#301 – Innovating to Eight Figures on Amazon And Beyond with June Lai
In episode 301 of the AM/PM Podcast, Kevin and June discuss:
- 02:45 – How June And Kevin Met
- 03:52 – June Lai’s Backstory And How She Got Started In Ecommerce
- 05:30 – How A Kickstarter Campaign Helped Her Product Launch
- 09:11 – What Is A Roadshow?
- 10:50 – Breaking Down The Technology Behind The Catalyst Phone Case Brand
- 13:19 – Inventing Patents And Not Being A “Me Too” Company
- 13:45 – Dealing With Knock-Offs Of Their Products
- 14:41 – Establishing Relationships With The Press
- 17:13 – What Is Classic Marketing All About?
- 18:39 – The Product-Market Fit Concept
- 20:13 – Getting Their Product Sold In Apple Stores
- 23:30 – Research & Development And Differentiation
- 25:18 – Attribution, Direct To Consumers, & Building A Customer List
- 27:00 – Getting Specifications For Upcoming Products
- 29:45 – Key Lessons When Dealing With Your Factories And Supply Chain
- 33:19 – June’s Process On Determining Cost Basis In Product Development
- 35:23 – Selling Their Products Outside Of Amazon
- 35:45 – Brick and Mortar vs Amazon: Which Is More Profitable?
- 37:55 – Amazon Is Middle And Bottom Funnel For Some Brands
- 40:21 – June’s Amazon Strategy For The Catalyst Brand
- 41:25 – Most Brands Can’t Follow A Performance Marketing Strategy
- 43:43 – Educating The Customer On Why Their Products Are Better
- 44:30 – June’s Advice For Entrepreneurs Who Are Building Brands And Products
- 46:42 – How To Get In Touch With June Lai
- 47:55 – Once Upon A Time In Hong Kong
- 50:58 – This Week’s Golden Nugget Tip
Transcript
Kevin King:
In this episode of the AM/PM Podcast, I’m speaking with June Lai. June is a Hong Kong-based CEO of Catalyst® cases. One of the top manufacturers of iPhone and other types of cases out there, some really innovative products, she’s gonna be talking about product innovation, the way they create their products, the way they market their products, they sell on Amazon. Amazon mix up about half their sales, but they’re also in the apple store and best buy and a whole bunch of other places. So you’re gonna be talking about that entire process. I think you’re gonna get a lot out of this episode. And by the end, you’re gonna be asking yourself why, why my product over my competition.
Kevin King:
Welcome to episode 301 of the AM/PM Podcast. My guest this week is June Lai. June is someone who you definitely need to listen to because this woman has got it down when it comes to creating brands and marketing and going beyond Amazon. That’s some of the stuff that we’re gonna be talking about, but June first I wanna welcome you to the AM/PM Podcast. I’m super stoked to have you here.
June:
Thank you, Kevin. Really appreciate the invitation and it’s awesome to catch up with you after a few years of COVID. Now
Kevin King:
I know we, we, the last time we saw each other, June made a trip over to the US and she was I live in Austin. She had, I think she went to a, an event in San Antonio, right? Like a geek out or so something like that in San Antonio. And she said, Hey, I’m in your neck of the woods. I’m just up the road. What are you and your wife doing? I’ll come up and go to dinner and hang out for a day and so I was like, come on up. And this was like February, I think, late January or February of 2020. And she had come from Hong Kong. She’s based in Hong Kong, and still based in Hong Kong. And she had come from Hong Kong and then after that, we’re like, well, maybe, you know, that’s right around the time some of the news was coming out, the lockdown had started in Wuhan. We’re like, was that the best idea to have someone from Hong Kong come? But it was an awesome time. Do you remember that?
June:
Yes. I remember I was there for e-commerce live. So that was part of e-commerce fuel and on that trip, COVID started to happen in Hong Kong before it reached North America. And so I was traveling and I said, well, I don’t have it. So I should just stay in the US and travel and go see friends. And I said, Kevin, Hey, I’m close by let’s catch up and it was fantastic. Actually. It was really nice to see you.
Kevin King:
It was great to see you too and I think we actually first met and like, I think in Vegas, I think Norm Farrar introduced us or something you were out there for, I think was it Trian and Ben Cummings event, like one of their big mastermind events or something and you brought one of your team members with you and y’all were out there learning the latest tactics and strategies for selling on Amazon or something. One of those like $10,000 per person events or something.
June:
Yes, yes. That was a few years ago. Actually, I like to go to a lot of these events because you learn a lot from different industries, but I also diversify. So I don’t just focus on Amazon. So I do round up my background and experience by going outside of my sector. And so at that time I was just trying to get better at Amazon, but it’s not my primary focus. And I think that’s why something you wanted to talk to me about today.
Kevin King:
Exactly. That’s one of the reasons I have you here is because most of the listeners are Amazon first and then maybe some of ’em may be doing something off, but you’re really good at creating a brand and using Amazon as just one of your channels. And that’s what I wanna talk about is kind of your journey and building of your brand, the brand is called Catalyst®. If you’re not familiar with it, you can find it on Amazon it’s iPhone cases. And I’ll let her talk about that in just a second, but you’re actually Canadian by origin by birth. And so how did you end up in Hong Kong? Can you just walk me through a little bit of your back story of how that actually happened?
June:
Sure. so I did, let me just go back. I grew up in Canada, but I was born in Hong Kong. I pretty much am very Canadian though. So we moved when I was really young and I studied there. I did my undergrad in biochemistry, in Vancouver, my hometown, and then I went and did my MBA, CFA CPA, and CMA went into finance, investment banking, and equity research. So that brought me to the east coast of Canada. And I was working for a job in Montreal at that time and got a job offer to move to Hong Kong. And I thought, well, this is fantastic because instead of we’re doing one country, I get to do 12 countries in M&A, and that’s actually what brought me to Hong Kong. So I moved many years ago over to Hong Kong. I thought it would be a short-term role and I just love the city.
June:
I didn’t think I would stay. And it’s just such a great place to be especially for our business because we’re right next to China, it’s a lot easier to get products made and make sure that they’re made really well. And being able to go over the border and see factories made such a big difference, but also just the time zone, and that proximity gave us an advantage. So I was in M&A working really long hours. I got tired of the long hours, so I quit my job. I went traveling around the world, I got my pilot’s license. I came back to Hong Kong and then I started Catalyst®. And at that time, I think this was early days. So back then we were doing development on the iPhone 3GS and relaunched with the iPhone 4 on Kickstarter.
Kevin King:
And this was what about to put that perspective? That’s what about 2000 or so, or what time?
June:
2010. Around that time. So we were probably one of the first case companies and because I’m a climber, I spent all my time outside and waterproof cases we thought would be easy, but they’re really, really difficult because you basically take a normal case and then you add, like, in our case 44 odd parts on it, because you have to fully seal and cover it and make everything fully functional.
Kevin King:
So around 2010, you transitioned, just to make sure I got this clear from M&A, and you started Catalyst®. Was it called catalyst at that time or was it a different name back then?
June:
I actually started a design consultancy first and then looked for the right product idea. And then finally the names all refer to scientific names basically because I was a scientist first. So and there’s a ton of science center products, but I guess I really liked catalyst because it was a brand that really resonated with me because a catalyst is something that kicks off a chemical reaction, or it’s something that really amplifies something or accelerates something. And in our case, we make cases that allow you to go anywhere. So it’s a catalyst for you to have your adventures. It’s a catalyst for you to take photos. Like just do things without really thinking about it or without worrying about your device, you can just go and do anything.
Kevin King:
The cases started as a result of your passion for climbing and hiking. And you wanted something waterproof. How did it evolve? So you started with, you said the iPhone 3 or the 3GS, which one was it?
June:
Yeah, we started on one version, and then we launched with the iPhone four on Kickstarter back before Kickstarter was a big deal. We started on Kickstarter and we got funded and that helped cover the tooling cost. It didn’t cover everything, but it got us started with the first product we launched it, and got it built. Then I was at a trade show in Hong Kong and some of the big case companies started to notice what we were doing. And at that time we had a competitor called LifeProof that was also in waterproof cases, but their construction and approach were very different. And the way we built products is from the ground up. And I think what they did was they actually went and sourced a product. So their product architecture hasn’t really changed even over, I guess, 12 years.
June:
But we are constantly innovating and improving our products. So yeah, at that time, some of the large case companies noticed what we were doing. We started to get approached and we looked at partnerships with a bunch of them and we picked and partnered with Griffin at that time, Griffin technology because they used to make these rugged cases called Survivor. So that actually got us started, we did a co-branded product with them and they got us seated into a lot of retailers around the world and the brand was out there. So it’s hard to work with another company that was not an easy deal to make. Once like basically the moment we signed a deal, they tried to change the terms on us. So that kind of thing will happen. So we had to be very careful with them. And we just chose not to renew and we went, went on our own. And then at that point, I went and traveled and did a roadshow and met and targeted a whole bunch of distributors. And I said, Hey, well, you already know our brand because a lot of you resell us. It was just under like Russian and product before but–
Kevin King:
So what does that mean a roadshow when you say, explain that to the audience, if they don’t know what that is, what does that means a roadshow?
June:
A roadshow is when you do a series of meetings or like you’re basically touring. So if it’s in finance, you’re touring to get to raise funds basically. So you might be meeting with investors in this case, I was meeting with distributors and trying to get different customers. So I was all over Europe. We had people come through Hong Kong. I traveled a lot just to build those relationships because face to face meetings. And it’s, it’s really important to have face-to-face meetings and those kinds of relationships because people don’t know you from anyone else and they don’t know why you like, why Catalyst®. And so, yeah, at that time I did a roadshow. I traveled, I don’t know, I think maybe 17 cities in the span of three weeks, four weeks, and got our first customer base
Kevin King:
Earlier. You said that I mean, the iPhone case business, which is where you started. I know you’ve pivoted off into a few other things besides that now, but iPhones cases, that’s a super, super competitive space and there’s a lot of people that get into that. And it’s very, very difficult to really stand out. And you said something earlier where the life case basically took some existing car, kinda like what Yeti did or something where they found something, you know, that whole story of Yeti, where they found something in a market and they modified it, but you developed it from scratch. And I think you said something like 40 some odd parts. Yes. And most people probably don’t realize what they’re looking at their case right now. And they’re like, how the heck does this have 40 some odd parts? Can you, can you walk us through that process a little bit?
June:
Sure. So waterproofing is one of the hardest things you could do. So we’re more like a current company than a case company. But people don’t know that because they hear the word case. So if you think about a normal case, you normally have cut-out holes, so you can access buttons or switches, or the sound comes out, microphone sound goes in, you can take pictures, everything, or where it’s like normal. That’s what a normal case is. It might be a single injection or double injection. You could have different materials, but it’s simplest form. That’s what a case is for waterproof. It’s totally different. We start with the case has to be fully covered and sealed. So no water goes in and with waterproofing, it’s about the weakest point that fails. So we’re having to embed a screen protector layer.
June:
You’ve gotta have fully sealed buttons. They have to be able to actuate without letting water, and you have to be able to rotate. We actually have a signature patented rotating needed switch on the case. So it’s actually something that people rave about. But in the world of marketing, it’s really hard to explain this until you experience it, but once you experience it, you just rotate it and it clicks and it feels really satisfying. It’s kind of like a fidget spinner, but it’s one of those features that’s really hard to sell prepurchase for the customer to understand. Post-purchase, everyone’s like, wow, that’s the thing I love. I didn’t know I needed it, but I definitely needed it. And so it just elevated the user experience. So we thought of a lot of these kinds of things.
June:
One of the most difficult things to do about waterproof cases is the sound or acoustics. And actually, it took us maybe about a year and a half to develop the acoustic technology that we have in our case. So the problem is if you have sound coming out in a sealed closed box system, if you think about it the sound comes out, but then it goes right back into the microphone. And so you’d get echoes or you have problems with sound reverberations or stuff like that. And so we had to go back and test a lot of scientific principles in the Anechoic chamber and understand how to make that work. That’s actually one of the first patents that we had, we started doing utility patents back in 2010 or 2011 or something like that. And today we have 700 pieces of intellectual property.
Kevin King:
Oh, wow.
June:
IP is a core part of building our brand because we’re not a me-too company we invent and we invent, and then we patent what we invent. I mean, it’s a broad range of it.
Kevin King:
So have you had a lot of people? I mean, you’re based in China, you’re prob are you manufacturing in Shenzhen or somewhere near there, maybe have you had people knock you off and you’ve had to actually go after them and defend your IP. And it’s successful in every case or is it, or no pun intended is it successful every time or has there been something you’ve really had to struggle to fight with?
June:
On the brand side, it’s quite typical to play guacamole with, with copy products or, or stuff like that. We layer our IP so that we can take down different kinds of people. So we have a range of different types of intellectual property. I think Amazon’s gotten better about recognizing different types of IP. But I think if you’re a company that invents. If you, I mean, look at what you teach in Amazon. A lot of sellers just look at, oh, that’s selling really well. It’s ranking. Well let me go and copy that and source something that looks like that and then sell it online and they don’t know any better. So I’m on a different part of the spectrum, cuz I’m thinking of something novel and then patenting it, inventing it, and building the marketing and the PR around it. We work with 3000 journalists. So we get around 1700 press publications, reviews, and mentions a month. That helps us get, and probably our reach was around 2.2 billion. I’m not sure what it is today, but we get a wide following. A lot of journalists know us. So they cover all the case companies. But a lot of them actually, they have Catalyst® cases on their phone.
Kevin King:
That’s awesome. That’s super important. But how did you establish those relationships? Did they come to you or did you do a campaign? I know when you were here visiting, you showed me like this little video mailer thing is really cool. It’s like you made this little video and it came in this like little box and you opened it up. It’s like a video brochure and you were getting ready to use that for something that you’re doing to introduce a new product, but how did you secure 3000 press people to actually work with? That’s gonna, every time you come out the new product, they’re gonna hopefully talk about it or review it or rate it or whatever.
June:
Yeah. I think being one of the case companies, like one of the big major case companies out there, people just know you for what you do. And journalists like to write about products that are unique and we’re not a me-too company. So every time we have something new, they want to cover it and write about it because they also know their audience will be interested. So that was built up over, I don’t know a decade of going to press events, going to trade shows like meeting a lot of journalists. Those relationships just have been built over time. And also we’re one of the brands out there that we try to stay true to our core. So we try to be authentic. So I will have a conversation with anyone and they can ask me any question and I will answer it for them. And I think we were easy to work with for a lot of media because we weren’t saying write this about me. Like, I really want you to say this. We just allowed them to ask any question that they had and we had a comment and it wasn’t a forced review. So journalists could be critical.
Kevin King:
Do you work with influencers as well or just press?
June:
We work with influencers as well. So if anyone is an influencer listening to this and wants to work with us, reach out to us and we’ll have a conversation. But yeah, we also work with a lot of influencers and you know, people love our products. So when you have a really high-quality, well-built product, it’s easy for an influencer to recommend you to their audience, especially if you’re solving a problem for them. So classic marketing is all about pain points. It’s here. Like top-of-funnel marketing is telling someone, Hey, here’s a problem that you have. You probably didn’t even know you had this problem, but yes, it’s there. And where are the perfect solution for that? If you buy this product, it’s going to solve all your problems and it’s gonna be amazing. And that’s how you hook a customer. Like that’s basically what you see is the structure of a Facebook ad. So you have to hook them in the first two, three seconds. And then you have to make sure that you’re talking about the pain point and how you solve their problem. It’s not about the features. It’s not about tax backs. No one buys based on technical spec specifications, they buy on how you’re gonna make my life easier, more convenient, all the benefits that I get from your product.
Kevin King:
So you said earlier, one of the features that people love is that little dial, that little turn dial that they didn’t know they need, but they love it once they have it. How do you communicate that? Or what pain point does that solve or is that just a coolness thing?
June:
So the ideal funnel for that one, I think is to work with beauty influencers because for a lot of these cases, you actually have to dig your fingernail in there. So if you think about women that just got their manicure done, I really don’t wanna put my nail in there and dig around and then have a break, like put any stress or pressure on there. It’s gonna chip where it’s just not a great experience for me. A lot of marketing and sales is about product market fit. So it’s finding the right pinpoint for the right audience. And if I’m thinking about which segment and I segment down that’s one niche or application that totally makes sense because do I have a pinpoint there? Yes. Am I willing to pay a little bit more for a premium well-built case for that, that solves that problem? Yes. Would I rather pay for another manicure? No. Like the alternative is just like, it’s a no-brainer.
Kevin King:
Your cases are premium cases. What’s the like a, I don’t know, the latest iPhone case? What’s a suggested retail price for one of your nicer cases?
June:
Our cases are with Meg safe, I think this year everyone’s gonna have Meg safe. So I think our cases in general for our drop proof and they’re around $40 to $60 are waterproof cases are $90 to $100 for iPhones. We’ve got AirPods cases. We were the first to invent a waterproof AirPods case. And actually one of the first cases out there for AirPods, cuz a lot of people said, why do you even need a case for AirPods? And then they be like, it became a category and everyone was out there trying to do the same thing. But we launched ours first, I guess back in April 2017. And it’s such a well-built product and thought-through product that it solves a lot of customer needs and it became the category leader. So at one point we ended up talking to Apple about it because someone, one of their employees in their store said, Hey, like Apple parent corporation, we should carry this. Apple has a program to say, Hey, what product should we be looking at, bringing in our store? And so we got into the Apple store.
Kevin King:
Is it just with the AirPod cases or do you have, or actually have the catalyst cases in the apple store
June:
It’s with the AirPods cases for now? At that time Apple didn’t even want to carry AirPods cases because they’d never done it before. And so we were the first brand to get into the apple store for an AirPods case. And then it became a theme.
Kevin King:
How’s that done for you being in the apple store is that really jumped a bunch of sales or you, or how’s that been working with Apple?
June:
It’s been great. So a lot of people work with Apple. It’s great marketing. Everyone knows your brand helps everyone see more. When you make a high-quality product, people come back. So I’ve had people at trade shows, buy a product or they go online, they buy a product and they come back the next day and they say, what else do you guys make? Because this is really, really good. So I really wanna see everything else that you make. So I think if you think about classic marketing, if we were talking about pain points, if you focus on that audience and you find the right product-market fit, that’s how you’re gonna get your top of funnel strategy working and be able to scale in that vertical. But then once you convert that customer, you wanna think about retargeting and going back to them and selling them more products.
June:
How do I cross-sell how do I upsell these customers? But that customer already has listening for you. If they already are a customer and they already have a product, they already know the quality of your product. So it makes it easier for you to come in and say, Hey, we, we also solve these other pro problems for you. So if you have a dog, you should really think about our waterproof air kegs cases. So we have a version that it clips on and it’s perfect for clipping onto a dog color. And it’s not like your dogs gonna listen to you and not go and jump in a puddle or get wet or be hard on it. But we’ve got the perfect air tags case that’s that works even for the most active dog cause it’s waterproof, it’s drop proof and you weren’t in the market for something for your pet. But now you are because I brought you down my funnel and you already know the quality of my products.
Kevin King:
That’s awesome. I didn’t even know you had that. I’m gonna have to get one of those for our dogs that we’re about to put ’em in our luggage, just for when we check ’em on planes, that’s perfect for a dog, you know where your dog is at all times.
June:
And I go back to the question because there are other competitor products and air tags, but we need to be doing our marketing in a way that we can say, why Catalyst®? So why should, why does it have to be waterproof? I’m like, well you’re for your dog. That’s a perfect application because you needed something waterproof. You need something that is tested to military standards for impacts. Like you don’t need it. You don’t need that for a lot of their applications for your air techs. But if if I’m sticking it onto a car, we have a version that you can stick it onto a car. You need something. If you’re gonna stick it and tag the underside of your car, we’ve got a version for that. You’re not gonna just take something that’s not waterproof. That’s not designed to be more rugged. That’s why it’s the price point that it is. That’s why it’s worth it. And you need to figure out how to match your product to the market and the pain point, and then the problem that you’re solving.
Kevin King:
So what percentage would you say of your revenue? Do you spend on R&D because you’re doing some serious R&D and some serious testing and some serious development? Is it a significant percentage or is it pretty steady or does it go up and down over time?
June:
It does go up and down, we have some seasonality, but that that’s time to product launches. So we follow Apple’s launch cycle, of course, but we do spend some money or time on R&D, but it’s more, I think where we’re going is really understanding, you know, we’re not a me-too brand, so we differentiate ourselves and we’re into a segment that not everyone is in and not everyone can execute at. And we are priced higher than our competitors because the cost is higher. We’re not just injecting a case and then spitting it out and putting a name on it. The name stands for something and so from my perspective, I always try to make sure that we say catalyst, but why catalyst? So you need that brand association.
Kevin King:
So in a lot of ways you have a consumable product. I mean, that can snowball, like you come, someone has an iPhone 5 that started with you back then love the quality, loved what you’re doing. They’re gonna upgrade over time to an iPhone 6, or maybe they skip the six and they go to the seven when it comes out and they’re gonna, like, I want another one of those cases. And so it’s a constant like you have new people coming in and you have constantly people rebuying and rebuying, and rebuying, some of those are going to the store and they’re buying it. But do you do anything along those lines to actually capture that direct-to-consumer side of things like any kind of inserts or any kind of QR codes or any kind of things like that, so that you can really analyze that customer flow and actually capture those customers yourself rather than just having to depend totally on the retail side of things.
June:
I think attribution is one of the hardest things to do in marketing, especially when you’re omnichannel and brick-and-mortar customers really don’t want you to send traffic to your site. They, they really want the customer to complete their sale in store, but the reality is a lot of customers like if you watch customers in stores today, they could be in the best buy store, pick up your product, and then they go to your website or they go to Amazon and they’re there just to read more about you and look at reviews and then make a decision. And they had the product right there, but they might just check out and buy on Amazon or they might buy in store, but they’re going to other places to get reference information and do a little bit of research to confirm that purchase. So when you understand that’s the customer journey, it’s not linear. I might start a conversation with you on Facebook, but you might complete it in store. You need to think about just fleshing out your funnel and making sure you’re delivering the right content at the right point in time. So that customer can complete that sale.
Kevin King:
So you’re not doing a whole lot to actually build a customer list, a direct consumer customer list of your own?
June:
We have our own customer list. It’s difficult to attribute and map out the full journey. So we have, like whoever bought on our website could be a repeat customer, but they first heard about us in brick-and-mortar. It’s really hard to track the customer purchase because we’re not just on Amazon only, and we’re not just doing direct-to-consumer and post iOS 14.5, it’s become more difficult to do advertising. Also with Apple implementing other changes like MPP, like just, you’re not getting the same quality of data that you had before. So it’s become more difficult to track different kinds of customers and really understand their full behavior.
Kevin King:
So how does that work when apple announces that the world developer conference or one of their events said, Hey, we’re coming out with an iPhone 14 or whatever, is that the moment you’re like, okay, we gotta get busy on this or do they send you some sort of specifications? Are you on some special developer list or how does that process work? So you can be ready the day those phones are out, or how does that process work?
June:
Some companies will do that via NDA. So you have to sign a non-disclosure agreement with the other party. And we don’t have this relationship with apple by the way, but like in general, the manufacturer will give you an NDA that you sign and you’re bound to keep the information confidential. And usually, as they’re developing the device, they will give you some general idea of some of the features and the form. And you can start development on the basis of that. We’ve done some of these partnerships with other companies as well not Apple. And so you can start to build that product. Then now part of the risk is as they do their development, they might change certain features. And for us, for waterproof, it’s really difficult for us to work within that basis. Because if something changes, it affects the functionality because our waterproof cases are like a finely tailored suit, everything works on it.
June:
And so if you move something over, it’s gonna change how it functions. So it’s harder for us to do development on a waterproof case for that, for a drop-proof case, it’s a lot easier. There are some principles around it and is I don’t have to make sure that I have to cover everything. I can have holes. I can have features. I can manage it. It’s a lot easier. So yeah, you would really do an NDA, normally a licensing agreement. So they get some form of royalty if they’re releasing your data and you can’t announce there are rules around how you do lunch or what you can announce and when, and you wanna really make sure that you have product available where the devices hold at the same time.
Kevin King:
But if you don’t know this exact specification, you’re kind of having a guess. So when, like you said, you might have to make some minor tweaks when you actually get your hands physically on the final product. So like when a new iPhone comes out or you guys like down at the iPhone store, like first one in line to get that, so you can test it on your prototype that you haven’t fired up manufacturing on yet, or how does that work?
June:
Yeah, it’s like that every year and we don’t get any special preference. We have to buy the phone like everyone else. So we’re on the same waiting list to get our, our hands on our product. And then we start doing a lot of development at that time.
Kevin King:
What do you think are some of the keys in dealing with your manufacturers, and your supply chain, and what are some of the things you do to really control it? Do you have NDAs with them? Do you have NNMs with them? What are you doing to protect yourself there, besides just the IP? Because sometimes, you know, in China, they don’t care about the IP and what are you doing to develop relationships with your suppliers? What are some key lessons or key things that people should be, could take from your experiences in that?
June:
So, first off you asked about an NDA versus an NNM in China. You definitely need an NNM so let’s start there. Definitely need that no matter who you’re talking to because it’s not just disclosure, but it’s them going around and circumventing and using whatever you’ve developed. So you wanna be careful with that. We have good relationships with a lot of our suppliers, but we are the company that designs and builds the product. So all our suppliers know they couldn’t really make this product without us. So we focus on high precision, so, and quality. And, you know, our cost base isn’t that low. We understand everything down to part costs because we’re designing at the part cost sub-component part level, and we work with multiple factories. So for example, if we go back to the waterproof case example, there isn’t one supplier that makes it parts are coming from different factories and we’re specifying it and then pulling it together and then sending it to one factory that does some of the parts, and they do the final finish assembly and QC it. And we do a hundred percent waterproof testing to make sure that it is waterproof to its rating, if it fails and the final finish is good, then we don’t ship it. And that’s how I can make sure it’s a hundred percent waterproof before you get it in your hands.
Kevin King:
So how often are you actually visiting any of the factories or do you have someone else that does that for you now? Or are you occasionally going out there just to cultivate those relationships with the factory owners and stuff?
June:
We have a team in China and we also have some of the factories are Hong Kong-owned factories. So we see some of them there, but these relationships have been built up over years. I think there’s a lot of respect that comes from understanding how to work together. Like we’re working at the level of how do you build tooling, which is normally the domain of the factory but we’re trying to solve for functional problems or functional issues, and the factories thinking about tooling issues. And we also have to think about how to design for target costs. So we’re in the weights of the details to work with them, to come up with the best possible solution. And it’s not just you could think about it from a silo approach and say, Hey, I’m just going to think about how to make this product output fast and make it easy to do from the factory’s perspective.
June:
But a lot of times that kind of thinking might lead to a compromise on the functionality of the product, and they don’t fully understand all those details. So we have to work really closely with them and I think it’s easy to copy. It’s hard to come up with the idea it’s really hard to troubleshoot and think through problem-solving. It’s also really difficult to build a precision product. It’s all about your tolerances. So if you have a really wide part tolerance between one part to the next, and the tolerances don’t overlap, then you’re gonna have problems with the product not working well, it’s gonna leak in our case, or in other cases, it might rattle or it doesn’t fit them very well. So there’s a difference when you’re talking about precision manufacturing versus just general manufacturing.
Kevin King:
So you said you engineer and cost bases down to the part level. So does that mean when you’re developing a new product, that you have a very specific target, final cost of goods that you’re looking at, or do you reverse start it like, well, we wanna sell this case for $69 and we need to have an X percent margin? So we can go up to this point and cost. How do you work that process?
June:
Normally you start from costs and work back up, and then you also you look at the market and you do your market research and you understand market pricing and what the market will bear and your profits are what’s in between. So if it’s just costing too much and you can’t sell, you can’t make money on it, then you shouldn’t do it. So really it goes both ways. So we’re looking at what are the costs. And then we look at what can we sell this at? What’s the price that the market will bear? And if I’m priced outta the category, then I’m not gonna get the sale. So I probably can’t go forward with that product. So we look at it both ways, and sometimes when you’re taking it from a, you really have to set pricing in the context of the market.
June:
Very few people can do a cost pricing model. I think if you have competition and their price really low now, we’re, we’re never gonna be the low-cost company, our cost structure. Isn’t designed for that. So I’m not a company that goes and does the lowest product because I’m not copying products. I have to invest in people in R&D and patents and marketing all the brand building. So I’m always going to be on the premium side of the market, but there’s room for a good, better, best solution in the market. I build the best in general, but I think I can also do better products. So there’s a range and you can step down a little bit and step up and test and do different product solutions to build out your portfolio. That’s a better strategy for a company like us because we’re not just saying, Hey, that looks good. Let me go source something that looks like that and slap a name on it and put that out. It’s a very different strand.
Kevin King:
So on the marketing side, on the sales side, you mentioned earlier, like, like this is mostly an Amazon audience, listen to this and you sell on Amazon, but that’s not the only place. What percentage of your sales would you say estimate come from Amazon?
June:
I’d say probably about 50% of our sales is online and that’s Amazon and Shopify. And then the rest is brick-and-mortar
Kevin King:
On a per unit basis, which one is more profitable?
June:
It depends
Kevin King:
Wholesale or Amazon doing third-party sales on Amazon, right? You’re not a vendor or you a vendor.
June:
We’re a third-party seller
Kevin King:
Third-party. So you’re controlling, they are not issuing you POs?
June:
Yes. we definitely control everything. I, it’s hard to say, cuz it varies by product. If you have volume through a brick-and-mortar retailer that lowers your per unit cost, cuz you can amortize your fixed cost. So on volume that will actually make you more profitable over time. It ideally you wanna mix of both because you wanna diversify, you don’t wanna have all your eggs in one basket, and going to brick-and-mortar will give you volume, which lowers fixed costs if you have high fixed costs on your products. So we do have high fixed costs on some products because the tooling is expensive. So we definitely need volume for those. If your fixed costs, your tooling costs your overhead is low, then you can go then your focus more on your part costs and really drilling down into your bomb costs. And then you have to make a markup on that. So it really varies. You want that mix and you’re gonna accept sales on either channel up until you hit a certain level like Amazon and Shopify. That’s hard to say because I would just scale my advertising to a certain level to really drive more sales.
Kevin King:
So for Shopify, you’re driving the traffic basically you’re doing ads and driving traffic or people that just know catalystcase.com. It’s a Shopify back in, or they’re going to Amazon or they’re going to, what are some of the other retailers you said Apple, Best Buy. What are some of the other retailers that people may know that you’re in?
June:
In Apple, Best Buy, Verizon, and Target we’re in some airport stores we’re in 70 countries around the world, and then in over 500 apple stores around the
Kevin King:
World. And you’re in Amazon’s around the world as well. Not just the US, right?
June:
Yes, yes. Multiple marketplaces,
Kevin King:
But, and still even despite being in Best Buy and Apple and all these other places that you just rattled off, Amazon is still Amazon, Shopify. Amazon’s probably the heavier part of that 50% or still 50% of your business. That’s just how big Amazon is.
June:
I think Amazon is not the top of the funnel at all. Not for someone like us, people aren’t going to Amazon and discovering us because Amazon’s design for lower price products. Right? And so they’re not going there and saying, Hey, let me go search and find a case and let me buy Catalyst®. That’s not why like generally we won’t win that sale on search because there’s other people that will do that, that has a lot lower price product. That’s probably a better fit to some of Amazon’s customers where Amazon plays for us is they’re more middle and bottom of the funnel for us. So someone knows Catalyst®. They saw us in a press article or they saw us from a Facebook ad or they found us in a retail store. And then they went to Amazon to look at our products and maybe look at our category of products and then find us. So we’re not getting that much in terms of organic sales. And I don’t think PPC on Amazon moves the needle for us. You need to be generating top fennel traffic off Amazon. So doing your Facebook ads, doing your social media advertising and influencer marketing, all that kind of stuff that drives people to be aware of the brand. Amazon’s just their preferred shopping cart. So they check in, look at you and add to cart and then they check out.
Kevin King:
That’s how you’re different from a lot of people who are selling on Amazon. They’re depending on Amazon for all the traffic they’re depending on Amazon for all the discoverability. Yeah. They might run some Facebook ads or something outside to help them with their launch or to drive a little bit. But you’re the opposite. Let’s do all this branding. Let’s do all this press. Let’s do all this influencer stuff. Let’s get the brand out there, get in people’s hands so they can play with the dial. They can see how cool it is. Their friends can go where’d you get that case. And then Amazon is like you said, it’s just their preferred shopping cart. And it just happens to be a significant number of people that go there. So you’re not having to do a lot of the gamification that a lot of other sellers have to do to sell on Amazon.
Kevin King:
Like you just said, the PPC doesn’t really move the needle too much for you. So is there anything that I met you with originally at an Amazon conference and you said you were trying to expand your knowledge about Amazon? Have you come to the realization that we don’t really need to do all these little things that other sellers are doing? We just focus on what’s working for us on the branding side and it’ll just come or have you made some shifts in what you’re doing on Amazon to actually try to make those sales on Amazon a little bit higher?
June:
We really focus on why we’re better. So I think that’s really important. So we do look at listing optimization. We do look at how we rank on Amazon organically. I try not to overspend on PPC. Actually. I intentionally cut that back because again, Amazon’s middle and bottom of funnel so I can spend on it if I’m spending top of funnel to drive eyeballs to Amazon that’s the only time that makes sense. Otherwise, it’s not really gonna help me. What I need to do is when I do get that person on the page, my hero ASIN image has to beat everyone else. So we have a great design team. So we make our images. We try to make sure that our images are winning. It’s very much like a search. So are we winning versus the competitor?
June:
Do we look better than them? We do this at the packaging level also for brick-and-mortar retail. So it’s very similar to page one. Like how do I make sure my packaging pops and stands out on the shelf and you pick it up and then you look at Catalyst® and you know why we’re better? So the question we’re trying to answer is why Catalyst® and we’re a performance brand. So not most brands can’t follow up on performance marketing strategy. We can. So we do a lot of performance claims. So things like we’re 66 times more waterproof than our competitor in our waterproof brick of an AirPods case, we have a version that’s our total protection case. That’s a hundred meters waterproof for 330 feet waterproof. And that product, you know, it has 4.8 stars on Amazon. Like people love it. It’s at a super high price point or perceived to be a super high price point.
June:
Now the cost is way higher than an average case. So the customer doesn’t see that they don’t understand that, but in brick-and-mortar, it’s not the right product because at $50 it doesn’t really sell. So that like brick and mortar retailers will say, Hey, I don’t think the customer’s willingness to pay this. On Amazon, it’s probably one of the top products in the category because it’s the ultimate AirPods case that you could have. It’s like pretty much perfect. And if you look at the product reviews, people say why it’s so much better. So what we do is we try to say, what’s the alternative and why am I better? What are the pain points associated with some of the other products in my category, what’s the ranking on page one? And if I go and look at their one-star reviews, I can see all the problems that people have with their purchases.
June:
And then I put that into my product listing and say, unlike these other cases, like if you look at our apple watch case, actually every other watch case out there has fundamental flaws. And our approach is a very different approach to design. So all those cases they just pop on and either it’s a hard case, it’s probably a co-injected case that snaps over your Apple watch, but doesn’t, it doesn’t fully cover it. So what happens is the customer bumps it or knocks it. And then the case goes missing and it disappears. It pops off. And so what I’m doing in my listings is taking that language and using it in my listing to say, Hey, this, unlike other cases, this won’t pop off because it’s strapped down to your wrist and it’s built. So it’s incorporated. So you didn’t just spend 10-20 bucks and waste your money on something like that.
June:
So we’re trying to educate the customer on why we’re better because we’re at a higher price point. So if you think about it from the customer’s perspective, you’re really saying, why is this case worth that money, you’re higher than everyone else on Amazon, but I’m willing for the customer. That’s willing to pay for quality. You just need to make it easy for them to understand why you’re worth that $50. Why Catalyst® it’s because I solve these problems that you have. If you go buy back and go back to page one and buy these other cases, they have all these pain points, but I solve that. That’s why I still have the place on page one. I have a place building the best product on page one. And my job is to explain to the customer, like why we’re so much better and why we’re worth the extra 20-30, whatever dollars it is.
Kevin King:
Awesome. So as an entrepreneur, that’s developing their own brand, their own product. What are one or two really good pieces of advice that you could share with someone that’s starting this journey? That’s, that’s gonna build their own brand. That’s gonna build their own be different. Why their product and not somebody else. What’s, what’s a couple of things that you could share that would be really good advice for someone like that?
June:
I’d say, if you have a name, make sure you trademark it in China, not just in the US because if you’re manufacturing or sourcing from China, someone else can register your trademark and block you from shipping goods out of China with that brand name on it. So first, like just get it trademarked it’s way simpler than not getting it trademarked and then having to recover it cuz it’s, it can be very expensive and long and drawn out. So I’d say, get that done first. Secondly, build a mote. So if you’re gonna do something that’s differentiated, you need to get intellectual property around it. So some of the simplest types of IP are that trade trademark names. Secondly looking at copyright where you can look at if you have anything that’s patentable, so a utility patent would be better depending on the country, the type of IP should adjust, but like don’t outspend on IP when you’re a younger company, I think you have to adjust your IP strategy as you get more mature and understand what people are gonna copy, I guess, really do your homework on product market fit.
June:
So I know that you guys do you probably talk a lot about how to do product research on Amazon. I’d say think about some of the elements that make you different and then think about, is there any intellectual property that I could file and obtain that covers that that keeps out competitors because that helps give me a sustainable, competitive advantage and a reason why I can keep out other people and why I can charge it a little bit more for that product.
Kevin King:
Awesome advice. That’s really, really good advice, June, I just wanna say thanks so much for coming on today and, and sharing all this. If someone wanted to reach out to you and find out more about your company or about you or anything, what’s the best way to do that?
June:
Probably they could reach out to me on LinkedIn because it’s easier than email. I will definitely see that separately. So it’s a lot easier. So our website is catalystcase.com. My LinkedIn is under June Lai – CEO. So you can find me there.
Kevin King:
That’s spelled June Lai just for those listening.
June:
Yes. June Lai CEO. And then for our Amazon store, just search for catalyst case. We’ve got a range of products there. We try to make our products available on Amazon as well, because I think about it as a catalog. So you can see a lot of the products that we’ve made, not just on our website, but on Amazon. Again, we do Amazon because we’re making the product available where the customer shops? So you, you’re trying to reduce that friction. I might have sold to you. I might have closed the sale off Amazon, but you’re just going there to complete the purchase.
Kevin King:
Awesome. So everybody makes sure you go check out catalystcase.com or if you wanna reach out to June, June Lai CEO on LinkedIn. And just one last thing before we wrap this up, I just want to have you tell a little story about something that happened in Hong Kong. I remember we were over there. My wife and I, and a few of us were over there for, I think the global sources show and the Canton fair. And you’re based in Hong Kong. And you said, Hey, let’s go to dinner. And you did this nice little dinner with your team and we met everybody. And then afterward we all went to like this bar, I think it’s the highest bar in the world or something like that. It’s like, I don’t, I forget what 90-something stories up in this one building. It’s the tallest ball bar or the highest bar in the world. And when we were there, we were all sitting around. We had like a lounge, you got in like a little area and we were all drinking, but then something happened when we left and there was a surprise. Do you remember what that little surprise was?
June:
Do you mean the bill?
Kevin King:
Yeah, the bill, someone, we were all doing shot. We were all doing shots and we were, people were passing stuff around. There were like a couple of little groups sitting around talking and then it was, it was time to go and everybody pretty much darted for the elevators to get outta there. And June was there waiting for the bill and then the bill came and I think it was pretty shocking. Someone had ordered like one of like the most premium liquors in the place or something. Right. It was like a bottle of some of the thousands of dollars bottle or something like that, right?
June:
Yeah. Something like that. It was so long ago, but yeah, it was a pretty big bill. Yeah. We went to Ozone, which is on the 118th floor and part of the Ritz Carlton. So it’s in one of the tallest buildings that we have in Hong Kong on the Kalion side and yeah, you and I were just catching up and we went for drinks after, and then all these other Amazon sellers kind of crushed our party and I don’t know who ordered those drinks, but yeah, we ended up footing the bill. I think most of the bill.
Kevin King:
Yeah, that was, that was very kind of you that night. But I, I know that was a pretty, pretty big eye opener. Again, June, I think so much for coming on today and spending some time and sharing your story and talking about how you guys are different. I think it’s something that a lot of people need to think about and not just being an Amazon seller, but actually creating a true brand being different and saying why me and really listening to the way you’re structuring things and why Catalyst®. So you can apply a lot of these lessons that June was talking about to your own business and really build that moat and really build that IP and that unique stuff. That’s just gonna really help you in your journey. So thanks again, June for coming on.
June:
Thank you, Kevin. I really appreciate it.
Kevin King:
You know, in business, the two most important things are innovation and marketing, and that’s exactly what June just talked about, how they’re innovating, creating a truly unique product. That’s protected with a bunch of IP, and they’re doing some very, very powerful marketing to where they don’t have to depend on Amazon to actually bring eyeballs to them. Amazon is more of a shopping cart of choice. Like she talked about very fascinating stuff, a lot of you can take away from this on brand building and creating a true, true business and a true company. So I hope you enjoyed this episode. Don’t forget. We’ll be back again next week with another amazing episode, and before we go, I just wanna leave you with this week’s little golden nugget. We cannot control our luck, whether that’s good or bad, but what we can control is our effort and preparation. It’s remembering you cannot control your luck, whether that’s good luck or bad luck, but what you can control is your effort and preparation. We’ll see you again next week. Thanks for listening.
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