June 24, 2025 • 35 mins
The business landscape has shifted dramatically with the introduction of new tariffs, creating significant challenges for e-commerce brands selling on Amazon. But beyond the immediate financial strain lies opportunity for those willing to think creatively and act decisively.
Mike from ProTuff shares his brand's raw, unfiltered experience with tariffs, revealing how compounding factors created a perfect storm for their business. When tariffs hit amid inventory and cash flow challenges, they discovered the true value of their 40,000-person email list – generating $125,000 in just two days when they needed it most. This real-world example demonstrates why building direct customer relationships matters now more than ever.
While many brands focus solely on the obstacles, this conversation explores actionable strategies for not just surviving but potentially thriving during this disruption. From investigating Section 232 tariff exemptions to exploring bonded warehouses, diversifying manufacturing to countries like India, and capitalizing on competitors' stockouts – we examine tactical approaches to navigate these choppy waters.
The most valuable insight might be the mindset shift required: successful entrepreneurs acknowledge challenges but quickly pivot to solution-finding. As Matt aptly points out, "Today it's tariffs, tomorrow it will be something else." The brands that build resilience through diversification – multiple manufacturers, various countries, different sales channels, and direct customer relationships – gain protection against whatever challenges emerge next in the e-commerce landscape.
Whether you're currently feeling the pinch of tariffs or preparing for future disruptions, this episode provides both immediate tactics and strategic perspective to strengthen your brand for the long haul. What opportunities might you discover if you look at this challenge through a new lens?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome everyone to another episode of Tactics
Tuesday with Brand Fortress HQ,and today we're talking about
something that is very timely,as far as you know what's
happening for a lot of brandsthat are selling on Amazon and
beyond, and that is kind ofwhat's become the dirty word,
which is tariffs, and ratherthan talking about you know how
terrible they are and how unfairthey are, and you know how
(00:22):
challenging they are for thebusiness, which all of those
things are true for many, manybrands that are selling on
Amazon and beyond.
Really, we want to focus on whatimpacts are they having and
what can we do about it andwhere can we find some silver
linings in this, so that way wecan build a more robust business
beyond, no matter what happenswith the tariffs, and whether it
(00:44):
be in 2025 or whateverchallenge happens to come in
2026, 2027, and down the road,as you're building a business
for the long term.
So with that I'm actually goingto Mike.
I guess I'll hand it over toyou and if you'd be willing to
share a little bit about how thetariffs have impacted you guys
at ProTuff.
Speaker 2 (01:02):
Yeah, no for sure.
And my cough's still justgetting better.
So if I make it into a coughingfit, I'll let you guys carry
the conversation for a minute.
But so tariffs would have beenbad enough for us had there not
been for a couple of othermistakes.
But realistically, we stoppedshipments completely probably
(01:23):
three weeks ago, stoppedshipments completely probably
three weeks ago, and we had so afew things One we knew from a
cashflow perspective and I'llget into kind of some of the
other mistakes that were madethat kind of put us in this
position, which had nothing todo with tariffs, they just
compounded with it.
But as a result of thosemistakes, we ended up with a lot
(01:44):
of inventory in China that wassupposed to be here and, as a
result, when the tariffs reallyhit, I so I was on, well, I
wasn't really on vacation, but Iwas overseas at some
conferences.
So I didn't, you know, I wasn'twatching the day-to to day of
things, you know, while we weregone and whatnot, and so I
(02:06):
didn't know that we really hadany specific, you know, larger
issues to deal with.
All I knew was okay, yeah,tariffs are here, it's a higher
price, like okay, we're gonnahave to figure out how to pay
for that or what to do.
And then of course they just,you know, skyrocketed, you know,
to 150%, you know, reciprocaltariff or whatever, it was 145.
And then I found out we don'thave inventory here in the
(02:30):
States, like shipments weren'tgoing through, and that was an
agency issue, and that's a topicfor another Tech this Tuesday
probably, where we can talk alittle bit about agencies and
how to navigate those watersbetter and how to navigate those
waters better.
But the end result is we're ina space where we have minimal
inventory here in the States.
(02:51):
And then you've got thequestions of do we raise prices
and try to extend out ourinventory and wait out the
competition, in a sense till?
Maybe they stock out becausemany other sellers are going to
have to, you know, stop orrestrict their shipments as well
?
You know, do we not do that?
Do we go hard on it and sellthrough what we've got for cash
(03:13):
flow?
Because we also ended up it'salso kind of a cash flow
conversation because we werelaunching some new products this
year, the new two-year versionof our lifetime products, but in
so doing, the new two-yearversion of our lifetime products
, but in so doing because thetwo-year version was going to be
a much higher volume productthan the lifetime, but also,
(03:34):
realistically speaking, the cogson that product weren't really
much different.
So we ended up having to steala lot of cashflow from our other
product lines that were alreadyrunning, plus leverage
ourselves a bit to get ahead ofthat, because we need a lot of
inventory on that two year youknow product.
Well, now all that inventory issitting in China so we can't
(03:55):
launch it, but we've alreadypaid for it, you know, with our
suppliers, and so the cash flowissues are pretty significant.
Issues are pretty significant,but I think the bigger thing
here is it has reminded me thatreally big issues like this you
know ones that are industry-wide, e-commerce-wide, you know,
whatever, economy-wide youalways have to step back.
(04:20):
You know, after the initialshock, after all of the oh my
gosh, what are we going to do?
Right, you have to step back andlook at how can we benefit from
this, how can we navigate itwell enough that we can make it
to the other side, and what arethe benefits if we can manage to
do that?
Because anytime there's adifficulty like this, whether
it's Amazon sellers, whetherit's just e-commerce in general,
whatever it is, there are goingto be a lot of businesses that
(04:42):
don't make it through thosewaters, like they're going to
capsize, they don't have muchprofit margin, they don't really
know how to manage theirbusiness, they have no idea what
the numbers are and they'regoing to go under, and then that
presents an opportunity for thebusinesses that can make it
through.
I think that's the biggestthing right now is just you know
how do you properly navigatethose waters in a way that at
least you're still a brand thatexists on the other side of this
(05:03):
, and then you can takeadvantage of the opportunities
that present themselves at thatpoint.
So I think that's kind of whereI'm trying to keep my head
right now, yeah, yeah, and I did.
Speaker 1 (05:11):
I just want to reemphasize that.
You know I've talked to anumber of brands over the last
few weeks that are, you know,some of them are clients, some
of them are just, you know,relationships that I have, and I
think a lot of brands are inthe same boat, where you know
they're looking at strategicallyhow do you, how do we navigate
this?
And and what are you know, howcan we translate this into
(05:32):
upside?
But also looking at it from aperspective of you know what,
what do I need to survive today?
And then how do I leverage thisinto an opportunity later?
Because I mean, there are somepretty massive impacts.
As far as you know, there'scertain products that are just
not profitable, and so I thinkthat's where it comes down to.
(05:53):
You know those conversationsthat I'm having.
Some of it is around like, hey,if you have products that you
know aren't critical to yourbusiness and, with those tariffs
in place, are not profitable,then maybe you know, maybe that
strategy is, yeah, you run outof stock on that product for a
while until tariffs are figuredout, or there is a way to adjust
(06:14):
those prices in order to makeit make sense, rather than
trying to put a lot of time andeffort into a product that,
until tariffs change, just isn'tprofitable.
Time and effort into a productthat you know, until tariffs
change, just isn't profitable.
The other thing that I know alot of the brands that I spoke
with of what they're doing isthey are, you know, really
slowing down a lot of theirproduct developments Because if,
(06:35):
especially if they're, you know, manufacturing in China, hey,
it doesn't really make sense toput a lot of time and money into
developing new products rightnow, at least if you know,
within China, if you knowthere's no certainty around what
the margins on those productsare going to look like.
But then the other thing onexisting products is really, you
know, I think you know lookingat, hey, okay, if there is a
(06:59):
window that opens up where youknow tariffs drop dramatically,
like what we've seen with othercountries, kind of overnight of
making sure that those productsfor your best sellers are ready
to go.
Because my understanding youguys correct me if I'm wrong
because import, export andduties is not my area of
expertise, but talking to anumber of people on this issue
(07:22):
is that that tariff isdetermined by when those ships
hit the water.
So if you start shipping aproduct, whatever that tariff
rate is of when you startshipping that from China is
going to be what your tariffrate is when you import it here
in the United States.
So those brands are looking athey, we've got X number of
products at the manufacturer inChina and they're waiting until,
(07:45):
if those tariffs do drop,they've got to plan a place in
order to move very quickly toget that inventory onto a boat
so that way they can takeadvantage of a lower tariff rate
that may be long-term or thatwindow may be very, very small.
So I think taking advantage ofthose things, of looking at what
you can do in these types ofsituations, is helpful for some
(08:07):
brands in kind of navigatingthese waters.
Speaker 3 (08:11):
Taking a step back.
I think the biggest thing beinginvolved in ProTuff and seeing
you know what things we've doneto kind of navigate those waters
I think the biggest thing totake away from this is that,
first of all, what we know isthat the one thing that's
constant on Amazon is change,and something changes, whether
(08:32):
it's increased fees or inboundplacement fees or things change
all the time and even thoughthis is bigger than just a new
fee on Amazon, sitting aroundand complaining about it.
I know that it hurts and, yes,there's a lot of businesses that
aren't going to make it.
But I think the businesses thatare able to pivot and not just
whether it be tariffs or whetherit be a problem with the
(08:54):
manufacturer or something wentwrong with one of your products
and you're getting a whole bunchof bad reviews being able to
pivot and not sit and dwell onthe actual issue that you can't
control, but figuring out a wayto navigate those waters I mean,
mike said it, he mentioned itand I think John you did also
you know there are going to bebrands that don't make it on the
other side, and if you are ableto be one of those brands that
(09:15):
are able to navigate thesewaters and make it to the other
side, like at ProTuff, forexample.
I mean, we deal with a lot ofcheap Chinese manufacturers that
are selling a pole for 40, 50bucks and those, like, with this
whole de minimis exemptiongoing away at the beginning of
May, like I have a feeling a lotof those are going to either go
away completely or they'regoing to have to raise their
(09:37):
price pretty significantlybecause now they have to pay
tariffs and reciprocal tariffsand all of this stuff.
So that's one of the things thatwe did early on is, yes, it
sucks, yes it's going to bepainful, but what can we do?
And for us it goes back to a lotof the principles that we've
talked about in this podcast forover a year.
We have a decent sized listthat we were able to send an
email to be honest andtransparent and we did a little
(10:00):
bit of a promotion that wehaven't really done catalog wide
, and it generated a lot ofcashflow that we needed.
So, like because we had thatlist and because we had the
foundation, we were able togenerate some much needed
cashflow to help us get kind ofnavigate those waters.
So I think that's really thebiggest thing is that things are
going to change on Amazon.
Things are going to change inthe world of e-commerce.
(10:22):
Spending a little bit of timeletting the pain hit but then
deciding how you're going topivot, I think, is the most
important thing to take awayfrom this situation, because
tariffs, yes, they suck, butthere's going to be something
else in a couple of months fromnow that's going to suck too.
Speaker 2 (10:40):
And so one thing, just to put some numbers to
paper for people about the valueof having that list right.
So we have about 40,000 peopleon our list.
They're pretty active, and ofcourse, we do cross-sell and we
do whatnot, but most of ussoft-sell, you know, it's like
(11:01):
we're not really hardcore aboutit.
To be honest, we probablyshould be a little bit more
hardcore about our cross andupsells, and I think that's one
of the things, quite frankly,that I think I've probably
learned from this process isthat we'd probably be in a
little better shape if we weredoing that more.
But setting those things aside,because our inventory was in
such rough shape, we ended upstocking out on three of our
(11:24):
hero products at Amazon.
Now, fortunately, we had FBMbackup, and so we were able to
use that to at least be able tofulfill those Amazon orders.
But obviously CTRs are worse,cvrs are worse, because your
delivery times aren't nearly asgood, right?
So our sales went way down.
(11:44):
And here's another piece ofinformation Although it's really
useful to have FBM backup sothat you don't completely run
out of stock, volume of sale isgoing to decrease significantly.
We literally were able to trackit out and we were selling a
third of the volume in terms ofnumber of units that we would
(12:07):
have been selling had we had FBA.
That's how precipitous the dropin sales was.
So don't run out at FBA.
Have FBA on backup, but makesure you got stuff at FBA.
But beyond that, if we talkabout the list, even with those
struggles, the nice thing aboutthe list is they already trust
us, they know us and they aremuch more willing to put up with
(12:32):
an extended delivery window orsomething right, because they
want our brand.
They don't want something else.
So our volume was down so lowthat we were only doing I think
we were hitting maybe 10 to12,000 a day would have been
essentially our kind of ourbaseline, right we, when we sent
out that message, essentiallyover a span of just over two
(12:55):
days we put through an extra onehundred and twenty five
thousand dollars in sales fromthat list and that was a huge
cash injection for us, which wereally needed from a cashflow
perspective.
So if you don't have a list,like I mean, I know we hammer
this and we hammer this and wehammer this, but I'm telling you
like you need that list becauseone thing it gives me a little
(13:16):
bit of comfort because even ifthis whole thing was to fall to
pieces, right, and you know, Icould rebuild off of that list
because I have 40,000 people whotrust me, who trust my brand,
who trust my business, right, soI could rebuild a new business
off of that list.
It might not even be in thepool products, you know business
.
Maybe something completelydifferent.
(13:36):
If I find something that themajority of that list would be
interested in and they know meand trust me, they would buy it.
So, you know, don'tunderestimate the value of that.
But then the other, really,really thinking outside the box
in terms of how to solve this,you know the problem that you're
running into like, try not tolook at it simply from the
(13:59):
position of which of our leverscan we pull harder or not pull
or whatever?
Like we've got, we have these10 levers that we're working all
the time right, which of themyou know and what combination
should we pull?
That you know solves thisproblem right Instead, not that
you shouldn't look at that,obviously you should.
(14:21):
But I think we sometimes end upin a space where we get very
narrow-minded and those are theonly 10 levers that we know and
so we don't think of any otherlevers and there's some major
levers that you might be able topull outside of that that you
haven't had to previouslybecause things were kind of
sailing along but that couldhave a drastic impact, for
(14:41):
instance.
I'll give you an example Now,unfortunately this is not going
to work for us, but it was anavenue that we considered and
for another brand it might'vebeen absolutely a solution.
So we sell pool tools.
Australia is also a very bigmarket for pool products and
essentially it's pretty openbecause there really aren't any
(15:04):
really good products on theAustralian market.
We haven't gone that roadbecause there's a little bit of
a learning curve there.
And we know Amazon, our D2Cwasn't really fleshed out very
well and Amazon Australia is notreally that well fleshed out,
so it's not like that's a bigvolume play for sale, but D2C is
.
And if you could spin up D2C,you know, fairly quick, like if
(15:27):
you already kind of have it andyou spun it up for Australia,
you know for us that would havebeen an immediate win because
all of that inventory that wasin China could go into Australia
tariff free and all of a suddenyou know we can sell product.
Right now it doesn't work forus because Australia is an
opposing season, so it doesn'thelp us right this moment, but
(15:47):
it was an idea.
And for another brand, where itwasn't a seasonal thing like
that, taking that product movinginto Australia that's an
English speaking country thatprobably uses many of the same
products that we use over hereand taking advantage of that
opportunity to at least startpushing some product through
could be a solution.
But you might not think of thatnormally.
The other thing is China.
Your products are alreadysitting in China.
(16:09):
You're like, if you don't wantto bring them in because of the
tariff, where is it that meansthey're in China?
China is a huge market.
So, depending on your product,maybe live sales, like the
social media, like live sellingthat's massive in China.
You can hire a live influencerin China to do live sale events
for your product, and there'ssome of those influencers that
(16:31):
do millions in just hours.
So, again, not something thatyou would normally think of if
you're generally focused on theUS market, but if you can't
bring the product here, why notsell it there?
So just make sure that you'reactually looking at some of
those other levers that youmight be able to pull that
ordinarily you might not think.
Speaker 1 (16:49):
Yeah, and I think also just thinking about the
other opportunities that itpresents too is if you can take
advantage of them.
So if you happen to be, youknow cause I've talked to a
couple of brands as well thatyou know some of their products
are not manufactured in China,and so for them, I'm like this
is the time when you need to,like you know, not double down
like triple and quadruple down,and really look at which of your
(17:12):
competitors are out of stockand which of your competitors
are low stock, because even ifyou just look at that single
tactic right there, there's hugeopportunities for you to gain
market share.
Because, yeah, maybe they likebrand X and they went searching
for that brand.
Well, if that product is out ofstock and you're providing a
(17:32):
very solid alternative that,again, if they're on Amazon that
they can get tomorrow, chancesare they're going to go with
your product if there's nothingelse available.
Most brands aren't so strongthat somebody will be like, well
, it's got to be this or nothing.
They're going to say, well,this is what I wanted, but if
there's something that'scomparable, especially on Amazon
(17:54):
, give that a shot.
If I don't like it, let's behonest, their return policy is
very generous, so customers feela lot more confident with it.
So looking at those types ofopportunities of just looking at
low stock and out of stock foryour competitors is a big
advantage.
And then I haven't seen thenumbers for Amazon yet, but I
did find it really interesting.
(18:17):
I was reading through somethingthe other day where I was
talking about how Timu and Shienwere like 20% of the ad spend
on Meta over the last year.
So if you look at, you knowthose two companies well.
First of all, you know and I'vetalked to a couple of brands
where they had knockoffs thatwere being sold on Timu for 25%
of the price that they were.
Well, as of yesterday, timu isnow charging 145% tariff fee.
(18:42):
So most of those knockoffs areno longer competitive.
And some of these brandsespecially that have kind of a
premium brand and have investedin the patent and basically been
ripped off by a lot of theseChinese sellers, that they're
able to get some of that back.
And the same thing with AmazonYou're talking about a little
(19:08):
bit with the pool polls of hey,there's a lot of Chinese
competitors.
They're selling a product for20, 30 bucks if you've got, you
know, the inventory and capacitylike now, is an amazing time to
grab market share If you're ina position for your brand in
order to do it, if you've gotthe inventory and the cash in
order to do it.
I think this is one of thoseyou know instances that comes up
, you know, every few years towhere, if you can figure out how
(19:31):
to pull the right levers rightnow, you can make some massive
progress.
Speaker 2 (19:34):
Well, and like you said, John, like if you know,
for instance, the brands thatare getting ready, you know, and
preparing for if the tariffnumber comes down, you know, if
you've got the cash flow and thereserves to do it.
You know, moving in, let's faceit, I could tariff stay where
(19:54):
they are.
Yeah, is it likely?
Highly unlikely.
How long do they stay?
I don't know Right, but but itseems highly unlikely that they
stay at the at the rate thatthey are.
And so if you've got the moneyto invest in some inventory and
a place to store it, say, youdrop over in China so you don't
have to pay the tariffs yetMaybe you negotiate 60-day terms
(20:17):
or even 90-day terms with yoursupplier, right, you might have
a situation where you could getthese orders flowing, have the
inventory waiting at Skewdropand as soon as that tariff
number comes down, you're on theship and ready to roll and
everybody else is 30, 60, 90days back because they got to
wait for production.
Like you're on the ship andready to roll and everybody else
is 30, 60, 90 days back becausethey got to wait for production
, like you said, now you've gotthe inventory here, they don't,
(20:39):
you know, and you're off to theraces Now.
Not everybody has the cash flowor the capital to do that, but
if you do, I would recommendthat you consider that as an
option.
I'm not telling you do it, butyou should definitely be
thinking about that as an optionto potentially get ahead of
your.
Speaker 3 (20:53):
Well, I mean similar to, like stock market crashes
and, you know, the housing crash, like when something like that,
a major event happens in thefinancial markets, it really is
the best time to buy, and that'swhen.
That's when true, like actualwealth, like generational wealth
, is built.
And that's really one of thereasons why there's a big gap
between the you know, the onepercenters and and the non,
(21:16):
because that's what they do.
They have so similar in thisstory.
You know, if you do have thosereserves and and if you have the
infrastructure to be able topivot during these times, I mean
I'm confident that our entiremarket is going to change once.
As long as the de minimisexemption goes away at the
beginning of May, which isscheduled to, I mean, our
market's going to changesignificantly.
I firmly believe that and andso like that's that's the thing
(21:39):
that we're talking about ishaving the foundation in place
to be able to invest in timeslike this, but also, like you
know, a lot of even though itwas really stressful a lot of
really good ideas have come from.
Some of them are kind of offthe wall, but, like those off
the wall ideas, in some casesturn into something like we've
been talking about like, beingable to like.
(22:03):
Can we put some of our partstogether in Columbia?
Can we like what about anIndian manufacturer, which we
actually just went and visitedlast week?
So like all of these thingsthat were kind of brainstorming
on how, how do we solve thisproblem, is going to make us
stronger on the other side.
So like that's again, that'sbeing able to sit with it for
long enough to be able to startmaking some solid decisions that
(22:23):
are going to set you up forstrength later on down the road.
I mean, that's what's going tohappen at the end of this is I'm
confident that once we getthrough this, our market's going
to look a lot different andwe're going to be able our
conversion will go a lot higher,because now we're going to have
a lot of those smaller you know, very cheap, like cheap made
and cheap price products thatare on the market.
Now they're going to go away orthey're going to have to raise
(22:45):
their price, which is going toput us more in line.
We're already at the premiumend of the price point, but I
think this is going to kind oftilt those scale in the other
direction, so we're going tocome out stronger on the other
side, and it's because of thefoundation we built, but it's
also because we keptlevel-headed instead of
complaining and oh the world is,the sky is falling, we actually
sat down and had some realhonest discussions where we
(23:05):
threw some really obnoxiousideas, threw them at the wall,
and some really goodconversations came from that.
So that's what I really lovedabout how these conversations
were happened, happened, andthat's really when you have that
foundation for that that solidfoundation it allows you to make
moves like that.
Speaker 1 (23:23):
Yeah, and I think it's totally rational.
And you know, I understand.
You know, when things like thishappen, for people to say, wow,
that really sucks, this isreally unfair, and that's a
totally rational response.
And then you go okay, what'snext Like for me?
Personally, I have to switchfrom that this sucks, to how do
we, how do we figure out asolution?
(23:45):
You know, the faster I makethat switch, the better it is
for everybody.
And I think in this case, again,a lot of creative solutions
that maybe you haven't thoughtof before.
And I think the other thingjust to build off of what you
said, matt, which is you're notin this alone as a brand.
There's a lot of other peoplethat you support.
So maybe I know there's a lotof brands that are having
(24:06):
conversations with theirmanufacturer to say, hey, you
know we need to share the loadon or the additional costs on
these tariffs and maybe it's notgoing to be 50-50, but you know
, even if they give you another10 to 20%, you know that's far
better than zero.
(24:30):
The other thing is that I think,again, the logistics piece of
it is not my area of expertise,but just on, what I'm reading
right now is that the shippingfees are probably going to go
down pretty significantly ifthese tariffs stay in place over
the next month or so.
Well, there is an opportunityin order to ship some of that
stuff over here into a duty-freezone, and some people will say,
okay, well, that's superexpensive and there are some
(24:51):
definite truths to that.
But if you can make up some ofthat margin because you're
paying 30% or 40% less on yourshipping over here, maybe that
makes sense.
It's not going to be a fit forevery brand, but kind of like
what you were saying, mike,which is considering options
that were outside of what youconsidered before, and getting
(25:12):
creative and relooking at allthose things that you know
didn't make sense before to comeup with something that maybe
makes sense now.
Speaker 2 (25:19):
Yeah, I think I mean.
So, actually, maybe it's amaybe it's a decent place to
somewhat change gears on this alittle bit, just because so
there's a few things thatobviously we've mentioned, you
know, in this podcast in termsof, we'll say, potential
solutions, you know to to theproblem.
One of them that people aretalking about is bonded
(25:40):
warehouses.
You know, and I think that'ssomething to investigate.
If you don't know what that islike, look it up, you know, like
this, this is not probably theconversation for an expanded
understanding of what that isand why you might use it, but
essentially it gives you theopportunity, you know, to at
least bring the product over andwait it out, right, so that
(26:00):
it's already here and you don'tpay the duty.
Yet you're paying to havestorage in this bonded warehouse
and then once the tariff comesdown, then you release it.
It's a little bit of a risk.
You are going to invest alittle bit more money because
you do have to pay to get itover here and you don't know
when it's going to drop, butit's an option.
But something else, and this isa strategy that I'm going to
(26:22):
say I'm not saying do it,because we don't even know yet
whether we can do it or whetherit's valid, but it's an idea
that I have, that we're vettingand it looks right.
It looks like it's possible.
I'm not going to give all thedetails of it, but I'm going to
give the broad strokes, and thatis that products that can be
(26:45):
classified under Section 232 ofthe tariff code are exempt from
the reciprocal tariffs.
And the reciprocal tariffs arethe ones that are really
hammering everybody right, likeyeah, there's some other tariffs
that those are stacking on topof, but as a rule it's the
reciprocal tariff that's reallyhammering people and putting
them in a bind.
(27:05):
So any way that you can exemptyourself from those reciprocal
tariffs is a significant win.
So the question is is yourproduct eligible for Section 232
?
And the answer to that questionis if it is within certain
categories and if it is a metalproduct, then it falls under
(27:29):
section 232.
But also there's been anaddition made to that, which is
you don't necessarily have to bea metal product.
In other words, I mean, forlack of any better way to say it
a metal product is a productthat is made up mostly of metal
and the metal is the importantpart of the product.
So, for instance, our pool poleessentially is metal product
(27:52):
right, like, okay, it's got ahandle that's not metal and it's
got a locking mechanism thatisn't metal but everything else
is metal and the pole itselfthat's what it is right.
So it would be a section 232option.
So we knew I knew probably acouple of weeks ago that the
poll was in good shape.
You know that we could beexempt from the reciprocal
(28:13):
tariffs.
What I didn't realize was thepossibility that some of our
other products, which are notreally truly metal products,
might also be exempt.
So here's the addition toSection 232 that becomes
relevant and you shouldinvestigate it like we are the
addition to Section 232 thatbecomes relevant and you should
investigate it like we are.
(28:37):
Section 232 now has a clausethat essentially says that metal
derivatives can also qualifyunder Section 232.
And a metal derivativetechnically is any product that
falls within a certain categorylist, and there's a list out
there that you can look at tosee if your product falls in one
of those categories.
If you're in one of thosecategories and you have any
metal in your product, you canbe classified as a metal
derivative and you can send inunder Section 232.
(29:00):
Maybe there's some other thinghere that I'm not seeing.
However, so far, chats withmultiple deep reasoning models
of AI have led to the sameconclusion, which is that if you
have a metal screw in yourproduct and your product falls
within one of thoseclassification categories, you
(29:21):
can be Section 232 and you canbe an exempt from the reciprocal
tariff.
You can be an exempt from thereciprocal tariff.
So I would immediately go andlook and find out is your
product within one of thosecategories?
And if you don't have metal inyour product, how can you swap
out a piece or a part orsomething to make it metal so
you can be section 232?
(29:41):
Now, before you do any of that,go talk to a customs broker.
Go talk to the people that knowwhat they're doing.
But I am 80% confident thatthis is a strategy that we're
going to be able to use to movea number of our products into
the country without paying thosereciprocal tariffs.
It's not advice.
I'm not telling you to do it.
Don't sue me if it doesn't work.
(30:01):
I'm just telling youinvestigate.
Speaker 1 (30:05):
Not legal advice, just a caveat there.
But I think this is a greatexample, and I think this is
probably a good place to wrap onthis topic for today.
But I think it's a greatexample of how, as entrepreneurs
, we have to find creativesolutions, the problems that
come up.
So today's problem happens tobe tariffs, and I think, matt,
(30:25):
you said it best when you saidtomorrow's problem is going to
be something different.
But at the end of the day, itreally boils down to being able
to problem solve and being ableto effectively implement
solutions to those problems inorder to build the brands.
And the nice thing about it isthat, yes, these types of issues
quite frankly suck Like there'sno other way to put it.
(30:48):
They're very challenging,they're very expensive, they're
very stressful, all those typesof things.
That said, they are also anamazing opportunity to continue
to grow your brand, while othercompetitors, whether they be in
China or other places, are notwilling to put in the effort and
the time and everything elseand the resources in order to
(31:11):
solve these problems, to movetheir brand forward.
So you know, I think there's ayou know, a ton of opportunity
for the brands who can figureout how to navigate these waters
over the next few months andcontinue to grow.
So that's that's kind of myperspective on it.
Before we wrap up anything elsethat Mike or Matt that you want
to add.
Speaker 3 (31:31):
I mean, I think the biggest thing from my standpoint
is and we've said it a coupleof times in this conversation is
it sucks, like you said, john,sit with that.
It does, there's no questionabout it.
But pivoting, having a strongfoundation, having your list,
having all these things that wetalk about, there's a reason why
we talk about it and why wehammer it, and this is a very,
very real world example of theimportance of building a
fortress around your brand,which includes building an
(31:54):
audience, and we've been able toleverage that and be able to
kind of help us get through this.
So it's the same thing that wetalk about all the time.
This is a real world example ofwhy, why having that in place
is important.
Speaker 2 (32:06):
I think the only thing that I would add is
there's a reason that peopletalk about diversification.
Now, on the one hand, you knowthere are those conversations
like you'll hear Alex Moralessay this all the time, and I
don't disagree with him.
You know, like, asentrepreneurs and business
owners, it's easy to get caughtby the next shiny object.
(32:28):
Like, as entrepreneurs andbusiness owners, it's easy to
get caught by the next shinyobject and he talks a lot about.
You know, like, no, stayfocused on the one thing.
You know that you're doingright, and I think that's
valuable advice.
I think it's easy for us to getdistracted and whatnot.
But it's also you know you haveto.
It's not just the next shinyobject idea, it's how can I do
things in my business where Idiversify my risk, and so, for
(32:52):
instance, if you have a singlemanufacturer in a single country
, that's a problem, because anyproblem that that manufacturer
runs into is your problem andyou can't solve it.
If the country becomes aproblem, you can't solve it
right If you know whatever thatis.
So the more you can diversify,the better off you are.
So, for instance, we had twomanufacturers in China.
(33:14):
That's great, because if onemanufacturer has a problem.
We can get product from theother manufacturers, so that's
awesome.
But if China becomes theproblem and they're both there
well now I'm not actually reallydiversified anymore.
So we've now got an Indianmanufacturer that we're working
with that'll be producing polessoon.
I think there's a good chancethat they could potentially
(33:35):
produce nets if we needed themto.
And so again, now we've gotmultiple manufacturers, but also
multiple different countries.
Anytime there's a way in yourbusiness, without
over-complicating things, thatyou can diversify yourself to
mitigate the risks of one pillargoing down.
Please pay attention to that.
And at the end of the day, oneof the best ways to diversify,
(33:59):
especially if you're an Amazonseller, is to have a list,
because then with the list, it'snot just I can sell anything I
want to those individuals, aslong as it's something they need
because they trust me.
It's not just having a list,but it's having a list of people
that actually trust you andyour brand and what you stand
for, right.
If you have that, whateverhappens to your business, you
(34:23):
have an opportunity, that youhave all those people that you
can sell something to and youcan rebuild from the ashes, and
that gives me a lot of comfort.
You know I could.
I could sell them an app.
I could sell them some otherphysical product.
I could sell them a service.
I could.
You know I could promoteaffiliate products I could.
There's a million different waysthat I could potentially
monetize that list if I had to.
(34:45):
That don't involve selling thempool tools.
And so if you don't have thatlist, please start building the
list.
And if you don't know how tobuild a list, then connect with
us so we can help you figure outhow to build that list.
I mean, go back and listen tosome of our podcasts, because we
talked about it on a number ofoccasions.
There's a lot of different waysto do it.
Speaker 1 (35:03):
Please start doing it .
All right.
Well, I think that's a greatplace to wrap for today.
Thank you everybody forlistening and we look forward to
having you again on anotherTactics Tuesday.
Welcome everyone to another episode of Tactics
Tuesday with Brand Fortress HQ,and today we're talking about
something that is very timely,as far as you know what's
happening for a lot of brandsthat are selling on Amazon and
beyond, and that is kind ofwhat's become the dirty word,
which is tariffs, and ratherthan talking about you know how
terrible they are and how unfairthey are, and you know how
(00:22):
challenging they are for thebusiness, which all of those
things are true for many, manybrands that are selling on
Amazon and beyond.
Really, we want to focus on whatimpacts are they having and
what can we do about it andwhere can we find some silver
linings in this, so that way wecan build a more robust business
beyond, no matter what happenswith the tariffs, and whether it
(00:44):
be in 2025 or whateverchallenge happens to come in
2026, 2027, and down the road,as you're building a business
for the long term.
So with that I'm actually goingto Mike.
I guess I'll hand it over toyou and if you'd be willing to
share a little bit about how thetariffs have impacted you guys
at ProTuff.
Speaker 2 (01:02):
Yeah, no for sure.
And my cough's still justgetting better.
So if I make it into a coughingfit, I'll let you guys carry
the conversation for a minute.
But so tariffs would have beenbad enough for us had there not
been for a couple of othermistakes.
But realistically, we stoppedshipments completely probably
(01:23):
three weeks ago, stoppedshipments completely probably
three weeks ago, and we had so afew things One we knew from a
cashflow perspective and I'llget into kind of some of the
other mistakes that were madethat kind of put us in this
position, which had nothing todo with tariffs, they just
compounded with it.
But as a result of thosemistakes, we ended up with a lot
(01:44):
of inventory in China that wassupposed to be here and, as a
result, when the tariffs reallyhit, I so I was on, well, I
wasn't really on vacation, but Iwas overseas at some
conferences.
So I didn't, you know, I wasn'twatching the day-to to day of
things, you know, while we weregone and whatnot, and so I
(02:06):
didn't know that we really hadany specific, you know, larger
issues to deal with.
All I knew was okay, yeah,tariffs are here, it's a higher
price, like okay, we're gonnahave to figure out how to pay
for that or what to do.
And then of course they just,you know, skyrocketed, you know,
to 150%, you know, reciprocaltariff or whatever, it was 145.
And then I found out we don'thave inventory here in the
(02:30):
States, like shipments weren'tgoing through, and that was an
agency issue, and that's a topicfor another Tech this Tuesday
probably, where we can talk alittle bit about agencies and
how to navigate those watersbetter and how to navigate those
waters better.
But the end result is we're ina space where we have minimal
inventory here in the States.
(02:51):
And then you've got thequestions of do we raise prices
and try to extend out ourinventory and wait out the
competition, in a sense till?
Maybe they stock out becausemany other sellers are going to
have to, you know, stop orrestrict their shipments as well
?
You know, do we not do that?
Do we go hard on it and sellthrough what we've got for cash
(03:13):
flow?
Because we also ended up it'salso kind of a cash flow
conversation because we werelaunching some new products this
year, the new two-year versionof our lifetime products, but in
so doing, the new two-yearversion of our lifetime products
, but in so doing because thetwo-year version was going to be
a much higher volume productthan the lifetime, but also,
(03:34):
realistically speaking, the cogson that product weren't really
much different.
So we ended up having to steala lot of cashflow from our other
product lines that were alreadyrunning, plus leverage
ourselves a bit to get ahead ofthat, because we need a lot of
inventory on that two year youknow product.
Well, now all that inventory issitting in China so we can't
(03:55):
launch it, but we've alreadypaid for it, you know, with our
suppliers, and so the cash flowissues are pretty significant.
Issues are pretty significant,but I think the bigger thing
here is it has reminded me thatreally big issues like this you
know ones that are industry-wide, e-commerce-wide, you know,
whatever, economy-wide youalways have to step back.
(04:20):
You know, after the initialshock, after all of the oh my
gosh, what are we going to do?
Right, you have to step back andlook at how can we benefit from
this, how can we navigate itwell enough that we can make it
to the other side, and what arethe benefits if we can manage to
do that?
Because anytime there's adifficulty like this, whether
it's Amazon sellers, whetherit's just e-commerce in general,
whatever it is, there are goingto be a lot of businesses that
(04:42):
don't make it through thosewaters, like they're going to
capsize, they don't have muchprofit margin, they don't really
know how to manage theirbusiness, they have no idea what
the numbers are and they'regoing to go under, and then that
presents an opportunity for thebusinesses that can make it
through.
I think that's the biggestthing right now is just you know
how do you properly navigatethose waters in a way that at
least you're still a brand thatexists on the other side of this
(05:03):
, and then you can takeadvantage of the opportunities
that present themselves at thatpoint.
So I think that's kind of whereI'm trying to keep my head
right now, yeah, yeah, and I did.
Speaker 1 (05:11):
I just want to reemphasize that.
You know I've talked to anumber of brands over the last
few weeks that are, you know,some of them are clients, some
of them are just, you know,relationships that I have, and I
think a lot of brands are inthe same boat, where you know
they're looking at strategicallyhow do you, how do we navigate
this?
And and what are you know, howcan we translate this into
(05:32):
upside?
But also looking at it from aperspective of you know what,
what do I need to survive today?
And then how do I leverage thisinto an opportunity later?
Because I mean, there are somepretty massive impacts.
As far as you know, there'scertain products that are just
not profitable, and so I thinkthat's where it comes down to.
(05:53):
You know those conversationsthat I'm having.
Some of it is around like, hey,if you have products that you
know aren't critical to yourbusiness and, with those tariffs
in place, are not profitable,then maybe you know, maybe that
strategy is, yeah, you run outof stock on that product for a
while until tariffs are figuredout, or there is a way to adjust
(06:14):
those prices in order to makeit make sense, rather than
trying to put a lot of time andeffort into a product that,
until tariffs change, just isn'tprofitable.
Time and effort into a productthat you know, until tariffs
change, just isn't profitable.
The other thing that I know alot of the brands that I spoke
with of what they're doing isthey are, you know, really
slowing down a lot of theirproduct developments Because if,
(06:35):
especially if they're, you know, manufacturing in China, hey,
it doesn't really make sense toput a lot of time and money into
developing new products rightnow, at least if you know,
within China, if you knowthere's no certainty around what
the margins on those productsare going to look like.
But then the other thing onexisting products is really, you
know, I think you know lookingat, hey, okay, if there is a
(06:59):
window that opens up where youknow tariffs drop dramatically,
like what we've seen with othercountries, kind of overnight of
making sure that those productsfor your best sellers are ready
to go.
Because my understanding youguys correct me if I'm wrong
because import, export andduties is not my area of
expertise, but talking to anumber of people on this issue
(07:22):
is that that tariff isdetermined by when those ships
hit the water.
So if you start shipping aproduct, whatever that tariff
rate is of when you startshipping that from China is
going to be what your tariffrate is when you import it here
in the United States.
So those brands are looking athey, we've got X number of
products at the manufacturer inChina and they're waiting until,
(07:45):
if those tariffs do drop,they've got to plan a place in
order to move very quickly toget that inventory onto a boat
so that way they can takeadvantage of a lower tariff rate
that may be long-term or thatwindow may be very, very small.
So I think taking advantage ofthose things, of looking at what
you can do in these types ofsituations, is helpful for some
(08:07):
brands in kind of navigatingthese waters.
Speaker 3 (08:11):
Taking a step back.
I think the biggest thing beinginvolved in ProTuff and seeing
you know what things we've doneto kind of navigate those waters
I think the biggest thing totake away from this is that,
first of all, what we know isthat the one thing that's
constant on Amazon is change,and something changes, whether
(08:32):
it's increased fees or inboundplacement fees or things change
all the time and even thoughthis is bigger than just a new
fee on Amazon, sitting aroundand complaining about it.
I know that it hurts and, yes,there's a lot of businesses that
aren't going to make it.
But I think the businesses thatare able to pivot and not just
whether it be tariffs or whetherit be a problem with the
(08:54):
manufacturer or something wentwrong with one of your products
and you're getting a whole bunchof bad reviews being able to
pivot and not sit and dwell onthe actual issue that you can't
control, but figuring out a wayto navigate those waters I mean,
mike said it, he mentioned itand I think John you did also
you know there are going to bebrands that don't make it on the
other side, and if you are ableto be one of those brands that
(09:15):
are able to navigate thesewaters and make it to the other
side, like at ProTuff, forexample.
I mean, we deal with a lot ofcheap Chinese manufacturers that
are selling a pole for 40, 50bucks and those, like, with this
whole de minimis exemptiongoing away at the beginning of
May, like I have a feeling a lotof those are going to either go
away completely or they'regoing to have to raise their
(09:37):
price pretty significantlybecause now they have to pay
tariffs and reciprocal tariffsand all of this stuff.
So that's one of the things thatwe did early on is, yes, it
sucks, yes it's going to bepainful, but what can we do?
And for us it goes back to a lotof the principles that we've
talked about in this podcast forover a year.
We have a decent sized listthat we were able to send an
email to be honest andtransparent and we did a little
(10:00):
bit of a promotion that wehaven't really done catalog wide
, and it generated a lot ofcashflow that we needed.
So, like because we had thatlist and because we had the
foundation, we were able togenerate some much needed
cashflow to help us get kind ofnavigate those waters.
So I think that's really thebiggest thing is that things are
going to change on Amazon.
Things are going to change inthe world of e-commerce.
(10:22):
Spending a little bit of timeletting the pain hit but then
deciding how you're going topivot, I think, is the most
important thing to take awayfrom this situation, because
tariffs, yes, they suck, butthere's going to be something
else in a couple of months fromnow that's going to suck too.
Speaker 2 (10:40):
And so one thing, just to put some numbers to
paper for people about the valueof having that list right.
So we have about 40,000 peopleon our list.
They're pretty active, and ofcourse, we do cross-sell and we
do whatnot, but most of ussoft-sell, you know, it's like
(11:01):
we're not really hardcore aboutit.
To be honest, we probablyshould be a little bit more
hardcore about our cross andupsells, and I think that's one
of the things, quite frankly,that I think I've probably
learned from this process isthat we'd probably be in a
little better shape if we weredoing that more.
But setting those things aside,because our inventory was in
such rough shape, we ended upstocking out on three of our
(11:24):
hero products at Amazon.
Now, fortunately, we had FBMbackup, and so we were able to
use that to at least be able tofulfill those Amazon orders.
But obviously CTRs are worse,cvrs are worse, because your
delivery times aren't nearly asgood, right?
So our sales went way down.
(11:44):
And here's another piece ofinformation Although it's really
useful to have FBM backup sothat you don't completely run
out of stock, volume of sale isgoing to decrease significantly.
We literally were able to trackit out and we were selling a
third of the volume in terms ofnumber of units that we would
(12:07):
have been selling had we had FBA.
That's how precipitous the dropin sales was.
So don't run out at FBA.
Have FBA on backup, but makesure you got stuff at FBA.
But beyond that, if we talkabout the list, even with those
struggles, the nice thing aboutthe list is they already trust
us, they know us and they aremuch more willing to put up with
(12:32):
an extended delivery window orsomething right, because they
want our brand.
They don't want something else.
So our volume was down so lowthat we were only doing I think
we were hitting maybe 10 to12,000 a day would have been
essentially our kind of ourbaseline, right we, when we sent
out that message, essentiallyover a span of just over two
(12:55):
days we put through an extra onehundred and twenty five
thousand dollars in sales fromthat list and that was a huge
cash injection for us, which wereally needed from a cashflow
perspective.
So if you don't have a list,like I mean, I know we hammer
this and we hammer this and wehammer this, but I'm telling you
like you need that list becauseone thing it gives me a little
(13:16):
bit of comfort because even ifthis whole thing was to fall to
pieces, right, and you know, Icould rebuild off of that list
because I have 40,000 people whotrust me, who trust my brand,
who trust my business, right, soI could rebuild a new business
off of that list.
It might not even be in thepool products, you know business
.
Maybe something completelydifferent.
(13:36):
If I find something that themajority of that list would be
interested in and they know meand trust me, they would buy it.
So, you know, don'tunderestimate the value of that.
But then the other, really,really thinking outside the box
in terms of how to solve this,you know the problem that you're
running into like, try not tolook at it simply from the
(13:59):
position of which of our leverscan we pull harder or not pull
or whatever?
Like we've got, we have these10 levers that we're working all
the time right, which of themyou know and what combination
should we pull?
That you know solves thisproblem right Instead, not that
you shouldn't look at that,obviously you should.
(14:21):
But I think we sometimes end upin a space where we get very
narrow-minded and those are theonly 10 levers that we know and
so we don't think of any otherlevers and there's some major
levers that you might be able topull outside of that that you
haven't had to previouslybecause things were kind of
sailing along but that couldhave a drastic impact, for
(14:41):
instance.
I'll give you an example Now,unfortunately this is not going
to work for us, but it was anavenue that we considered and
for another brand it might'vebeen absolutely a solution.
So we sell pool tools.
Australia is also a very bigmarket for pool products and
essentially it's pretty openbecause there really aren't any
(15:04):
really good products on theAustralian market.
We haven't gone that roadbecause there's a little bit of
a learning curve there.
And we know Amazon, our D2Cwasn't really fleshed out very
well and Amazon Australia is notreally that well fleshed out,
so it's not like that's a bigvolume play for sale, but D2C is
.
And if you could spin up D2C,you know, fairly quick, like if
(15:27):
you already kind of have it andyou spun it up for Australia,
you know for us that would havebeen an immediate win because
all of that inventory that wasin China could go into Australia
tariff free and all of a suddenyou know we can sell product.
Right now it doesn't work forus because Australia is an
opposing season, so it doesn'thelp us right this moment, but
(15:47):
it was an idea.
And for another brand, where itwasn't a seasonal thing like
that, taking that product movinginto Australia that's an
English speaking country thatprobably uses many of the same
products that we use over hereand taking advantage of that
opportunity to at least startpushing some product through
could be a solution.
But you might not think of thatnormally.
The other thing is China.
Your products are alreadysitting in China.
(16:09):
You're like, if you don't wantto bring them in because of the
tariff, where is it that meansthey're in China?
China is a huge market.
So, depending on your product,maybe live sales, like the
social media, like live sellingthat's massive in China.
You can hire a live influencerin China to do live sale events
for your product, and there'ssome of those influencers that
(16:31):
do millions in just hours.
So, again, not something thatyou would normally think of if
you're generally focused on theUS market, but if you can't
bring the product here, why notsell it there?
So just make sure that you'reactually looking at some of
those other levers that youmight be able to pull that
ordinarily you might not think.
Speaker 1 (16:49):
Yeah, and I think also just thinking about the
other opportunities that itpresents too is if you can take
advantage of them.
So if you happen to be, youknow cause I've talked to a
couple of brands as well thatyou know some of their products
are not manufactured in China,and so for them, I'm like this
is the time when you need to,like you know, not double down
like triple and quadruple down,and really look at which of your
(17:12):
competitors are out of stockand which of your competitors
are low stock, because even ifyou just look at that single
tactic right there, there's hugeopportunities for you to gain
market share.
Because, yeah, maybe they likebrand X and they went searching
for that brand.
Well, if that product is out ofstock and you're providing a
(17:32):
very solid alternative that,again, if they're on Amazon that
they can get tomorrow, chancesare they're going to go with
your product if there's nothingelse available.
Most brands aren't so strongthat somebody will be like, well
, it's got to be this or nothing.
They're going to say, well,this is what I wanted, but if
there's something that'scomparable, especially on Amazon
(17:54):
, give that a shot.
If I don't like it, let's behonest, their return policy is
very generous, so customers feela lot more confident with it.
So looking at those types ofopportunities of just looking at
low stock and out of stock foryour competitors is a big
advantage.
And then I haven't seen thenumbers for Amazon yet, but I
did find it really interesting.
(18:17):
I was reading through somethingthe other day where I was
talking about how Timu and Shienwere like 20% of the ad spend
on Meta over the last year.
So if you look at, you knowthose two companies well.
First of all, you know and I'vetalked to a couple of brands
where they had knockoffs thatwere being sold on Timu for 25%
of the price that they were.
Well, as of yesterday, timu isnow charging 145% tariff fee.
(18:42):
So most of those knockoffs areno longer competitive.
And some of these brandsespecially that have kind of a
premium brand and have investedin the patent and basically been
ripped off by a lot of theseChinese sellers, that they're
able to get some of that back.
And the same thing with AmazonYou're talking about a little
(19:08):
bit with the pool polls of hey,there's a lot of Chinese
competitors.
They're selling a product for20, 30 bucks if you've got, you
know, the inventory and capacitylike now, is an amazing time to
grab market share If you're ina position for your brand in
order to do it, if you've gotthe inventory and the cash in
order to do it.
I think this is one of thoseyou know instances that comes up
, you know, every few years towhere, if you can figure out how
(19:31):
to pull the right levers rightnow, you can make some massive
progress.
Speaker 2 (19:34):
Well, and like you said, John, like if you know,
for instance, the brands thatare getting ready, you know, and
preparing for if the tariffnumber comes down, you know, if
you've got the cash flow and thereserves to do it.
You know, moving in, let's faceit, I could tariff stay where
(19:54):
they are.
Yeah, is it likely?
Highly unlikely.
How long do they stay?
I don't know Right, but but itseems highly unlikely that they
stay at the at the rate thatthey are.
And so if you've got the moneyto invest in some inventory and
a place to store it, say, youdrop over in China so you don't
have to pay the tariffs yetMaybe you negotiate 60-day terms
(20:17):
or even 90-day terms with yoursupplier, right, you might have
a situation where you could getthese orders flowing, have the
inventory waiting at Skewdropand as soon as that tariff
number comes down, you're on theship and ready to roll and
everybody else is 30, 60, 90days back because they got to
wait for production.
Like you're on the ship andready to roll and everybody else
is 30, 60, 90 days back becausethey got to wait for production
, like you said, now you've gotthe inventory here, they don't,
(20:39):
you know, and you're off to theraces Now.
Not everybody has the cash flowor the capital to do that, but
if you do, I would recommendthat you consider that as an
option.
I'm not telling you do it, butyou should definitely be
thinking about that as an optionto potentially get ahead of
your.
Speaker 3 (20:53):
Well, I mean similar to, like stock market crashes
and, you know, the housing crash, like when something like that,
a major event happens in thefinancial markets, it really is
the best time to buy, and that'swhen.
That's when true, like actualwealth, like generational wealth
, is built.
And that's really one of thereasons why there's a big gap
between the you know, the onepercenters and and the non,
(21:16):
because that's what they do.
They have so similar in thisstory.
You know, if you do have thosereserves and and if you have the
infrastructure to be able topivot during these times, I mean
I'm confident that our entiremarket is going to change once.
As long as the de minimisexemption goes away at the
beginning of May, which isscheduled to, I mean, our
market's going to changesignificantly.
I firmly believe that and andso like that's that's the thing
(21:39):
that we're talking about ishaving the foundation in place
to be able to invest in timeslike this, but also, like you
know, a lot of even though itwas really stressful a lot of
really good ideas have come from.
Some of them are kind of offthe wall, but, like those off
the wall ideas, in some casesturn into something like we've
been talking about like, beingable to like.
(22:03):
Can we put some of our partstogether in Columbia?
Can we like what about anIndian manufacturer, which we
actually just went and visitedlast week?
So like all of these thingsthat were kind of brainstorming
on how, how do we solve thisproblem, is going to make us
stronger on the other side.
So like that's again, that'sbeing able to sit with it for
long enough to be able to startmaking some solid decisions that
(22:23):
are going to set you up forstrength later on down the road.
I mean, that's what's going tohappen at the end of this is I'm
confident that once we getthrough this, our market's going
to look a lot different andwe're going to be able our
conversion will go a lot higher,because now we're going to have
a lot of those smaller you know, very cheap, like cheap made
and cheap price products thatare on the market.
Now they're going to go away orthey're going to have to raise
(22:45):
their price, which is going toput us more in line.
We're already at the premiumend of the price point, but I
think this is going to kind oftilt those scale in the other
direction, so we're going tocome out stronger on the other
side, and it's because of thefoundation we built, but it's
also because we keptlevel-headed instead of
complaining and oh the world is,the sky is falling, we actually
sat down and had some realhonest discussions where we
(23:05):
threw some really obnoxiousideas, threw them at the wall,
and some really goodconversations came from that.
So that's what I really lovedabout how these conversations
were happened, happened, andthat's really when you have that
foundation for that that solidfoundation it allows you to make
moves like that.
Speaker 1 (23:23):
Yeah, and I think it's totally rational.
And you know, I understand.
You know, when things like thishappen, for people to say, wow,
that really sucks, this isreally unfair, and that's a
totally rational response.
And then you go okay, what'snext Like for me?
Personally, I have to switchfrom that this sucks, to how do
we, how do we figure out asolution?
(23:45):
You know, the faster I makethat switch, the better it is
for everybody.
And I think in this case, again,a lot of creative solutions
that maybe you haven't thoughtof before.
And I think the other thingjust to build off of what you
said, matt, which is you're notin this alone as a brand.
There's a lot of other peoplethat you support.
So maybe I know there's a lotof brands that are having
(24:06):
conversations with theirmanufacturer to say, hey, you
know we need to share the loadon or the additional costs on
these tariffs and maybe it's notgoing to be 50-50, but you know
, even if they give you another10 to 20%, you know that's far
better than zero.
(24:30):
The other thing is that I think,again, the logistics piece of
it is not my area of expertise,but just on, what I'm reading
right now is that the shippingfees are probably going to go
down pretty significantly ifthese tariffs stay in place over
the next month or so.
Well, there is an opportunityin order to ship some of that
stuff over here into a duty-freezone, and some people will say,
okay, well, that's superexpensive and there are some
(24:51):
definite truths to that.
But if you can make up some ofthat margin because you're
paying 30% or 40% less on yourshipping over here, maybe that
makes sense.
It's not going to be a fit forevery brand, but kind of like
what you were saying, mike,which is considering options
that were outside of what youconsidered before, and getting
(25:12):
creative and relooking at allthose things that you know
didn't make sense before to comeup with something that maybe
makes sense now.
Speaker 2 (25:19):
Yeah, I think I mean.
So, actually, maybe it's amaybe it's a decent place to
somewhat change gears on this alittle bit, just because so
there's a few things thatobviously we've mentioned, you
know, in this podcast in termsof, we'll say, potential
solutions, you know to to theproblem.
One of them that people aretalking about is bonded
(25:40):
warehouses.
You know, and I think that'ssomething to investigate.
If you don't know what that islike, look it up, you know, like
this, this is not probably theconversation for an expanded
understanding of what that isand why you might use it, but
essentially it gives you theopportunity, you know, to at
least bring the product over andwait it out, right, so that
(26:00):
it's already here and you don'tpay the duty.
Yet you're paying to havestorage in this bonded warehouse
and then once the tariff comesdown, then you release it.
It's a little bit of a risk.
You are going to invest alittle bit more money because
you do have to pay to get itover here and you don't know
when it's going to drop, butit's an option.
But something else, and this isa strategy that I'm going to
(26:22):
say I'm not saying do it,because we don't even know yet
whether we can do it or whetherit's valid, but it's an idea
that I have, that we're vettingand it looks right.
It looks like it's possible.
I'm not going to give all thedetails of it, but I'm going to
give the broad strokes, and thatis that products that can be
(26:45):
classified under Section 232 ofthe tariff code are exempt from
the reciprocal tariffs.
And the reciprocal tariffs arethe ones that are really
hammering everybody right, likeyeah, there's some other tariffs
that those are stacking on topof, but as a rule it's the
reciprocal tariff that's reallyhammering people and putting
them in a bind.
(27:05):
So any way that you can exemptyourself from those reciprocal
tariffs is a significant win.
So the question is is yourproduct eligible for Section 232
?
And the answer to that questionis if it is within certain
categories and if it is a metalproduct, then it falls under
(27:29):
section 232.
But also there's been anaddition made to that, which is
you don't necessarily have to bea metal product.
In other words, I mean, forlack of any better way to say it
a metal product is a productthat is made up mostly of metal
and the metal is the importantpart of the product.
So, for instance, our pool poleessentially is metal product
(27:52):
right, like, okay, it's got ahandle that's not metal and it's
got a locking mechanism thatisn't metal but everything else
is metal and the pole itselfthat's what it is right.
So it would be a section 232option.
So we knew I knew probably acouple of weeks ago that the
poll was in good shape.
You know that we could beexempt from the reciprocal
(28:13):
tariffs.
What I didn't realize was thepossibility that some of our
other products, which are notreally truly metal products,
might also be exempt.
So here's the addition toSection 232 that becomes
relevant and you shouldinvestigate it like we are the
addition to Section 232 thatbecomes relevant and you should
investigate it like we are.
(28:37):
Section 232 now has a clausethat essentially says that metal
derivatives can also qualifyunder Section 232.
And a metal derivativetechnically is any product that
falls within a certain categorylist, and there's a list out
there that you can look at tosee if your product falls in one
of those categories.
If you're in one of thosecategories and you have any
metal in your product, you canbe classified as a metal
derivative and you can send inunder Section 232.
(29:00):
Maybe there's some other thinghere that I'm not seeing.
However, so far, chats withmultiple deep reasoning models
of AI have led to the sameconclusion, which is that if you
have a metal screw in yourproduct and your product falls
within one of thoseclassification categories, you
(29:21):
can be Section 232 and you canbe an exempt from the reciprocal
tariff.
You can be an exempt from thereciprocal tariff.
So I would immediately go andlook and find out is your
product within one of thosecategories?
And if you don't have metal inyour product, how can you swap
out a piece or a part orsomething to make it metal so
you can be section 232?
(29:41):
Now, before you do any of that,go talk to a customs broker.
Go talk to the people that knowwhat they're doing.
But I am 80% confident thatthis is a strategy that we're
going to be able to use to movea number of our products into
the country without paying thosereciprocal tariffs.
It's not advice.
I'm not telling you to do it.
Don't sue me if it doesn't work.
(30:01):
I'm just telling youinvestigate.
Speaker 1 (30:05):
Not legal advice, just a caveat there.
But I think this is a greatexample, and I think this is
probably a good place to wrap onthis topic for today.
But I think it's a greatexample of how, as entrepreneurs
, we have to find creativesolutions, the problems that
come up.
So today's problem happens tobe tariffs, and I think, matt,
(30:25):
you said it best when you saidtomorrow's problem is going to
be something different.
But at the end of the day, itreally boils down to being able
to problem solve and being ableto effectively implement
solutions to those problems inorder to build the brands.
And the nice thing about it isthat, yes, these types of issues
quite frankly suck Like there'sno other way to put it.
(30:48):
They're very challenging,they're very expensive, they're
very stressful, all those typesof things.
That said, they are also anamazing opportunity to continue
to grow your brand, while othercompetitors, whether they be in
China or other places, are notwilling to put in the effort and
the time and everything elseand the resources in order to
(31:11):
solve these problems, to movetheir brand forward.
So you know, I think there's ayou know, a ton of opportunity
for the brands who can figureout how to navigate these waters
over the next few months andcontinue to grow.
So that's that's kind of myperspective on it.
Before we wrap up anything elsethat Mike or Matt that you want
to add.
Speaker 3 (31:31):
I mean, I think the biggest thing from my standpoint
is and we've said it a coupleof times in this conversation is
it sucks, like you said, john,sit with that.
It does, there's no questionabout it.
But pivoting, having a strongfoundation, having your list,
having all these things that wetalk about, there's a reason why
we talk about it and why wehammer it, and this is a very,
very real world example of theimportance of building a
fortress around your brand,which includes building an
(31:54):
audience, and we've been able toleverage that and be able to
kind of help us get through this.
So it's the same thing that wetalk about all the time.
This is a real world example ofwhy, why having that in place
is important.
Speaker 2 (32:06):
I think the only thing that I would add is
there's a reason that peopletalk about diversification.
Now, on the one hand, you knowthere are those conversations
like you'll hear Alex Moralessay this all the time, and I
don't disagree with him.
You know, like, asentrepreneurs and business
owners, it's easy to get caughtby the next shiny object.
(32:28):
Like, as entrepreneurs andbusiness owners, it's easy to
get caught by the next shinyobject and he talks a lot about.
You know, like, no, stayfocused on the one thing.
You know that you're doingright, and I think that's
valuable advice.
I think it's easy for us to getdistracted and whatnot.
But it's also you know you haveto.
It's not just the next shinyobject idea, it's how can I do
things in my business where Idiversify my risk, and so, for
(32:52):
instance, if you have a singlemanufacturer in a single country
, that's a problem, because anyproblem that that manufacturer
runs into is your problem andyou can't solve it.
If the country becomes aproblem, you can't solve it
right If you know whatever thatis.
So the more you can diversify,the better off you are.
So, for instance, we had twomanufacturers in China.
(33:14):
That's great, because if onemanufacturer has a problem.
We can get product from theother manufacturers, so that's
awesome.
But if China becomes theproblem and they're both there
well now I'm not actually reallydiversified anymore.
So we've now got an Indianmanufacturer that we're working
with that'll be producing polessoon.
I think there's a good chancethat they could potentially
(33:35):
produce nets if we needed themto.
And so again, now we've gotmultiple manufacturers, but also
multiple different countries.
Anytime there's a way in yourbusiness, without
over-complicating things, thatyou can diversify yourself to
mitigate the risks of one pillargoing down.
Please pay attention to that.
And at the end of the day, oneof the best ways to diversify,
(33:59):
especially if you're an Amazonseller, is to have a list,
because then with the list, it'snot just I can sell anything I
want to those individuals, aslong as it's something they need
because they trust me.
It's not just having a list,but it's having a list of people
that actually trust you andyour brand and what you stand
for, right.
If you have that, whateverhappens to your business, you
(34:23):
have an opportunity, that youhave all those people that you
can sell something to and youcan rebuild from the ashes, and
that gives me a lot of comfort.
You know I could.
I could sell them an app.
I could sell them some otherphysical product.
I could sell them a service.
I could.
You know I could promoteaffiliate products I could.
There's a million different waysthat I could potentially
monetize that list if I had to.
(34:45):
That don't involve selling thempool tools.
And so if you don't have thatlist, please start building the
list.
And if you don't know how tobuild a list, then connect with
us so we can help you figure outhow to build that list.
I mean, go back and listen tosome of our podcasts, because we
talked about it on a number ofoccasions.
There's a lot of different waysto do it.
Speaker 1 (35:03):
Please start doing it .
All right.
Well, I think that's a greatplace to wrap for today.
Thank you everybody forlistening and we look forward to
having you again on anotherTactics Tuesday.
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