At the age of 21, Patrick Barnhill started Specialist ID, an e-commerce business, because he wanted to "sell while you sleep." In 2015, his company was named the eighth-fastest growing company in Miami and No. 1,686 on the Inc. 5000.
"It started as a website and then we made our way onto eBay," Patrick told me during an e-commerceFuel meetup. "After a few years, while still bartending and having graduated from college, I launched my first true e-commerce store using Yahoo Stores. A close college friend of mine (Duran Inci) recommended Yahoo Stores, as he had early e-commerce experience working for a successful business here in Miami."
I was intrigued by his persistence (Specialist ID is now a 15-year-old business) and focus in scaling the company to a multimillion-dollar e-commerce business.
I spoke to him at length about some of the strategies and tactics he implemented, which led to the phenomenal growth of his company. I was amazed at the level of intricate details Patrick shared that I believe can help many e-commerce entrepreneurs today who are looking to grow their businesses.
What was the journey like making it to the first million dollars in revenue?
For the first seven years it was trial and error like crazy. Equipped with that experience, and having read Jim Collins's book Good to Great, I realized that if I stopped trying to compete on the big complicated ID and access control systems, and became the best in the world at ID Badge Accessories, I would have huge competitive advantage in a niche that was somewhat neglected.
We started putting more time and detail into badge accessories than anyone else in the world, and that quickly started to snowball. It took 10 years of trial and error, mixed with college, bartending, more trial and error, and major setbacks.
What were the pivotal points that changed the game for your business?
Becoming the best in one area was huge. If you can answer the questions related to your product that lets a customer know with absolute certainty that they can order this item online without ever having seen, touched, or smelled one, then you will convert. For us, this was questions like Is it clear on both sides? Does hold multiple cards? How big is it? Will it fit my card? etc.
Product videos helped set us apart and answer any questions that may have still existed after seeing the pictures or reading the descriptions. Also, videos show that you are real people and actually have the product.
To have success on Amazon, eBay, and other marketplaces, you have to just get used to unrealistic customer expectations and unfair reviews, etc. We developed a very liberal and customer friendly customer service policy where we lose money on a few orders (a very small percentage). We don't try to be right or argue. You absolutely have to maintain solid metrics and ship on time. This requires some solid inventory management and very good customer service.
It's pretty obvious, but having a team is essential. Learning to delegate and let things go is the holy grail in business. When I realized that if someone can do it 80 percent as good as I felt I could, it was better than me doing it 100 percent and not getting things done fast or at all. Build better processes and give people a chance.
What's the path from $1 million to $3 million in revenue?
Finding the processes that are successful and repeating those was the key for us, especially pushing our own brand and becoming a brand, rather than pushing other peoples brand and losing to competition (including Amazon going direct) in the long run.
Using existing tools to scale. There are so many amazing tools out there that you can do 95 percent of what you need to. Then for the missing 5 percent, having the ability to build custom integrations is huge.
To scale beyond $4 million and be able to go to 10+, we had to do some serious soul searching and have brought on some major changes. We outsourced our accounting processes to an e-commerce accounting and processes specialists and they have allowed us to scale on new marketplaces, both domestic and international at a level that we just could not have done when we were trying to handle the accounting internally.
Additionally, we started using Skubana, which allows for very advanced inventory management, more streamlined order processes, and has greatly improved our purchasing abilities, allowing us to issue and track POs all in one place.
What's the one thing that you would advise e-commerce founders to do if they wish to scale big?
I would look at e-commerce as two areas. Building your own brand, and reselling. If you are just a reseller, I think you can be successful, but will have a very hard time on Amazon and other third-party channels. If you resell and have a great store front but want to be online, you have a chance at leveraging your existing customers and brand and should definitely have a Shopify store and some serious resources allocated to it.
If you have your own product/idea/brand, there is room for some major success online, even on Amazon. Proof of concept is easier to get than ever before by either launching a few as a third-party seller and going FBA (Fulfillment by Amazon) to test the waters.
Even if you lose a few bucks on each one, overspending on amazon sponsored products, you can quickly see if there is demand. If there is, move fast! Alternatively, with Kickstarter and other platforms, I have seen people make hugely successful product launches, and you can read and model after their success.
I cannot stress enough how important it is to understand the value of a brand. There are tons of stories about counterfeits and Amazon hijackers, destroying a brand.
If you understand how to protect your brand you will have a much better chance of winning in the long run. Just understanding your rights as a brand owner and trademark owner and trademark basics will set you miles ahead!