Test product ideas quickly in small batches. In today’s eCommerce world and the rise of companies like Alibaba, brands no longer have to spend their money on massive, wholesale sized orders. Take advantage of this and focus on creating and selling small batches of product to do more testing. Doing small batches not only allows you to save more money, it also allows you to engage with your target audience more and develop an air of exclusivity with limited inventory. Supreme is a great example of this — they offer exclusive, small batches of inventory that their audience knows will be a one-of-a-kind product. As a result, its products are highly sought after and the brand has an almost cult-like following.
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 Patrick Sheridan, co-founder and Managing Partner of Modus Create, a global consulting firm that helps businesses thrive in the digital world. Founded in 2011, Modus Create has been recognized by Inc. Magazine as one of the fastest growing privately held companies in the United States for the past five years in a row.
Pat received his MBA from Georgetown University, where he currently serves on the Alumni Advisory Council for the McDonough School of Business. Pat also holds a BFA from the Corcoran College of the Arts and Design, where he currently serves on the National Council for the George Washington University Columbian College of Arts and Sciences.
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?
Art and technology have been passions of mine since I was a kid. Growing up on early video games, I love the amazing experiences that are created when creativity and technology merge. I started off in college studying engineering and ended up with a fine arts degree. I spent a few years in my early twenties painting murals around Washington DC, worked for a design architect, and ultimately jumped into startups in the mid 90s in design lead roles.
What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?
In 2009, I sold the UX firm that I founded to a larger software consulting company and spent a year in New York City helping major publishers launch their first applications for the phone and tablet. I realized that emerging technology had drastically changed consumer behavior and their entire business model was disrupted. My “aha” moment was realizing that this disruption would change how every major Fortune 500 company viewed technology, and it would also disrupt the business models of creative agencies and tech consulting firms.
Can you tell us a story about the hard times that you faced when you first started your journey?
One of the things I’m most proud of is that Modus has never missed a payroll. In the early days of Modus, we had an accountant double pay our federal taxes accidentally and it almost wiped out our entire business checking account. Apparently, the IRS credits over installment to your next tax bill and there was no way to get these much-needed funds back into our account. I met with our local bank manager everyday to show him our client installment and to work with them to ensure we made it through those critical times. In the early days of Modus, the “business side” of state filings and administrative items seemed overwhelming to keep tabs on while we were trying to focus on developing our core offerings themselves.
I’m lucky to have some great mentors and advisors that helped me along the way and really advocate for me. They encouraged me to join a peer mentoring group of fellow entrepreneurs who were able to share real, practical advice for when you’re starting out.
Did you ever consider giving up?
Not really. I am really all in on what we are trying to accomplish here at Modus and that has always been my mentality. I think it’s really hard to accomplish great things with a part-time effort. Sometimes it feels like the past 10 years have been one very long day, but I worked through it. I’ve definitely had my share of times where I wake up in the middle of the night feeling my heart beat through my chest, but I think the key is to have positive ways to handle that stress, because it only compounds the more success you have with the business.
Where did you get the drive to continue even though things were so hard?
I love what I do and I love the platform we are building at Modus. In many ways I feel our company is representative of a global movement reshaping the way people work and how companies need to be designed to succeed in the digital age. There is a certain energy I get from our global team and being able to travel the world helping global brands launch new products. The work itself is engaging and rewarding and that creates the drive.
So, how are things going today? How did your grit and resilience lead to your eventual success?
Resilience is the key. I learned with my first company that businesses can be too boutique to be sustainable. With Modus, I was able to take my lessons learned from my first business, couple them with the lessons learned helping to scale the company that bought my firm and shape them into what I believed is a better version of the model. Of course, we’ve had plenty more lessons learned along the way with Modus Create, but those previous experiences really gave insight to getting it right this time around.
Can you share a story about the funniest mistake you made when you were first starting?
When I was first pitching work in New York City to publishers and banks on Wall Street, I was dressed like I would for any typical workday — so, business casual. I had no idea how smart folks dress in New York City and how formal everyone dresses in Wall Street — even web designers were wearing suits, which I found baffling and pretty hilarious. I felt like I fell off of the corn truck and was going to get laughed out of meetings!
Can you tell us what lessons or ‘takeaways’ you learned from that?
Know your audience. Everyone wants to work with partners they feel understand their industry, their corporate culture and their unique challenges. I learned quickly that the New York City, or more specifically — Wall Street, audience was much more formal. This goes beyond just dress code, of course.
What do you think makes your company stand out?
Our team has an amazing culture. When my partner, Jay Garcia, and I started Modus Create we talked a lot about how most firms we had worked at had no real sense of their “social contract” with their employees. This is something that is core to why I believe people work — and more importantly, stay — at Modus. Modus is designed to increase the market value of Modites (our employees). By working here, you gain the experience and the ability to leverage our platform to develop your personal brand as a product or technology community leader. I feel this contract also extends to our clients as well; we want to make them hard to compete with, more so than just helping them build them an app or product. It’s a mindset thing and is a very powerful cultural connecting tissue for a company that is 100% remote worldwide.
Can you share a story?
When we started to expand the global team, many developers would tell Jay and me that they were surprised that the company executives could also code. Many folks across our team have described to me how they felt like second class citizens in other firms that have traditional outsourcing or offshoring development models — basically, firms that had low cost engineering as the core value proposition of their business. There are multiple instances within our history of a Modite who first engages by writing a few blogs about some interesting tech they employed on a client assignment, and then goes on to work on some of the open source projects with that technology in Modus Labs. Eventually, they are submitting conference talks, creating content on our YouTube channel, and sometimes even co-authoring a book with some fellow colleagues. This is our culture in a nutshell — we believe when leaders focus on building up the team, great things happen.
Which tips would you recommend to your colleagues in your industry to help them to thrive and not “burn out”?
I think a strong daily routine is critical for success. Segmenting your weekdays in planned meetings and planned working time also helps greatly.
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?
My father is a huge influence in my life. As one of five kids, his focus was always for us to be self-reliant. I see many kids who think getting a college degree is the ticket, but I’m thankful for the self-discipline, willpower, and work ethic my father drove into us.
Can you share a story?
From as early as I can remember my dad had a daily workout routine. One summer we would all get up at 6 AM and go run around the high school track with him as he prepared to compete in the law enforcement olympics in New York. I remember hating it the first few times he made us get up. By the end of the summer, though, my older brother and I were excited to get up and race each other every morning. This is the kind of willpower and drive my father instilled in us.
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?
I see many brands engaging on social channels, especially those focused on younger audiences. As the dad of two teenagers, I’ve been amazed to see just how fast apps like TikTok have become major platforms. Leveraging influencers and experimenting with collaborations on these channels seems to be having real results. Additionally, deeper integration into apps like Instagram that allow for purchase conversion directly from a post allows for a frictionless purchase experience.
A lot of companies we are talking to are also looking to offer personalized app experiences for their consumers, with deeper customization options for certain products or “companion app” style features to more easily manage preferences and stay engaged with a brand.
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?
Develop your brand and identify your brand advocates. Consider collaborations with other companies to extend your market upstream and downstream to extend your price points.
What are the most common mistakes you have seen CEOs & founders make when they start an eCommerce business? What can be done to avoid those errors?
There are several common mistakes I’ve seen CEOs and founders make when starting an eCommerce business. One of the most common ones is getting wrapped around the technology axle — they’re so focused on building their own platform or application that they fail to focus on developing their market segments. Instead, use trusted third-party platforms and focus your efforts on building out your market.
Similarly, I see a lot of businesses fall down the rabbit hole of and get too focused on what they are building, not what is actually driving transactions. This is where third party platforms can also help — by leveraging a third-party platform, businesses are less bogged down in the details and are able to focus on the bigger picture. If you are building the app or platform in house, it’s critical to step back and focus on not just what you’re building, but more importantly, why you are building it.
Another common mistake is many of these businesses aren’t focusing enough on the critical data that is coming in — they might have a lot of data but many aren’t using it and analyzing it to gain key insights for questions such as, why are they dropping out of the funnel/shopping cart? The information businesses are able to get today with multi/omni-channel platforms is enormous — use it!
Lastly, this last one might seem obvious but it’s a problem I still see everywhere in eCommerce: people don’t always use good photos and descriptions (or even include a description). Without a good description, it’s extremely difficult to increase organic engagement because you’re probably not showing up highly ranked (or even at all) in Google. Good photos are also important because today’s digital consumer expects it, and there’s really no excuse considering today’s iPhones and Androids take great quality pictures. Both of these mistakes are relatively easy to fix, it’s just a matter of putting forth the time and effort needed to get it done.
In your experience, which aspect of running an eCommerce brand tends to be most underestimated?
Creating demand with limited runs and developing brand collaborations. All too often early brands are trying to achieve scale quickly and end up failing to develop their brand and maintain a continuous dialog with their customers. They’re pouring their starting money into large, wholesale purchases of products or on business cards and logo designs, when they should be figuring out what their business is — this is where your focus should be.
Can you explain or give an example?
I think there are many interesting lessons to be learned from companies like Supreme and BAPE. Coordinating “drop days” and engaging with customers on social channels has built each brand a huge following and almost cult-like status, both because of the exclusivity of the product and the “hype” they build around its release.
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?
As far as tools go, third party services like Weebly and Square are amazing. Both allow almost immediate, turnkey eCommerce ability for small businesses. Facebook Blueprint is also an amazing (and free) resource for understanding how to segment and target audiences.
Alibaba has also really lowered the barrier for entry in the eCommerce game. Emerging eCommerce brands can use Alibaba to create their brand and find cheap suppliers in other countries, allowing them to create small batches of products to test on their follower base. They can then use Weebly to create inventory systems without having to do any coding, use the free Facebook Blueprint courses to learn how to do segmenting and look-a-like audiences, while testing and building their brand on a platform they likely already know the ins and outs of — Instagram.
Lastly, new and emerging eCommerce brands should not underestimate the power of Reddit. There’s a community for everything on Reddit, from subreddits on how to build your own brand to ones that reach your exact target markets.
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?
For retailers with large inventories, deep search capabilities are key. Having great images and product descriptions increase the findability of your products. It’s important to remember that context is key — recommendation engines, re-targeting and marketing campaigns can surface relevant items to interested customers with the right context.
And of course, don’t forget the basics like usability and information architecture of the online store — without these in place, any of the benefits from advanced targeting efforts and campaigns will be lost!
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?
All business is relationship based. With eCommerce, that extends to customer service, social engagement, and even how you package and ship. Great brands engage with customers and get their feedback on every aspect of the business; they observe and target based on shopper preferences, but more importantly, they listen to the customer and enter into a dialogue. This is where providing a good omnichannel shopping experience is critical — for these strategies to be effective, organizations must ensure that not only does their brand have a presence across all channels, but more importantly, those experiences are also integrated together in a way that enhances the customer experience.
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?
The guiding principles should always be honesty and transparency — just like an executive responding to a review of the company on Glassdoor. Take the time to make the reviewer feel heard and understood, then demonstrate tangible next steps to address feedback.
For the unfair or radical/aggressive feedback, the most important thing to keep in mind is to not feed the “trolls.” In most cases, your brand advocates will defend unjustified claims for you.
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.
The five most important things one should know in order to create a successful eCommerce business are:
- Know your audience and engage with them in constant dialogue. This spans the entire eCommerce lifecycle — starting with conducting good user research when building your brand, breaking into a new market or even launching a new product line. Continue engaging and learning from your customers by analyzing the data coming in and responding to customer feedback.
- Test product ideas quickly in small batches. In today’s eCommerce world and the rise of companies like Alibaba, brands no longer have to spend their money on massive, wholesale sized orders. Take advantage of this and focus on creating and selling small batches of product to do more testing. Doing small batches not only allows you to save more money, it also allows you to engage with your target audience more and develop an air of exclusivity with limited inventory. Supreme is a great example of this — they offer exclusive, small batches of inventory that their audience knows will be a one-of-a-kind product. As a result, its products are highly sought after and the brand has an almost cult-like following.
- Avoid building your own tech wherever possible. There are so many great third-party tools and software available, such as Weebly or Square, that allow eCommerce brands to quickly build their sites and create inventory systems, without requiring coding experience or a team of developers. These third-party solutions are customizable and have all the features and capabilities you need. That way, you can focus the majority of your time and money on user research, building brand recognition, and testing out products with your target audiences.
- Identify and celebrate your brand advocates. Leveraging influencers and experimenting with collaborations on social channels, such as Instagram or TikTok, is a great way to build brand recognition and engage with your target audience. It also provides another layer of data for you to leverage. For example, many sponsored campaigns with influences involve using a specific discount code, which allows you to better understand how your product is performing with their audience and more directly track the conversions coming in. This engagement should go both ways — celebrate your brand advocates and engage with their content to get your brand out there more. A timely and quite frankly, amazing, example of this is the viral Tik Tok with user “420doggface208” — more commonly known as the Ocean Spray skateboarder. Ocean Spray recognized the incredible engagement this video was getting and were able to lean into it even more by buying the user a car. With the viral video everywhere and the positive press Ocean Spray received for their donation, all across the U.S. grocery stores were selling out of Ocean Spray juices and thousands of copycat videos were uploaded daily using their product.
- Understand your key partners in delivering an end to end amazing experience. If you’re breaking into a new market or looking to extend your price points, identify companies that compliment your business and have similar values and develop brand collaborations with them. You should also focus on your interactions with your supplies and buyers — don’t just focus on improving the customer experience, improve their experience too.
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. 🙂
In some ways I feel very fortunate that my work within Modus Create is already on that journey. Amazing things happen when you align personal passion and professional purpose. All of the technology that is disrupting the old economy is also democratizing many aspects of society that were once out of reach for many people. With the internet you can learn for free, start an eCommerce business in a day, develop a brand for free on social channels — it’s truly an amazing time to be alive.
With Modus I want to continue to build a platform that allows people to work in the digital age no matter their location, and through that, work to contribute back to the open source and emerging tech communities that are the foundation of all of this innovation.
How can our readers further follow you online?
This was very inspiring. Thank you so much for the time you spent with this!