Hello! Who are you and what business did you start?
Hi all! My name is Eugene Ravitsky. I co-founded FactoryPure with my brother, Mike. We are an online retailer covering several product categories with an emphasis on heavy goods, particularly generators. We also carry smaller items, like drones and electric skateboards.
Our business is mainly B2C, but we provide a solid supply of generators to commercial customers like installers and electricians. This includes anything from inverter generators (small, quiet, and good for camping) to portable (open frame, larger, great for the field), to standby (whole-home power backup). The primary demographic for this category is males 35 and older, while products like electric skateboards, hoverboards, scooters, and drones will trend younger.
Our cumulative sales were $2.6M in 2017 and $6.1M in 2018. Today, we generate around $3M per month in revenue.
What's your backstory and how did you come up with the idea?
My brother and I got the entrepreneurial bug early in life - it was somewhat hereditary. Our parents and I immigrated from the Soviet Union when I was very young. Though they could barely speak English, they decided to take on the unimaginable journey and sacrifice of uprooting themselves so that their child (and future child) could have a better life. After years as a janitor and painter, our father started a contracting business that now operates in San Antonio, Austin, Dallas, and Houston.
My first business venture was at 5 or 6 years old. I received a VHS set demonstrating how to create balloon animals. A friend and I went door to door at our apartment complex to demonstrate my skills (and sell the goods) on demand for $1. It turned out that my skills were lacking. I remember continuously popping the balloons during the blow-up process. Even at that ripe age, I knew what embarrassment was. A few people gave us the $1 to go away. For better or worse, I was an entrepreneur before I even knew the word.
Our first real venture (not that balloon animals aren’t serious business) was eCommerce retail of cell phones and other electronics. It saw rapid growth, though we ultimately ran into some trouble with a cell phone carrier that didn’t want independent websites selling their products. It scared us, and we decided to move on in search of a friendlier category within eCommerce.
We also saw that we lacked a proper infrastructure that could scale. We were young and raw and focused on the wrong things. We knew how to market and sell, but were weak in operational fundamentals. Here were our learnings for the next venture, FactoryPure:
- Find a clear path to sustainable relationships on the product sourcing side
- Establish highly-specific rules and procedures for customer service
- Implement tailored software to manage orders, returns, chargebacks, and other daily business events
Describe the process of launching the business.
Our first step was choosing a product category in which to specialize - we landed on air purifiers. Through online research, I identified that air purifier manufacturers are more open than average to working with small, new retailers like us. We quickly put up a BigCommerce website so we could prove we have a medium on which to sell. In this phase, do not worry about overly optimizing for conversions, hiring a developer, or buying too much inventory. You should obtain proof of concept and make changes later. Regardless of industry, you need to get some online reviews and sales history before you will get the attention of better-known brands, higher-quality vendors, or larger customers. We thought of this as “traction,” and it accumulated slowly at first.
Using the waybackmachine, you can see an early version of our website below. It was unorganized and read more like an eBay listing. But it got the job done!
The next step is to create relationships with brands whose products we could resell. Some brands require minimum order quantities (MOQ). We asked such brands to waive MOQ in exchange for promotion on our front page’s rotating banner. Most of them accepted the proposal. There are always suggestions you can make to manufacturers/vendors/dealers. Nothing is set in stone, regardless of what their initial terms are.
I know money can be tight in the early stages, and I fully believe in a lean startup. With a drop-ship model, we were able to bootstrap the business. We didn’t need to pay for goods until we received payment from the customer. The business model that was easier for us was easier for everyone else, too. That’s why dropship businesses abound, they compete on price, and margins often converge to zero unless you get creative with promotions and incentives.
Initially, you may have to pursue lesser-known brands or accounts. High-level manufacturers may ask for revenue numbers that you simply do not have. The idea is to grab the lowest hanging fruit and turn that proof of concept into leverage with larger brands. When we launched, it took 3 or 4 months until our first sale. eCommerce is a tough business with low margins, and it will not be a short-term play.
Since launch, what has worked to attract and retain customers?
We are constantly vying for new customers. As you can imagine, there are not many returning customers when a good chunk of sales are generators. This makes the customer acquisition cost very high. Aside from google ads, here are a couple of techniques we use to generate recurring revenue.
Email Marketing: Email marketing can be done in thousands of different ways. I want to share one strategy we implemented to target customers who are more likely to be recurring buyers. We use Airtable and Parabola to search our customers/orders for keywords identifying the customer as an electrician or builder. It then automatically pulls email addresses of those who match the terms (and accept email marketing) and adds them to our segment in Omnisend. We can then send highly focused content about generators to these potential customers. This has led to a 10% conversion rate.
Facebook ads: You cannot get more highly targeted ads than Facebook. Facebook knows potential customers’ age, location, gender, interests, etc. Your money can go a long way here. The key is to A/B test various demographics and sees what provides the most engagement. You can also easily target customers who like your competitors. You can also set up retargeting. These ads automatically populate if a potential customer browses your site and leaves. We used AdEspresso to manage Facebook ads.
How are you doing today and what does the future look like?
FactoryPure is a team of 12 people. 100% of sales come from factorypure.com. We do not sell on Amazon, eBay, or other third-party marketplaces and have been profitable for some time in the first year. Our gross margin is roughly 10-12%, with a net of around 7%. We invest heavily in Google ads, with a ROAS (return on ad spend) of over 20x. This may seem high, but it is an absolute must for our industry, as our conversion rate is under 1%. When selling commodities, there is a lot of competition and the margins are exceedingly low. Many businesses do not properly track costs like the overhead of rent, employees, chargebacks, damaged products, cost of sales, etc.
Revenue does not equate to sustainable profits; you can buy web traffic and orders by bidding irresponsible amounts on-click ads, so you drive the top line but your margin falls out of the bottom on that expense. Our revenue growth has been roughly 100% YoY over the last 5 years, but the focus has been on building profitable revenue by carefully managing gross margins, ad spend, and intangible costs (A SKU could be high-margin, but if it has a high defect rate, the customer service cases will clog up your resources. This effect is hard to measure unless you have sophisticated systems in place).
Here is a chart of visitor traffic for last year:
You will see summer is our busiest season, which is the norm for a lot of businesses. We may also see spikes early to mid-fall depending on weather activity.
Over the last 6-8 months, we started revamping our website. The first step was overhauling product pages with visibility and conversions in mind. I will go through the breakdown section by section.
We wanted to answer several commonly asked questions right at the top. “Free Shipping” and information about our extended warranty program are displayed and easy to read. We show a coupon for items that are discounted. Displaying it in this format automatically allows the customer to copy the coupon code. We display large product images and easily scrollable thumbnails.
As you scroll down the product page, you have a section highlighting similar products and attachments/cross-sells. The similar products section includes reviews and an excerpt with features of the current item as well as those similar to it. Features highlighted in green are those that match the current item.
Scrolling further, you see an overview section that includes backend coding automatically pulling information about the power outlets found on the generator. You will also notice a static menu bar allowing you easily to jump from section to section:
When we overhauled our product pages, we were forced to manually edit all of our existing products. This took a solid 7 months - as a matter of fact, we JUST finished. I believe in concise descriptions. Customers don't want to read paragraphs. Our new version included shortening descriptions and switching to a 2-column layout, providing for less scrolling.
We added a clear warranty section as well as documentation. If you don’t have information visible on your site, customers will seek it elsewhere. Once they leave, they will likely never come back.
Moving forward, we are looking to expand our product offering. We have team members whose primary objective is finding brands we believe in. We are in the finishing stages of our new warehouse/office space, which will double storage capacity from 6,000 to 12,000 sq. ft. Alongside this growth, it starts making sense to bring other functions, like web development, in-house on a full-time basis.
Through starting the business, have you learned anything particularly helpful or advantageous?
It’s hard to remember all the little lessons you learn along the way. Most of them are applied somewhere within the business. A lot of it is subconscious at this point. But this highlights an important point. There is no substitute for business experience. You have an idea in mind, and by the time the business is successful, I can almost guarantee it will be a shell of the original vision. The reason for that is, regardless of how many books you read, you will never understand a business like you can from within. These experiences are invaluable. And the best part is that you can apply them to any other idea or venture in the future, sometimes without even realizing that you are doing that.
The most important thing is to hold yourself accountable. When you start a business, you have no boss. Most of the initial work (and by “initial,” I mean the first few years) is VERY boring. It can be difficult to make yourself do something when you have zero guarantees that it will bring you success. Many people set goals, but they work better when you take it a step further:
- Set a sequence of smaller goals. Rather than saying “I want my business up and running by next year” say “I want to have my website functioning by…” or “My business plan will be completed…” which brings us to the next step.
- Attach a date to those goals. A goal without a realistic timeframe is just a dream.
What platform/tools do you use for your business?
Over the last couple of years, we focused heavily on automating anything and everything! All decisions have scalability in mind. It seems like a simple concept, but it is difficult to foresee if the infrastructure built today will withstand 100x or even 500x growth. The Shopify platform has a lot of useful apps. Here are a couple of our hidden gems:
We use Simple Purchase Orders to streamline order submissions. It allows us to set up vendors, apply which products go with those vendors, and with one click submit all orders.
- Airtable allows you to store data pulled from Shopify including orders, customers, and products
- Parabola creates automated workflows to pull that data based on conditional criteria
- We set it up in a way that saves us hours each week. It automatically pulls orders that have not shipped within 4 business days. With one click, we can email those orders to 100+ suppliers to get status updates
What have been the most influential books, podcasts, or other resources?
eCommerce Fuel is a podcast I have been following for years. There are plenty of entrepreneur podcasts, but this one is eCommerce-specific. Mixergy is another that follows the same format. Much like this great site, I follow podcasts that interview successful people. The risk there is survivorship bias, meaning you get tips that, in hindsight, worked for particular entrepreneurs. However, the same strategies might have been implemented by people who ended up failing, and we wouldn’t hear about that. So, be selective about which pieces of advice are likely to apply to your case, and seek also to learn lessons from people whose businesses failed.
Advice for other entrepreneurs who want to get started or are just starting out?
I do not believe you MUST follow your passions to be successful. I hear it all the time - find what you love and the rest will take care of itself! This puts you in a box and limits your venture to a few ideas that evoke a certain emotion. I would instead research gaps in markets that could use added value. You can still build the business in a way that adds meaning to your life, like by donating some profit to charity or building a unique culture.
Perhaps take an idea that exists and ask yourself, “how can I make this better?” Many potential entrepreneurs have a light bulb moment. Upon doing the background research, they discover that their idea exists, and they call off the search. But every industry has problems that create business opportunities. You could operate more efficiently or, for example, you might enter an industry, learn about pain points that the operators face, and end up pivoting to create some software or business solution for those operators (who initially were your competitors).
The truth is there are a million ways to slice an onion. Don’t put yourself in a bubble. If you find something you ARE passionate about and see a ripe opportunity - even better! But don’t make that the only option. There is a lot of satisfaction in building a successful business and seeing it operate, irrespective of what the venture is doing.
Another pitfall I see is people too quickly deciding “I am not cut out for this.” Successful people in the media are often portrayed with a certain personality - a boisterous, fearless mentality. Perhaps it is because they highlight folks once they have already made it. Lots of those people weren’t like that when they started out. I find people assume that if they don’t have that personality type, they are not fit or strong enough to lead. Perhaps people have a fear of confrontation or don’t yell their thoughts. There are many leadership styles and personalities, and there is always one that fits your character.
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
Hey! 👋 I'm Pat Walls, the founder of Starter Story.
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