• Jeff, 48, founded "Happy Kit and Kaboodle" 22 years ago.

• He operates in the homeware and gifting sectors of consumer products, catering to both adults and kids.

• Initially Jeff was a wholesaler, rebranding and reselling market designs available in the domestic market.

• Over time, he transitioned to employing an in-house designer to create unique products, sourcing factories in China to do the manufacturing.

• Embracing e-commerce, Jeff started with his own website 14 years ago and later expanded to Amazon and eBay. Currently, he primarily focuses on Amazon (70% of sales), his own website (25%), and residual B2B sales (5%). eBay has fallen away.

• Key categories include flower vases moulded in glass, with those 15 SKUs accounting for nearly 40% of his 135 SKU home furnishings revenue.

• Jeff also offers seasonal items like kids’ toys and Halloween costumes.

• He uses FBA for Amazon and has a 3PL for his other sales (also sending stock through to FBA)

• Jeff's team totals 7 team members, including of Olivia (Livi), who has been with him for over 10 years, along with Phoebe, a more recent hire with prior expertise in e-commerce and Gurpreet, a raw trainee.

• "Happy Kit and Kaboodle" is expected to reach a turnover of $2.8 million this year.

• Jeff anticipates that this should provide a substantial profit that will support his family's comfortable lifestyle, but since the start of the pandemic, he has been unable to recover the profitability he enjoyed in 2019 and before.

Personal Life:

• Jeff is married to Sonia and has two children, Ethan and Orla, who attend fee-paying schools.

• He also has a son, Michael, from a previous relationship; Michael is due to attend university next year.

• Jeff faces funding concerns for Michael's university education, which highlight the importance of improving business performance.

Challenges and Strategic Considerations:

• Jeff faces several challenges as he navigates the post-pandemic market.

• Increased competition has intensified pressure on sales prices, affecting the company's revenue. Being surprised that he could raise prices reasonably easily during the pandemic, there is now downward price pressure, meaning he is having to lower prices back towards pre-pandemic levels.

• Many operational costs have surged - ocean freight costs have stabilized for now, but all other costs, including FBA and overheads, are sharply up.

• Taken together, these pricing and cost issues are putting considerable strain on profitability and cash flow.

Friendship Insights:

• Jeff talks with friends who are not in ecommerce about his declining profitability to see if their perspective throws light on what he should do next.

• Their focus centres on Amazon advertising costs, which have steadily increased over the past three years - ACoS below 20% pre-pandemic but now running at 27-28% and clearly headed to 30% in the near future. None of his friends has a business with such a high dependency on advertising costs.

Information Sources:

• Lacking direct contacts in the Amazon industry, Jeff (unknown to Livi) is seeking insights from Amazon advertising service providers.

• These providers share similar observations about advertising costs, but Jeff is concerned their focus is to follow relentlessly Amazon’s new initiatives rather than improve performance on the existing opportunities.

Future Direction:

• Jeff is determined to reduce advertising costs, with ACoS ideally back below 20%, to boost current profitability and restore the business to its previous performance level.

Summary

By addressing these challenges and exploring cost-effective advertising strategies, Jeff aims to secure a more profitable future for "Happy Kit and Kaboodle."

• Phoebe joined "Happy Kit and Kaboodle" 18 months ago

• Her first employer identified her short attention span.

• Grasping concepts quickly, Phoebe struggled to apply her knowledge effectively

• Phoebe was top of class, and had left university with a strong academic record.

• Phoebe’s first job was with $40m sales e-commerce company -  35% of its sales through Amazon, the rest from its own web site. 

• Phoebe was in a department of 8 people, being given tasks on both channels - the tasks were treated as stand alone, so she never saw the context of what she was doing and whether it achieved the company’s goals.

• • Phoebe remained unaware of her workplace shortcomings due to her intelligence making it easy for her throughout  her education to be a high performer

  • She has difficulty handling criticism and tends to provide quick, often superficial responses to her manager's queries.

  Ambition and Commitment:

  • Phoebe lacks a strong drive for professional advancement and is content with low commitment to her tasks.

  • Her approach is to complete her work quickly, allowing her more time for her outside interests.

Ambition and Commitment:

• Phoebe lacks a strong drive for professional advancement and is content with low commitment to her tasks.

• Her approach is to complete her work quickly, allowing her more time for her outside interests.

Learning from Past Experiences:

• Following a mediocre review from her first employer, Phoebe began seeking a new job as she thought the criticism from her manager was misplaced, reflecting the manager’s own shortcomings rather than her own.

Summary

Jeff and Livi do not spot Phoebe’s shortcomings in her interviews. 

Not having a detailed understanding of how Amazon’s advertising works, they are unaware of how to go about reducing Happy Kit and Kaboodle’s advertising spend as Jeff desires., Phoebe’s confident and quick responses gave them the assurance that she would bring the required  skills to the team. 

After 18 months, it is evident that Phoebe is not the answer to the advertising cost problem, but as Jeff and Livi have yet to define what needs to be done, finding a solution is looking unlikely. They decide to recruit a second marketing assistant to give more resource to tackling the objective without defining how they will deploy this extra time.

Phoebe is blissfully unaware that Jeff and Livi are uneasy about her continued employment, believing that she is achieving what she was employed to do.

Professional Journey:

• Livi, aged 31 and currently single, embarked on her career at "Happy Kit and Kaboodle" 12 years ago.

• With a modest formal education, they began as the warehouse clerk.

Recognition and Progression:

• Jeff swiftly recognized Livi's exceptional quickness and intelligence.

• They progressed through various administrative roles, consistently excelling in each one.

Customer Service and Amazon Transition:

• Right from the start, Livi efficiently managed customer service matters stemming from the Happy Kit and Kaboodle website.

• When Jeff expanded to Amazon 8 years ago, he entrusted Livi with all of Amazon’s back office functions – like many, Livi lacked prior Amazon experience but made up for this with raw enthusiasm.

Self-Taught Amazon Expertise:

• Livi dedicated herself to learning Amazon’s requirements from scratch.

• They now build listings with titles, bullet points, detailed product descriptions, and images, all utilising her self-taught skills.

• Livi has handled customer service issues as the Amazon business has grown.

Team Expansion:

• The scope of Livi's role grew too big for one person to handle. Jeff and Livi hired Phoebe (24 years old) 18 months ago and Gurpreet (23) just 3 months ago.

• While Phoebe claimed expertise in Amazon listings and advertising during their interviews, Jeff and Livi recognized her relative youth and limited experience.

Challenges and Pressure:

• Livi faces mounting pressure as advertising costs rise as a percentage of sales year-on-year.

• They actively learn from reviewing websites and listening to webinars, but struggle to interpret how the free learnings could help them control advertising costs. 

• The strain from this struggle affects the working relationship between Jeff and Livi, and hampers their ability to guide Phoebe and Gurpreet effectively.

Seeking External Support:

• Livi seeks external support to align Amazon advertising with Jeff's objectives.

• They have initiated discussions with Amazon advertising service providers with the hope of outsourcing the bidding process.

Gurpreet, junior marketing assistant, joined "Happy Kit and Kaboodle," three months ago.

After a series of dead-end jobs following his formal education, Gurpreet realised it was time to get on a clear career path.

Career Choice:

Gurpreet had an interest in e-commerce due to his father’s textiles business having a B2C arm - he saw an advertisement by Happy Kit and Kaboodle for a trainee e-commerce marketing assistant.

Encouragement from his parents convinced him to explore this opportunity.

The job assured full training and required no prior experience, making it accessible for newcomers like Gurpreet.

Livi, marketing manager and Phoebe, marketing assistant, conducted a short interview that resulted in Gurpreet being offered the position.

Neither Livi nor Phoebe pressed Gurpreet on any background he may have in ecommerce, so were unaware of the family connection when he joined "Happy Kit and Kaboodle”

Learning Phase and Challenges:

Given his short tenure, Gurpreet is still in the learning phase within the company.

He finds his working relationship with Phoebe challenging, as he perceives her as unfocussed and lacking a sound grasp of the detail needed in her role.

Gurpreet does not know how to communicate the concerns about his lack of training to Phoebe or Livi, which makes him feel uneasy as he does not want to be seen as being awkward, or possibly lacking an ability to deliver on the job he has been given.

Gurpreet suspects the promised training is not being delivered because none of his colleagues, Phoebe, Livi or Jeff actually knows what he needs to be trained in. Gurpreet’s father is pleased to see him in a good job, so  tells Gurpreet to keep his head down and see how it goes - but his father also makes sure that Gurpreet can get help from his staff on Amazon’s trading platform.

Summary

Gurpreet is enthusiastic in his new job and is keen to learn and contribute to the company’s B2C sales. 

He is finding his way in his new role, both in what he is being asked to do and how he should fit into the team. Gurpreet hopes to find ways to address the challenges in his interactions with Phoebe.