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David McKean of Knowland: “You need a platform to sell your product”

You need a platform to sell your product.We built our own online, web-based platform to sell directly to customers. My prior background in software provided me with amazing contacts that allowed us to build our web-based platform at a fraction of the cost of typical E-Commerce companies. As part of my series about the “5 […]

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You need a platform to sell your product.
We built our own online, web-based platform to sell directly to customers. My prior background in software provided me with amazing contacts that allowed us to build our web-based platform at a fraction of the cost of typical E-Commerce companies.


As part of my series about the “5 Things You Need To Know To Create A Highly Successful E-Commerce Business”, I had the pleasure of interviewing David McKean.

After spending almost ten years in sales for the Discovery Channel, Mr. McKean left to co-found The Knowland Group in 2004.

The Knowland Group is a data company for the hospitality industry. Today it is the largest provider of group sales data in the world. Knowland is a provider of intuitive business intelligence products for the hospitality industry and has more than 3,000 client hotels and 50,000 users globally.

As the CEO, David is taking his business acumen and applying it to building Sherpa Chai into the leading chai brand in North America.


Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

I began my career a long way from what I am doing today. I spent almost 10 years working for the Discovery Channel buying and selling programming. My efforts generated large profits for the Discovery Channel but very little for me and I said enough. I then began a software business with my brother and nine years later we had 500 employees and four regional offices. By then I found I was getting bored and I sold the company. After retiring from coaching my son’s lacrosse team, I found the kids were gone and I started looking for something new. I never drank very much coffee or tea but a friend kept giving me samples of Sherpa Chai and after watching my wife and three daughters loving this Chai, I wanted to meet the founder, Pemba Sherpa. I quickly fell in love with Pemba’s story and the story of the Sherpa people. I wanted to be an investor and soon afterward, the other shareholders asked me to be CEO. Initially, I declined but after getting involved it was too much fun. I have been drinking from a firehose since I got involved in the consumer packaged goods (CPG) industry. It is far different from running a software business.

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Since I am not the founder of Sherpa Chai, my “Aha Moment” is a bit different. For me it occurred in February 2019. I brought home a 64 oz bottle of the newest Sherpa Chai flavor that my friend had given me. The next morning my daughter turned to me at the refrigerator door and held up an empty bottle asking for more. That 64 oz bottle had been consumed in less than 12 hours. That was when I said I have to meet Pemba and from then I was totally hooked.

Can you tell us a story about the hard times that you faced when you first started your journey? Did you ever consider giving up? Where did you get the drive to continue even though things were so hard?

The early days of the software business were very hard. My kids were very young and there were many months when I would have to come home and tell my wife there is no pay this month. We struggled to pay the mortgage and pay bills. I refinanced my home three times. One of those was to get the two months mortgage free that was being offered. We knew we had a winner idea and we just pushed through. I was always able to see and believe in the dream. I think having 100% confidence in the product makes it possible to push through the hard times.

So, how are things going today? How did your grit and resilience lead to your eventual success?

Today, we have managed to turn the company profitable. Even after losing 40% of our revenue due to COVID-19 and the closing of coffee shops, we have stepped up our grocery sales, more than doubling our revenue through that channel and online sales.

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘takeaways’ you learned from that?

Early on, I dreamed of huge, national accounts that could carry our company to success, quickly and easily. Gigantic mistake! There is no other way to grow but slow and steady, whether it is software or consumer packaged goods. Today, this realization has made me relax a bit. In addition, with my first company, I used to think I could grow the company single-handed. Now, I don’t even pretend. I look for good people and give them the room to be successful. You have to know how to delegate and support the people you have working for you.

What do you think makes your company stand out? Can you share a story?

We are an authentic company. The recipes for our chai originated in Nepal, the tea we use comes from Nepal, and all of the brewers and producers of our chai are Sherpas from Nepal.

Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?

I would say make sure that you surround yourself with smart people and people with positive attitudes. I have been constantly amazed at how joyful and positive the Sherpa people are and I think this makes it so much fun to go to work. The Sherpa culture is very much based on giving back. Pemba, our founder, has four adopted children in Nepal that he agreed to care for housing, clothing, schooling, everything. Over the years, he has built a suspension bridge to help the children in his village get to school. He built a hydro generator in the village so they have electricity. Dilli, our head brewer, has similarly adopted three children along with having two of his own back in Nepal. Many of the people have not seen their families and wives for years but they are all so positive that it is infectious. My wife and I have followed their lead and adopted a 9-year old girl this past fall. She lives with her parents but we have agreed to pay for school, clothes, anything she needs. This may not be something others want to do, but having a mission, a goal of giving back to something bigger than yourself makes this whole thing satisfying.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

I know my success is not even close to being mine alone. I have learned I have to depend on others with full trust and confidence, starting with my family. I have three brothers and while growing up my father drummed it into the four of us that if you want to be successful, you need to own whatever you do. He was a lawyer and business owner, and as a result, all four boys grew up to be entrepreneurs. I rely heavily on the advice and support of my brothers and other entrepreneurs I have become friends with throughout the years.

Ok, thank you for all that. Now let’s shift to the main focus of this interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that eCommerce businesses are implementing to adapt to the new realities created by the Pandemic?

This pandemic has changed how many of our customers shop. We are seeing the coffee shops start to reopen and we hope that our sales to these groups will continue to increase but it is still a long time until we see a return to the old numbers in this channel. I think the fact that we have been out there, we find that a lot of the stores are closed and will never reopen. So, grocery stores and online sales continue to drive our business. During Covid, we saw our online sales go from 1,000 dollars a month to 10,000 dollars a month. We are working hard to increase this as go forward. We are running online promotions now one-to-two times a month and trying to come up with additional ways to push product online. Our best online sales occurred last November when we did almost 30,000 dollars in one month. We are running traditional promos (Mother’s Day, Father’s Day, Fourth of July, etc.), but we are looking for new ideas and new ways to engage our E-Commerce customers because this is going to be the way of the foreseeable future.

Amazon, and even Walmart are going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise retail companies and eCommerce companies, for them to be successful in the face of such strong competition?

We are lucky because the authenticity of our product requires that it is produced with traditional recipes, traditional ingredients, brewed by Sherpas, and these can’t be recreated in China. That said, we do face stiff competition from our competitors who produce a cheaper product that uses cheaper ingredients.

Can you share a few examples of tools or software that you think can dramatically empower emerging eCommerce brands to be more effective and more successful?

I recommend finding a good CRM application that allows you to manage both your E-Commerce and other distribution channels. The CRM application is going to be dependent upon your budget, there are plenty that are free to use, and in addition, there are plenty that cost a fortune.

As you know, “conversion” means to convert a visit into a sale. In your experience what are the best strategies an eCommerce business should use to increase conversion rates?

Sales conversion in E-Commerce can mean different things to different producers. In our case, we found our pricing and the cost of shipping caused us to lose quite a bit of our customers who made it to the checkout page. Determining a pricing model that absorbed the cost of shipping was a game changer. Our E-Commerce pricing had to better incentivize our customers not to abandon the cart when they came to the shipping page. This dramatically improved our abandon cart rates to less than five percent.

Of course, the main way to increase conversion rates is to create a trusted and beloved brand. Can you share a few ways that an eCommerce business can earn a reputation as a trusted and beloved brand?

For us, it’s all about the quality and authenticity of our product. We know that if we produce the superior chai, we will create a trusted and beloved brand. This includes guaranteeing our ingredients are organic, and meet the highest standards.

In addition, we take great care in making sure all of our E-Commerce business customers receive a quality product and if there’s a problem, our customer service reaches out directly to the customer and works diligently to ensure they are happy with our fulfillment.

One of the main benefits of shopping online is the ability to read reviews. Consumers love it! While good reviews are of course positive for a brand, poor reviews can be very damaging. In your experience what are a few things a brand should do to properly and effectively respond to poor reviews? How about other unfair things said online about a brand?

In all honesty, I’m grateful this isn’t a problem we’ve had to deal with to date but our team goes to extraordinary efforts if anything goes wrong with a delivery to ensure the customer is made whole and happy. We reach out to them personally, speaking to them on the phone. Generally, if there has been an issue, we refill the order. Plus, they will likely receive a free t-shirt.

Ok super. Here is the main question of our interview. Based on your experience and success, what are the five most important things one should know in order to create a very successful e-commerce business? Please share a story or an example for each.

  1. Need a great product that people want.In our case, as CEO, I fell in love with the quality of the product, the multi-generational tradition of the recipe, and the company’s history of giving back to the community.
  2. You need a platform to sell your product.
    We built our own online, web-based platform to sell directly to customers. My prior background in software provided me with amazing contacts that allowed us to build our web-based platform at a fraction of the cost of typical E-Commerce companies.
  3. You need to determine if you will supply the product to the customer or if you will utilize a third party.
    In the case of Sherpa Chai, third-party supply was out of the question because our product is produced solely by Sherpas, and to maintain quality control we have to keep this in-house. Frankly, this is the most difficult aspect of our E-Commerce business because we have to be very methodical in our growth.
  4. If you’re utilizing a third party, your margins will be imperative.
    I have looked at a number of third-party producers, and while they eliminate the struggles we face for growth, it’s very difficult to replicate with the quality and integrity that our product demands.
  5. If you’re selling product, yourself, you will need to make sure you’re capable of producing enough of the product to supply the demand.This is a daily challenge.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

Find a way to give back to your community.

How can our readers further follow you online?

www.sherpachai.com 
www.facebook.com/sherpachai

www.instagram.com/sherpachai

www.youtube.com/sherpachai

This was very inspiring. Thank you so much for the time you spent with this!

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