year over year, I’m not going to increase cost. You’ve got to do that in this kind of environment where you have inflation. You’ve got to do it consistently, because if you don’t, you’re going to have to do a much bigger increase, and then your clients will really feel it.
rather than being consistent and doing it at a smaller percentage.
Stephen Brown (43:18)
Yeah, and I think we had such a long era of very low inflation rates that it was easy to hold prices steady for years on end. And if you haven’t learned that lesson to incrementally increase prices, to do price testing, I mean, there is a theory out there of hold prices and let the competition die. But that only works if you have a really unique product.
that doesn’t have great alternate, or maybe it’s the opposite. Maybe you’re not unique. I think if you’re unique, you have more power to price. if you’re just playing a downward game. And I think this is one of the, we’re moving into an era where brand and financial discipline are so critical.
Lauren Maillard (44:15)
What would you recommend when we’re saying brand is critical? What does that look like?
Stephen Brown (44:24)
You know, every brand is different. I think you, know, brand is that experience. It’s not just your logo. It’s not just your name. It’s kind of the total experience a customer has with a company. It’s the checkout process, your store, ⁓ your product experience. I do think we were in an era of
luxury where people are thinking, how am going to do all this fancy packaging? I mean, guess, let me ask you, there are probably more women that do ecommerce than men. How important is the unboxing and the packaging experience for you with online sales?
Lauren Maillard (44:57)
Yeah.
Come.
I’m not sure if I’m the norm. I actually find it really, really annoying. And when things come in a super nice box that I then have to throw out, it annoys me. And it might be because I think even things that aren’t expensive or aren’t that expensive, it used to be, if you’re gonna go and buy a Hermes purse and spend $20,000, yeah, you’re gonna have the unboxing.
Stephen Brown (45:16)
Yeah.
Yeah, you just like… you feel bad.
You’re probably not going to do that online though. I don’t know, maybe you do.
Lauren Maillard (45:46)
Well,
you actually do. There are some handbags you can’t buy because you have to have this history. I mean, it’s a whole other episode, but you can go on the real royal and you can buy it. But I do think that it has really gone down. It’s all over that you see this luxury packaging and it’s just so wasteful that it annoys me.
Stephen Brown (45:53)
Hmm.
Yeah.
Yeah, I think that, and that’s an area you can really look at what’s your packaging, what’s your experience. But I think come back to your question, what would I do? mean, brand is not something you can flip a switch on. It’s done over a long period of time. Pricing, price analysis you can do. Cost analysis and cutting you can do fairly quickly. Changing your manufacturing costs takes time. Changing your shipping.
And fulfillment costs takes a little bit of time, but it’s something you can do. And I like to think of it this way. Like I said, I got my start in the dot com days and it was kind of, you know, free range and people were going crazy, starting companies. It was a little different. Ecommerce is more rooted in actual, ⁓ profit economics. Back then it wasn’t, it was more in what could I raise, ⁓ economics.
It’s just like, I’m getting a lots of users and I’ll figure out monetization later. Ecommerce hasn’t had that luxury, I think there’s been, ⁓ there’s a number of factors, low cost of capital, ⁓ very efficient digital marketing, lower competition. And I think what we’ve transitioned to is a more mature phase of this industry where
You no longer can go to Alibaba, source the same product that everybody else can source, throw up a Shopify store, throw it on Amazon, and make a lot of money. Like I think ecommerce is moving into an era of discipline and product, you know, value, product uniqueness. I still think it’s a great industry, but it’s, it’s, it’s, you’re going to, it’s an era, we’re moving to era where you got to level up your game. You’re going to have to really understand what you’re doing.
and the various disciplines to be successful.
Lauren Maillard (48:06)
You’ve got to be a little bit more sophisticated and thoughtful in your processes and systems and how you’re managing things. ⁓ You talked about ⁓ price testing. Have you ever done that on Shopify?
Stephen Brown (48:23)
⁓ We use a tool called Fermat that has some price testing capabilities. So yeah, and there’s, you know, there’s a lot of tools out there and it’s time to learn how they do it and learn what the data is telling you.
Lauren Maillard (48:35)
How long does that usually take you to do?
Stephen Brown (48:38)
partner’s been more involved with that. That’s on our list of things to go over. In price testing, the theoretical price testing is I sell a product at one price, how many sells do I get? I sell it at another price, how many sells do I get? And there’s some relatively simple math to come up with an optimal price point. And so that’s something that I think
price discipline and focus is going to have to be added to the list. So let’s kind of wrap up with kind of our respective takes. What are you thinking about the end of the year? Is it going to be a good selling season? I mean, I guess we’re kind of talking as consumers. Do you think we’re going to have a good second half of the year? This is where retail makes all its money.
Lauren Maillard (49:20)
Well, I think it will. We’re in the middle of prime days. And ⁓ what I heard is that it’s gonna be the equivalent of two Black Fridays. And I think that bodes well for the fall. I think things are gonna improve. People are going to, I won’t say get more comfortable with the tariffs, but they will have figured out what their strategy is gonna be. And will have had time to adjust if their strategy doesn’t work out.
Stephen Brown (49:55)
And my pick is it’s going to be kind of an OK season. I think the big, beautiful bill has enough stimulus into it to at least help us this year. We’ll see how next year plays out. So I think it’ll be, I’m going to say it’s going to be an OK season. But it’s hard to use the first half of this year because I think we’ve had a lot of cells being pulled forward.
A lot of consumers, they were like, prices are going up, so they’re buying, buying, The question is, will they keep buying at these higher prices? ⁓ I think they will, but maybe not at a crazy level. So we’ll see.
Lauren Maillard (50:37)
Yeah, we’ll see what it brings.
Stephen Brown (50:39)
All right, well, thank you for joining me on this comeback episode of the Ecommerce Finance Podcast. If you’ve enjoyed to it, subscribe and we will be kicking out episodes once again to talk about all things ecommerce, finance and money.
Lauren Maillard (50:56)
And if you didn’t enjoy it, subscribe still. There you go.
Stephen Brown (50:59)
Exactly.