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Segment 7: Disadvantages Of Amazon For DTC Brands Like Tower Paddle Boards

Below is an excerpt from our 2019 interview with Stephan Aarstol, the Founder & CEO of Tower Paddle Boards, who continues his conversation with Brad Kauffman of NoMiddleman.com. If you’d like to read or listen to the full interview, visit the Tower Paddle Boards blog post.

 

Brad: (Regarding selling on Amazon) What’s the difference from a customer service standpoint? How does (selling on Amazon) affect your ability to communicate with customers back and forth?

Stephan: You’re a bit detached from customers. Amazon really controls how you can communicate with customers, you don’t get their phone number, you don’t get their email address. You can communicate through their little email system, with customers. So it’s kind of limited.

It’s Amazon’s customer, and they’re very clear about that, and they don’t want you overstepping your bounds. So it’s more limited. But if they want to return it, they return it to Amazon, so there’s a lot of good customer service things from Amazon, as well.

Everybody trusts Amazon, and they don’t necessarily trust a brand that they’ve never done before. So you basically can get higher conversions on Amazon than even on your own website sometimes, just because of the (consumers’) trust.

Amazon was built for people’s ability to send the product back to Amazon. Where we’ll get a 1% return rate on our own website, on Amazon it’s 6%, because they make it easier to return. Some people abuse that and they just basically rent a paddle board for two months, and then return it to Amazon because they can.

So you’ve got to deal with that as a brand, and while it’s easier to return, you’re basically going to bundle that into your pricing, so you’ve got to raise your pricing to accommodate this abuse of the return system.

The other thing is, when we look at building a brand… I look at it like a snowball going down the hill. So every customer you get (grows) this installed base of customers, and it makes that snowball bigger and bigger and bigger, and makes it start rolling faster and faster down the hill. And as a brand you want to get that thing big, right?

Brad: Yeah.

Stephan: You want it as big as possible because then … If you have an installed customer base of 500 customers, each one of those customers riding their paddle boards every summer, a few people are going to see them and maybe they’ll refer a few customers. If you have 10,000 customers, and then they’re showing that product to other people, you’re going to get more referrals. If you have 100 thousand customers, you’re going to get more referrals. So that’s how we look at Amazon too. We were making money on sales in Amazon, we were doing very profitable there. But also, it was allowing us to really explode our installed customer base.

So then that meant we can still get away with not advertising and have a multi-million dollar company, and pass those advertising savings onto customers by getting this solid customer base. And the numbers at Amazon are just astronomical. We did a daily deal with Amazon, where they list three or four products one day that are great deals. And we did this in 2015 or 2016, and in one day we sold $385,000 worth of paddle boards!

Brad: Wow.

Stephan: Incredible numbers, when you plug into a system like that. So it was really good times in the early days when they were taking 10, or 15, or 20 percent. They were really helping us deliver these high-quality paddle boards at a low cost to consumers. But we can’t leverage Amazon to do that today.


Next: Will Tower Paddle Boards Walk Away From Amazon?

Is it time for direct to consumer brands to leave Amazon? How will they survive if so? In this segment, Aarstol explains the two consumer behaviors that he believes will not change in the future, and why that’s good news for brands like Tower—helping them survive without Amazon. Read more >>


 

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Full Interview: Tower Paddle Boards

If you’d like to skip ahead or go back for previous content, no problem! See below for links and summaries for every segment of our amazing interview with Tower Paddle Boards founder Stephan Aarstol.

Segment 1: Introduction To Tower Paddle Boards And Founder Stephan Aarstol

In this segment, we dive into where it all began for Tower Paddle Boards. We cover Aarstol’s background in online marketing, and how he pivoted away from his poker chip company to pursue his hunch that paddle boards would soon be mainstream. Read more >>

Segment 2: The Shark Tank Effect At Tower Paddle Boards

When Shark Tank came calling, Aarstol answered, and Tower Paddle Boards took off like a rocket ship. But it almost didn’t happen—Aarstol froze on stage, delivering what he calls “the worst pitch in Shark Tank history.” Learn how he crashed, recovered, and landed a deal with Mark Cuban. Read more >>

Segment 3: How Tower Paddle Boards Cut Out The Middlemen And Delivered More Value To Consumers

How did Aarstol figure out how to cut out the middlemen and deliver Tower Paddle Boards direct to consumer, for half of the retail price? In this segment, Aarstol explains how he overcame the price-fixing of the industry’s dominant players to bring consumers lower prices, higher quality, and better service. Read more >>

Segment 4: How Tower Paddle Boards Sourced Factories

When building a direct to consumer business, finding a dependable factory is a competitive advantage, Aarstol says. In this segment he reveals his best tools and tips in sourcing factories: how to find the best ones, how to avoid the scams, and why anti-competitive behaviors are a sign of bigger problems. Read more >>

Segment 5: The Retail Equation At Tower Paddle Boards

“We never want to be that company that just pads our direct-to-consumer margins so we can accommodate retail partners that are taking a 50% cut,” Aarstol explains. In this segment, you’ll learn how Tower Paddle Boards uses their core principles to evaluate retail opportunities. Read more >>

Segment 6: Tower Paddle Boards on Amazon

For direct to consumer brands, Amazon is the elephant in the room. In this segment, Aarstol explains how Amazon has become expensive for consumers and crowded for brands—and why he believes Amazon is merely an online convenience store, carrying the high markups of offline retail middlemen. Read more >>

Segment 7: Disadvantages Of Amazon For DTC Brands Like Tower Paddle Boards

Amazon was good for direct to consumer businesses—until it wasn’t. In this segment, you’ll see the astronomical sales numbers Aarstol enjoyed in the early days, but also the growing challenges: disconnected customer service, increased return rates, and increased fees. Read more >>

Segment 8: Will Tower Paddle Boards Walk Away From Amazon?

Is it time for direct to consumer brands to leave Amazon? How will they survive if so? In this segment, Aarstol explains the two consumer behaviors that he believes will not change in the future, and why that’s good news for brands like Tower—helping them survive without Amazon. Read more >>

Segment 9: On The Horizon At Tower Paddle Boards

What’s next for Tower Paddle Boards? In this segment, Aarstol reveals his perspective on the ideal balance between pricing and quality, and how keeping expenses low (and advertising minimal) impacts Tower’s ability to expand into popular products with exceptional value for consumers. Read more >>

Segment 10: What Informs New Product Ideas At Tower Paddle Boards

By living the beach lifestyle themselves, Aarstol’s team has insights into new products and quality design. “If a company out of New York is creating beach lifestyle products, they really don’t understand the market as well as we do,” Aarstol says. “Our brand has this authenticity, because we’re making products that we know.” Read more >>

Segment 11: What Tower Paddle Boards Is About (From A Value Standpoint)

Tower Paddle Boards went in two unique directions, when it comes to delivering value. Product development is focused on what the consumer needs (not what it costs), and team productivity is fueled by Aarstol’s revolutionary idea to live more by working less—with a five-hour workday. Learn the secrets behind Tower’s popular products and productive culture. Read more >>

Segment 12: Tower Beach Club Offers New Experience With Tower Paddle Boards

In this segment, you’ll learn how Tower Paddle Boards is taking the beach lifestyle experience to an entirely new level with the launch of Tower Beach Club in San Diego. Whether you’re a fan of Tower, or a direct to consumer brand exec, you’ll want to read the innovative retail plans and fun experience ahead for Tower customers and visitors. Read more >>

Segment 13: Connecting with Tower Paddle Boards

As we wrap up the interview, we provide links and information on connecting with your favorite Tower brands—from paddle boards to sunglasses to electric bikes—as well as how to reach out to Tower Founder & CEO, Stephan Aarstol. Read more >>