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Welcome to the Million Dollar Sellers Podcast. I'm your host, Nick Shucet, and today we have Megan Harmon with ThornCrest on the call. I'm really excited to bring Megan on. They have some great accomplishments that I wanna call out first.
They've helped a company sell for multi-billions of dollars in less than a year by removing 80% of unauthorized sellers and increasing their buy box rate. Megan, I'm really excited to hear you dig into that.
Share a little bit of knowledge on some things that listeners could take away now, but also how you can help sellers on Amazon and more than just Amazon achieve some of those things as well.
You've got some other great accomplishments on here, not just on the brand protection side, but taking a brand from one million to 50 million in revenue internationally in retail stores. I think that's also gonna share a lot of value as you describe how that played out.
As of today, you mentioned that ThornCrest has removed 39 million of unauthorized inventory over the past seven years. Megan, you've got some great accomplishments. I've worked with your team personally and I still do.
You guys are one of the best companies I've worked with when it comes to just being professional being on point, always meeting the deliverables that you guys say you're gonna deliver.
I think it's really great for companies that are ready to scale. Megan I'm gonna go ahead and kick it back your way and just share a little bit of knowledge about how you got into this ThornCrest operation and a little background on yourself.
Thanks so much, Nick. Thrilled we were able to make this happen and that we're able to be here and to share a little bit. The journey to ThornCrest was not necessarily a long one but actually started 10 years ago or so.
Susan, Kathleen, and I, are a woman-founded company and we met 10 years ago. A little bit over 10 years ago now. This was inside a brand.
The experience that we have is from being inside brands and having that intimate knowledge of the operational structure of the supply chain. This was a consumer-driven product that we were all part of.
This was one of the scenarios where we took the brand from one million to 50 million on the international side by really digging in with the brand. Originally it was sort of what we call the peanut butter approach.
You take everything we did in the US and you just spread it over to Europe and spread it over to Asia. That only works for a certain period of time till you hit about a million things and start to break a little bit.
You're not scaling because you don't know the culture, the local businesses, the retailers, et cetera. You really have to treat each market individually separate as they're truly their own country, not as a region as a whole.
Each one has its unique identity. In doing that, that was a lot of travel. I visited a lot of places and filled up passports or two. It's been an incredible experience.
At the end of the day, what it also taught me was how multiple brands go from being small to big and where the breaking point happens. We call it the teenage years when you get into the double-digit millions.
All of a sudden it's either you stall out or you have to take some of these bigger risks and put the infrastructure and get the guidance to scale that business. That was certainly a huge success, taking that international business to such a big level.
Now, the company has entities all over the world. That was very exciting. What it did also show us and tell us are all of the problems that can come from international and even domestic expansion.
Things like sellers popping up, gray market imports, exports, and counterfeits that look just like your product hanging on retail shelves and the retailer didn't even know it wasn't yours. It's interesting when you start flying to some of these countries.
You're like, hey, looks like there's a demand here. I have an interest in Hong Kong, China, and Japan. You go and you're like, this is my packaging. This is my product, but my name is spelled wrong.
It's a complete counterfeit good of the design. That experience within that brand is how ThornCrest was founded. It started impacting in the millions to the brand. Basically, counterfeits were almost 20% of some of the domestic returns.
The product was being replaced for free because it's under warranty and that has a massive impact on the bottom line of the brand. There was a very clear need for not just a monitoring and enforcement software program.
But for someone to do it because we could not outfit the company with five people just to monitor trademarks, IP, counterfeits, track down Johnny's Shop, track down gray imports from Singapore into Japan and into Hong Kong.
Our legal team was doing contract work. Our GC was not doing this level of work. When we got into a room, everyone pointed at each other. The CEO is like, well, whose problem is this? Well, this isn't our issue.
We're not selling to Johnny's Shop. I didn't authorize gray imports from the seller in Japan over to Hong Kong. Legal's like, well, we're writing the contracts. OK, and demand planning is like, well, we're buying.
We're like, well, but you're buying too much. Well, we're buying according to your forecasts but our forecast might be inflated because we've got gray imports coming from another country. Who owns this?
We all walked out of that boardroom going, we all own 15%, 25% of this problem, each one of the departments. Then who executes it? That was the biggest like, well, shit, pardon my language, but what do we do?
I'm trying to meet the numbers. I'm trying to grow the business. Council's chasing down patents and making sure those are wrapped up nice and pretty. Demand planning is working with the factories through forecasting, they're relying on sales.
Could sales own this? Sure, but then do you want us chasing bad guys or do you want us growing the business? We can't do both. We can't police in one side of our mouth and then call our buyer and be like, hey, place a bigger order on the other side of our mouth.
That's basically the birth of ThornCrest we need to have a software program that gives us the tools, and the data to know what's going on and then to have a managed service enforce it and take that problem.
Amazing. I think you touched on so many great things there. I just think it really speaks to your level of experience. I also have a hunch about your ability to build relationships with people.
I think going out to another country and understanding the local culture and meeting with the right people, you have to be a certain type of person to really do that effectively and people want to continue to work with you.
Then on the back end, you've got to actually prove that you have value to add. In between, there are a lot of things that have to happen between the person queuing that up and kicking off the relationship and then executing everything else.
I think that just really speaks to the scope of work that ThornCrest is capable of doing for the right brands. I'd like you to kind of talk about who are these right brands. What revenue tier are they in?
What problems are they probably facing right now that they don't know how to deal with?
It's a great question. I think for every brand the story's a little bit different, but I would say, where I said this teenage years of the millions, when you start hitting this 25, 30 million mark, you probably have a monitoring service in place.
You may or may not be omnichannel, but you probably are dipping into omnichannel if you're not, at the very least. That's where you get channel marketing. You certainly can organically grow on Amazon.
But visually for consumers, retail is where you get the brand marketing in the presence. That's channel marketing eyeballs on your brand. When you're on an ecommerce exclusive platform, you're one of fifty thousand pages.
It depends on the category you're in. Could you repeat that question one more time for me, Nick?
What kind of problems might a company be facing now that would raise the alarm that ThornCrest has something to offer? Maybe even a lower revenue tier, like coming into those teenage years as a lot of sellers in MDS.
A lot of sellers in MDS are maxing out Amazon and they're either looking to sell and be done with that one or they're looking to grow and go omnichannel and get into retail.
Thank you for that clarification. Pre-teenage years, pre-double digit millions, if you will, or that 20 to 30 mark, if it's e-commerce exclusive, it's unlikely that our services are going to be too valuable.
It's important to know what your brand's doing map-wise and monitoring but you're unlikely to fight too much with buy box because you probably don't have additional inventory from other channels coming into Amazon.
That's where we see the biggest shift for brands. You could get online arbitrage where they buy it from Black Friday and then resell it online. Certainly, that's an issue that we see big e-commerce exclusive brands deal with or D2C.
They did a Black Friday promotion or a Labor Day promotion on D2C, and a business went in and bought 50 units, and they didn't see that coming. Basically, when you start battling your buy box, you have the hint that there is something going on in the channel.
You've got other people buying your product. Whether it's Vendor Central or Seller Central when you're fighting buy box, who are you fighting against? Everybody really should be on your team. If it's an online arbitrage, that's one thing.
If you're e-commerce specific, then we would talk with you about what are your criteria on your D2C site. What raises red flags for D2C? What is your Amazon business site doing if you're on Amazon?
We would dig into basically your e-commerce side of things. If you're retail, we would need to look at, say, where you're at from a retail side, who is your distributor, et cetera. We would start really pulling, you have more layers, we would start peeling back some of those layers.
The biggest hint that you may have a problem is buy box fighting.
You touched on something a couple of times that hit me that also makes ThornCrest really special. I think this is also something I'm good at through a different avenue, which is that you guys understand people who don't play by the rules.
I don't play by the rules. I'm not a rule follower. I like to bend rules and test them and see how far I can take things, but you guys have a clear picture of what's going on in these supply chains and what's happening and how to deal with these bad actors and fight back.
If you're the type of person who has always played by the rules, you're gonna lose that battle if you just keep trying the way that you've been trying. You need a lawyer who understands the agreements how to escalate things and who to escalate them to.
Then you need data to back those things up. That's what ThornCrest does so well, is like you've talked about is that managed service that also has all that data to back it up. I know what it's like to work with ThornCrest, the bi-weekly meetings, the great reports, and the dashboard.
Why don't you let people know a little bit about what working with ThornCrest is? Like I said earlier, you guys execute things very well and always do what you say you're gonna do.
Honestly, the managed service side is obviously about the brand and the relationship, but making a business-to-business win on both sides. Nick, we've talked in the past about some brands.
We've got some brands that have a lot of authorized resellers. This is a really unique, not unique, but messy approach if you will, and the reason is, and we would advise the brands directly, you're not going to have investment from the resellers to your brand.
Everyone is on the same playing field, so no one's going to invest because they all have a potentially equal opportunity to win the buy box if they're all FBA. Where's the real benefit there? Why not have a brand or a seller invest in your brand?
Spend the money on marketing and the activities to further promote your brand and then they reap the benefits. I think that's where our like managed service comes in where we work with brands to have that conversation because we've been on the brand side.
We know what that's like. I don't wanna say, rule followers. I think we're all a little bit of rule-benders, but basically, you've got to create a win-win. Otherwise, you have everyone just mediocre.
No one wants to be mediocre. No one's in business to be okay. Then they don't go home like, yeah, we're just okay, this is great.
People with ambition strive to be better and most founders and entrepreneurs like you want to be better, to do more, to succeed, and to push boundaries, like you said. We have conversations with resellers.
We work with always brands, but the resellers that we see popping up, some of these resellers have significant inventory. That means they probably have decent cash flow. Well, if they have decent cash flow, what is it that they're doing?
They can't just be bad through and through. I always approach the world and individuals like they've got something to offer. My favorite pastime at ThornCrest too is turning bad actors into good actors.
Having a conversation with them and saying like, picking up the phone, saying, what is it that you guys do? Is Amazon your only business? I had one seller say, no, I've got gas stations. Amazon's a part of my business, but I do gas stations.
I said, well, hold on, hold on. Can you bring your MSRP up on this brand because it's a race to the bottom? You're degrading the integrity of this brand in terms of MAP. Let me introduce you to another brand of ours that is expanding in convenience stores.
This could be a great win-win for you guys. The seller was like, well, sold. Deal. That's I think where that managed service comes in and where you've got sales plus legal.
You have the force of a hammer, but you've got truly in the background, sales, seasoned salespeople going, well, how can we create a bigger opportunity for everybody? Just taking a stick doesn't always work.
You gotta stick and carrot approach and figure out what makes everybody tick because everyone's in business to make money. How do we all do it together and sing Kumbaya rather than approaching everything with a hammer because that doesn't ever work?
One word that comes to mind that I know is important in business when you tell that story is the word leverage. Going back to your ability to build relationships and how you navigate a difficult scenario like that, most people don't do that.
Most people get angry. They get negative. They fight fire with fire and no one really wins. Maybe you do win, but maybe you missed out on getting your product into thousands of convenience stores all across the country right because you didn't think to go down that channel or that avenue.
You can't just do that on your own
Maybe. Everyone's a little burned.
This isn't like a hack or a tip that you can just, oh yeah, I'm gonna go do that. No, Megan and team ThornCrest spent years traveling, those passport stamps, building these relationships, having these conversations, and figuring that stuff out.
You can't do that overnight. You're not gonna do that overnight.
Well, I think it's having that leverage book though, too. You certainly can have that conversation, but what are you going to offer for them to pop off, other than your secondborn? What do you do?
I think that's where like you said, that leverage comes in. You've got to have more levers to pull on than just one or two.
Yes. I like how you're looking at things just through a different lens than most people. Your statement about having 50 authorized sellers. We've got a brand that likes to have a lot of authorized sellers on their listing.
We've been banging at their door like, hey, let us create your storefronts. Let us create your new listings. Let us put 5% of our purchasing price into advertising. Give us the opportunity to be an exclusive seller.
They won't do it. I think it's a fear thing. In my head, maybe there's one or two things. I'd love to hear your opinion on this. I think it probably comes down to whether am I gonna sell as much as I did last year. Are those POs gonna come in like they did last year if I go down to one person?
Honestly, I think that's the fear. I think that is absolutely it is, well, if I've got 50, 50 do more than one or two. Not necessarily. You could have 50 minnows. They're not gonna do as much as one big dog.
I'm not saying put all your eggs in one basket necessarily, but if you're gonna test the water, you should test the theory. Don't knock it till you try it. Test the theory, one or two SKUs, and see what happens, because the brands are going to be surprised.
For the ones with multiple sellers, I think the thought is, well, a PO is a PO is a PO. Every sale is not equal, but sometimes that's how it feels. Well, if they're all selling on Amazon, every PO is equal.
Every PO is not equal, not if you're getting sponsored ads and listings and placement. You're now talking about brand recognition. It's a very different type of PO. If that PO comes with ads and brand pages, you're talking about a branding exercise.
Brands last longer than products because brands make consumer impressions. Products are flighty. They come and they go, but if you remember a brand name, then you're more likely to go back to it to buy something different if it served you well in the first place.
That's also scary. It's a scary leap. I always say walk before you run and test the waters. I would advise any brand to do that, but by saying just flat-out no before even trying it, you could be leaving a lot on the table.
You didn't realize you were leaving on the table because it was being dismissed.
Do you guys help with or have any advice? I'm thinking of both parties here because I know there are people in the group and maybe some other people listening, they have value to add, and they want to do it, but the brand is fearful of taking that leap.
I talk about this in other podcasts. A lot of businesses are still operating on old-school business tactics. They're reading EOS, they're reading, scaling up, great books, but it's not the world we live in anymore.
Not everyone's going into an office building and cash options have changed. If you look at a company like Brex or Parker or 8fig, these companies will give you money based on your trailing 12 months and you can get it fast and it's low interest and you can really scale quickly.
They don't understand all that stuff. How do you put together an agreement that locks in those baby steps that maybe turns into something that is like an annual agreement? Have you guys done that at all?
How do you calm both parties' fears? On my end, it's like, well, I don't want to build your Amazon storefront and six months later you just get rid of me. Now you've got this great asset that's going to be valuable for three years maybe and I'm out of the picture.
That's a great question. I really think that it needs to come into the proposal stage. It needs to come from the seller and the brand. Then we could come in as a mediating party if you will.
Putting together a proposal and saying, if we hit X threshold in the first six months, we get another three months. If we commit to doing your brand store, then we get a trailing commission of six months when we end if you ever end the contract.
That way you can recoup some of your losses or basically sell out to try and recoup some of that cost that you put into the brand, or does the brand say, we'll give you X dollar figure, couple thousand dollars or whatever if we hit over X, you give that back.
That basically was your investment. We give you a down payment and installment to help support your upfront costs. Once you hit X value, we know how much commission you're making and then you start dipping back into that installment and give it back to us.
At the end of the day, what are the fears? What is your fear? It's investing and then losing money. What is their fear? Is it the loss of POs? Is it that they don't think it'll be successful? Well, you don't know until you try, and so then they wanna protect that SKU if you will.
Put a threshold and make it an easy out. Give me three months, or six months, and move it to a year. Then it's an annual contract, then you start getting in a rhythm, and then you're gonna give me another couple of SKUs.
I've proven my process. I've proven to you that I did increase sales on that SKU. It's very analytical when you think about it, but put KPIs around it that protect your fears and their fears and make it an easy exit.
You don't wanna be stuck in that contract either if all of a sudden you're realizing that they're no longer promoting or their lack of inventory. They didn't buy enough because your sales are starting to climb.
They didn't buy enough because it wasn't doing that before. Now, your sales are hindered not because of you, but because it wasn't, you know, they had no idea that demand would be so high.
There's got to be criteria in this proposal and sign off and whether that's a true agreement or whether it's a laid out memorandum.
All right, so Megan, you were talking about this great agreement that could come to be between a reseller and a brand that wants to go exclusive and partner on Amazon or another platform. Why don't you just tell us a little more about that agreement?
How you would negotiate that deal and start working on it?
I think the easiest starting point is a memorandum of understanding. Putting a two-page together with signatures on both sides, timelines embedded, what you provide and what they're going to provide, and the termination around that.
Yes, a contract, like a mini contract, doesn't have all the legalities, you certainly can go into a more formal contract but sometimes a memorandum of understanding feels a little less daunting, especially if you're doing something on a trial period.
It feels just a little bit less lawyers involved, if you will. Sometimes that is the easiest way to push things forward on a trial and then to go into a more formal longer-term contract, whether that's six months or 12 months or whatever, because basically the initial term was successful.
Is a memorandum of understanding, is that like a legal term? Do you use that for a certain reason or is that just how you're describing it?
A memorandum of understanding is a legal term, yes. I use that more on the sales side, honestly, for proposals of like, we're gonna do this, you're gonna do this, we make this mutual agreement.
Yes, it is a contract, but from a penalty standpoint, typically in a memorandum, you would have penalties laid out. It's almost like formalizing a proposal, like a true nuts and bolts proposal. It is a contract, it is binding but has less verbiage and less protocol.
You don't have things where you would sue each other if you went to a region. It's a lot less dense than that. It certainly can go as far as that. It just depends on what the brand and the seller are trying to do.
If you're trying to do this and maintain the existing relationship with the brand despite the success or failure, but you're both going at this as a trial, sometimes a memorandum of understanding can be like a handshake or a napkin, like you used to do basically.
It's like, hey, let's try this and see how this works. I still wanna be a part of your team. I wanna be a part of your brand, et cetera, but let's try this. Then if it doesn't work, I'm gonna fall back to the old ways.
The problem sometimes with contracts is when you throw a book at a brand, when you throw a book at a seller when you throw the contract at someone and you terminate, the relationship's kind of over.
The contract is there if something terrible happens that cannot be resolved by a simple conversation or business discussion, et cetera. You breached, you're in breach of contract. That never really ends well unless there's a standard term.
It was a year, we've ended our year, we're rebidding, no big deal, but sometimes a memorandum of understanding is just a soft proposal and more of like a napkin agreement.
It still leaves the door open if things don't go so well.
It does. It's a softer way to approach the situation rather than saying, I'd like you to sign this contract. If you've got a brand that's already a little skittish about the whole conversation, sometimes putting a proposal in front of them that's just a soft, like, yeah, I agree to this.
Yeah, I agree. Okay. Moving on.
Amazing. Megan is that something you guys help do? I'm sure that's probably a part of your service if you have a client, but what if someone just wanted that?
Call us, email us. Yes, we do. ThornCrest has legal and sales. I would sit with one of our lead councils and I would say we've had this conversation. This is what the seller wants. This is what the brand wants.
This is how it needs to look. Can we put this together in a way that makes it easy and non-threatening for both parties? We've got an easy format and it's just them looking over it. If I was on the call, I'd say, here's what I would suggest it looks like.
They would look it over and say, yeah, it looks good. This makes sense. Perfect sense. We don't need to tie anything up around it, and off it goes. That would be a simple contract fee. A one-time flat rate, $500, if you will.
Awesome. Man, I got a call on my calendar next week where I feel like I could use you there. I don't know if I want to try and pull it off myself based on what you just told me or just bring you in.
Hey, Nick, you're part of the brand protection program. You could come in as a consultant. Be happy to.
I think I need to put my ego to the side and just let you shine and do your thing. Someone going straight to a contract, now I see it as just, it could be such a huge mistake and a memorandum of understanding, I've never heard of that.
Now I can see the value in it, and it makes so much sense. It comes back to ThornCrest and you being able to navigate all these different things and bring them into business. It totally makes sense if I was trying to build a relationship with someone.
I'm not gonna go from the first date to being married. We're going to date a little bit. We're going to figure things out.
Make sure you like each other before you get married.
Thanks so much for coming on, Megan. This has been extremely beneficial and valuable for me. I'm sure a lot of sellers and listeners will get a lot of value out of it. Why don't you let the listeners know where they can find more about ThornCrest and what you guys offer?
Absolutely. We have an MDS landing page. If you want to go, I think it's in everyone's app as well for MDS, but basically, thorn-crest.com/MDS is a landing page or you can email me, Megan, at thorn-crest.com.
We're on LinkedIn as well under ThornCrest and you can message us there too. Any questions the same questions you're having Nick, we'd be happy to help.
We’re a part of this community and want to understand how we can help support you guys and your abilities, desires, and ambitions to grow.
Amazing. Will we be seeing you at any events soon? I know you guys did the first Inspire and we had the Barcelona event. You were in Barcelona, yes, I did miss Barcelona.
We did. Yeah. Then we were in Barcelona. We missed you in Barcelona. Our intention is to be at some of the events coming up. Not sure what we're going to be looking into. We're looking through what our event calendar looks like in 24.
Things stack up pretty quickly. I'm sure everyone listening can resonate with all of the Amazon events and conferences but we certainly will be at some of them, just don't know which ones yet.
All right, Megan. Well, again, thank you for your time. I know I'll be talking to you soon. I look forward to seeing you at an event sometime soon as well.
Sounds good. Thanks, Nick, for having us. Appreciate it. Have a good weekend.
You got it, thank you.
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