BIO: Anatoliy Labinskiy is an entrepreneur, eCommerce expert, and a holder of 4-time Two Comma Club awards. He is the founder of GSM Growth, an agency that helps e-commerce entrepreneurs achieve a new level of growth in their businesses.
STORY: When Anatoliy and his partner decided to scale their e-commerce shoe business, they paid a supplier in China $250,000 upfront and let him handle everything. The supplier sent customers low-quality shoes and eventually stopped shipping products despite having large orders. The partners had to refund customers and lost all the money they’d paid the supplier.
LEARNING: Double-check with your supplier how the product looks and works before scaling your sales. Think about how you’ll control your inventory once you scale your sales. Start slow.
“When you start scaling your business, even when you start just seeing a couple of sales here and there, ask your supplier to send you pictures and videos of the product in the warehouse.”
Anatoliy Labinskiy is an entrepreneur, eCommerce expert, and a holder of 4-time Two Comma Club awards. He is the founder of GSM Growth, an agency that helps e-commerce entrepreneurs achieve a new level of growth in their businesses. He is also a co-founder of EcomScout.io, an AI-powered service that tracks all loss events in advertising campaigns, providing real-time data and insights for informed decision-making and optimized ad spending.
In addition to his entrepreneurial pursuits, Anatoliy hosts the highly acclaimed Ecom Business Stream Podcast. The podcast showcases real-life stories from successful entrepreneurs, executives, investors, and thought leaders, offering a glimpse into their journeys to success in the business world.
Recognized for his outstanding achievements, Anatoliy Labinskiy is a member of the Forbes Business Council. He also proudly holds a place among the Top 100 USA Entrepreneurs with Ukrainian Origins, underscoring his influence and impact in the dynamic realm of e-commerce.
As an international speaker, Anatoliy shares his knowledge and expertise with audiences worldwide, further establishing himself as a leading figure in the e-commerce landscape.
Worst investment ever
In 2019, Anatoliy and his partner decided to scale their e-commerce business. At the time, they were selling leather shoes. They pumped in $250,000 to pay the supplier for inventory and to ship to customers instantly. They had worked with this supplier for a couple of months, so they let him handle everything. The partners had never seen the shoes they were selling in real life. They had only seen the pictures provided by the supplier.
Then, customers started sending emails complaining about the quality of the shoes. They thought it was just the usual case of a few unhappy customers and didn’t take it seriously until one customer insisted on sending back the shoes she had received so that the partners could see what they were selling. The shoes were sent to Anatoliy’s partner, who was in Minnesota. When the shoes arrived and the partner opened the box, it was unbelievable. The shoes had the smell of some toxic material. The shoes were plastic and wrapped in a garbage bag. The partners couldn’t believe what they were seeing. They couldn’t believe they had paid $250,000 for such crap.
They contacted the supplier, who assured them he would ship the correct product. Two weeks after this conversation, the partners started receiving customer emails complaining that they hadn’t received their orders. On checking the tracking numbers, they realized that they were fake.
So many people asked for chargebacks, causing PayPal and Stripe to hold all payments the customers had made. Anatoliy and his partner had to dip into their pockets to refund the customers. They never got the money that was put on hold.
- Double-check how the product looks and works with your supplier before scaling your sales.
- Think about how you’ll control your inventory once you scale your sales.
- You need cash flow and remain liquid for your business to stay afloat.
- Start slow.
Anatoliy recommends checking out his website for tips and tricks on running your e-commerce store and resources for writing ad copy that converts.
No.1 goal for the next 12 months
Anatoliy’s number one goal for the next 12 months is to get better quality customers for his agency and make it bigger in terms of results.
“Look at your failures as lessons, and they won’t be failures anymore.”
Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win an investing, you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And I want to thank my listeners from the US, Thailand, UK, Australia, Canada, India, Philippines, Singapore, Germany and Sweden. All of you guys and many, many more. I want to thank you for joining this mission fellow risk takers this is your words podcast hosts Andrew Stotz, from a Stotz Academy and I'm here with featured guests Anatoliy Labinskiy. Anatoliy, are you ready to join the mission?
Anatoliy Labinskiy 00:50
Yes, Andrew. I'm excited to share my experience.
Andrew Stotz 00:53
I'm looking forward to it. So let me introduce you to the audience. Anatoly is an entrepreneur, e commerce expert and a holder of four time two comma club awards. He is the founder of GSM growth and agency that helps e commerce entrepreneurs achieve a new level of growth in their business. And he's also a co founder of EECOM scout.io, an AI powered service that tracks all loss events in advertising campaigns, providing real time data and insights for informed decision making and optimized ad spending. And in addition to his entrepreneurial pursuits, and it totally hosts the highly acclaimed econ business stream Podcast, the podcast showcases real life stories from successful entrepreneurs, executives, investors and thought leaders offering a glimpse into their journeys to success in the business world. Anatoly, take a minute and tell us about the unique value that you are bringing to this wonderful world.
Anatoliy Labinskiy 01:59
Thank you, Andrew, I appreciate you having me here. And I for sure believe in my unique value in the world, in terms of where I get started and where I am today, and who I became today, because of the past. So basically, my background I like I was completely broke Ukrainian guy in Dubai. And I was just trying to start my E commerce business with no cash in the pocket with a lot of struggles, wife pregnant, sent her back to Ukraine. So it's like a backstory. But what's been the value from what I'm just saying? Because I had I opened something in myself that when human wants something, and has no plan B and has strong why, and understanding what exactly is matter, and the most important scene from significant of people of wealthy people. What's the same thing, one same thing there it is, never quit. And like, do whatever it takes. And even more like, because some particular moments, I was feeling that the grass is going under my feet, I was really completely destroyed. But I never had any single moment of my life where I would say, I have to stop it, I have to quit, when majority of the people actually have this kind of issue. Because everyone thinking about Plan B, everyone are thinking about something what can be done differently, I have no other choice. And I opened for myself, when I said my when I get my first success with the E commerce world and generated first seven figures, which is over 1 million in profitable sales. I realized one thing that we can manage everything, like I had no clue how to do my goal was 3000 a month maximum I was thinking it would be incredible life for my family. And now definitely is different goals. But the thing is that by opening myself that any kind of cetacean can be manageable. I start teaching my team who is now with me before I was completely alone. And now whatever is happening on our journey, always I'm saying like what are some do like this year was really incredible, tough time during the summer. And like I was thinking there's gonna be no way to manage. I mean, it was super stressful, but will guess what we just count down in the meeting, and I said guys will manage. There is no solution, but we will manage it. Guess what, in three weeks we find out the solution we created the solution. So my unique value, I believe that human being it's something what humans don't understand that you can do more than you think you're capable of. So believe in yourself and just don't quit on the middle of the road because in the next corner could be exactly that part of success, where you were looking for and
Andrew Stotz 04:57
what are the ideal customer For you, who is somebody that's perfect, they find you they find your website, they find your service. Maybe you can describe that so that the listeners if they're in that situation, they may say, Hey, I gotta learn more.
Anatoliy Labinskiy 05:13
Sure, like basically what we are doing we have as a main business, it suggests growth agency, where we are building advertising echoes ecosystem for Shopify brand owners, which is like Robbie managing stores and advertising platforms such as Facebook, Tik Tok, Snapchat, Google email, SMS marketing for the brand owners by building the consistency in profitability on the floor of the marketing for, for the owners. So our ideal customer, it's already proven by the several customers who will work with is that intelligent, mindset person, hustle person who understand that nothing is coming right now, right here. Obviously, when it's coming, it's amazing. But will he never expect to receive it at this particular moment, because he's already in the business, he knows some kind of pitfalls. He knows what ecommerce means. And like by investing online into advertising, and not getting back instantly, it's normal, because usually takes 60 to 90 days to optimize to create the that kind of flow which will be generated profitable results, as I'm saying, sometimes since from day one, but most of the time, it's 60, to 90 days to find it out or optimize and start scaling. And the business owners who understand the process of their business well and knows their metrics, educated in terms of their metrics, and just lost in terms of like, not enough time, not enough people, or maybe not enough skills to scale, those people are perfectly fit. And we are moving together for long people who has like less what I just said, usually they're coming and leaving in terms of like, three, four or five months? And will people who are really in that kind of criteria of our perfect customer, our are staying with us for almost forever?
Andrew Stotz 07:05
And where if somebody says, hey, that's me, where should they go to learn more?
Anatoliy Labinskiy 07:10
Yeah, sure. Like, there is several directions, one of them one of the best where I'm personally can reply to you, it's econ by Natale Instagram profile, and GSM growth agency.com. It's our website where you can go there is like possibilities to have a call with me of one of my team members where we can go through our audit Visio of your business and understanding if you need to help from someone else, if it thinks are working on your end, or no, we can guide you through and you can go in implement by yourself. Or we can actually if we both seen that we are a perfect fit to work together, maybe we can cooperate. But like sometimes just consultation is enough for business owner understanding what needs to be done next. And they just after the call implemented by themselves.
Andrew Stotz 07:56
Great. And I'll have links to all that in the show notes. So anybody that's listening and want to learn more, I just went to your Instagram, which I'm following you now there. So now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to and then tell us your story.
Anatoliy Labinskiy 08:19
Appreciate it, Andrew. Yeah, actually, I have several investments made in general in terms of like, education, and which didn't work fine. Like let's move on. It's like six figures a year when investing in education for our team, and several of them are not the best. Fine, let's keep it. We are investing in real estate. As I said, like I'm co founder of ADM enterprises where we buying houses by just making them nicer, put the tenants in and making the refinances there were several pitfalls, but I cannot call that like a bad investment. Because real estate in general, it's a great investment. I have something in my mind, which is was like a big lesson for me. In terms of my ecommerce journey. It was back in 2019. Yeah, it was 2019. And that was I believe, why because of I want to educate people to not repeat the same mistake. I want to share that with you guys. So we decided when we start scaling with my business partner, his mass, his name is mass. He was in Minnesota and been in Ukraine that time, we started scaling like shoe store. And we start scaling hard like from nothing to 50k 150k months 250k in couple of weeks and so on. So we just started scaling, the results sales were going on and the thing is that we were so I would say positive viewing all those things as a new beat. I mean, I already was experienced over like one and a half year there but I never scaled like to bigger numbers. And here we go. We just started scaling and we paid for a supplier value of the inventory of over $200,000 Just like to ship to our customers instantly and because the flow was cash flow was so big and so fast that we were like yeah let's pay it like just let him handle it and because we were already a couple of months with him you know but the thing is we were selling shoes shoes we in which we never seen okay, we never seen the shoes we have like on the pictures of our websites pictures were amazing and so on. So but the like we start in the middle of this process we like pay big amount and like on the middle of this process people start like sending us some emails oh my god What crap you send it to us and be like okay like it happens like ignoring like VA our VA just like the ghee bring that much attention just saying sorry. Like we have the script like how exactly to handle this situation. And one day like one of the customers said to us, where should they send the shoes guys? We're like No, no, it's fine. It's a gift to let to let us shipped to you that's one better quality and so you're like no no, no, no, I want honors to see their shoes. Like okay let it send to Minnesota to Mars and let's see what's happening when he when he sent it he sent this email like I forwarded to you guys and look what kinds of crap you're selling to people and I sent to you exactly such kind of package which you are sending to us and my partner just calling me usually we like go almost not using FaceTime calls but he like calling me like something happened and they can have the phone and like totally it's insane like books arrived and like I when I opened the box the smell of my on my in my house it's like some kinds of toxic materials like came in the room like What do you mean he said look and he opened in the box and there is like a garbage B bag was rolling with the type tape yeah like he said this is how we shipping the products to our customers and we like he'll go like on packaging the box and smell go and he said smell is insane I almost cried and like and the shoe was like plastic one and we were selling leather shoes and it was all the leather oxford shoes and I was feeling so bad like okay, what should we do we just bought it like we just paid another 200,000 Like for shipped or customers because like it was one of the biggest months we like pay upfront all the all the fees and he said I really don't know but maybe it's a mistake. So we start asking our supplier supplier start sending us this first lesson lesson learned that we you need to ask when you start scaling your business even when you start just seeing couple of sales here and there ask your supplier to send you pictures video in the warehouse how they look like how they like moving how how the thing is working tell them what the packages is so you need to really double check before you're going to be scaling your sales and we like start asking you what sort of stuff was swimming around about the answer but then he sent us couple of pictures couple of videos which is we're much better what we have seen but we sent him back like no it's our mistakes. Okay, that's not about the bad investment by the investment happened here when you pay 200k like we like Vera we realize we have a better quality issues without him only from this moment those kinds of shoes like nothing else whatever else we're gonna be just deducted from the payment but the thing is after that conversation it was March 2019 We weren't the middle of the month so I called over 250k already like a paid up front for several things and two weeks after people start reaching out to us where is my order? Where is my order? What is my order? What is my order? Not like time to time the real like attack from the customers where is my order be like something strange going on here? We will like let us check we check in the tracking numbers the tricky numbers are fake like the tracking numbers provided by supplier are not working. We wait a second what's happening we start reaching out to supplier he's like yeah, I'm send it I send it all good. All good. Like no worries like we've seen tracking numbers now doesn't work. We have a lot of like people who are about to open chargebacks and he's like No, no good or good ads and he stopped replying to us. And we and next two months was the real challenge for both of us to decide if you want to continue like in general doing the business as a commerce when we want to quit because like those two months it was the challenge of handling, like over 200 its income which is means over half million of dollars in complaints, which is average shoot was 69. So it means like, every like several emails, several DM several people were reaching out to us and saying that we scamming them never ship the products and the tracking number is fake and we start receiving the chargebacks our stripe hold it like round for a or no scribe for Yeah, Around 40,000 people over 25,000 in other stripe hold it money and we like screwed we have no liquid cash, everything is on hold whatever sells good Keep going Keep going to the whole data count, which is account just collecting and not withdrawing to us. And we like again nazara lesson have backup providers payment providers. So just switch and like your business, you'll be healthy and continue generating the cash flow from the next orders and the previous orders will be recovered. So we were not educated in that. And it's like the cold becoming bigger, bigger, bigger new customers, we need to send them items we have no liquid cash, and all that things are happening. And then supplier never sent 200k of value to our customer. So the product and like that was really insane experience. We got holes, PayPal never return our like today's 2024 Almost, we never get back money from PayPal, even there is a policy 180 days holds. Because the chargebacks were keep going until the altom. The same year, they were like we were reaching out people Hey, like we want to get like you have enough cash to cover the refunds give us like at least personal they said no, wait a year, we wait a year, April next year we reach out, they just deny all our requests, we still never get those kinds of 20 or 25 plus k from PayPal stripe somehow somewhere in a year or eight months, give us back some leftover amounts because so many people open the chargebacks. So it was incredible. One of the hardest moments of the like build as a business owner as a brand owner, like it's sort of it was kind of the brand. But as a store owner, it was the real challenge to see if you're strong enough to survive to handle the problems. And like really a you'd have you learned your lesson or know what kind of lessons you learn it you have to sit down and analyze. And when we analyze everything we like, fine. I mean, it's happening. And all the time I was sharing everything online or the journey I was sharing the line with our audience. This is like what I was doing quite often. And people will like why you continue, like you have like just to create, change the store and so on and be like, why we are in the business guys. And like if we won't be able to be responsible for our mistakes, and learning the lessons, which is like happened to us as fails, we might we won't be going forward. I mean, we won't survive in this business. So this situation made us stronger. We went almost to bankruptcy. I even have no, I remember my partner got credit card for 25k or something like that. And we just clean it up. Like, I don't remember how we handled the cash flow gap, which we had. But the thing is that yeah, we handled that situation, it was super tough. It's kick us out for like couple of months minimum, from the like whole story of the business, you had to stop the ads, like until we handle everything. So like, while you have 200k We just give us a gift to the supplier who just cheat us and like it wasn't funny story. But that was a really successful investments ever.
Andrew Stotz 18:50
That's quite a story. And I think one of the lessons that I learned from this story and other stories that I hear like it from people that are ordering, fulfilling orders from other manufacturers and other places is that first thing is true, you got to start slow. You know, the manufacturer, or the distributor is always going to ask for a lot of money up front. And you got to hold the line and say I can't I gotta I gotta do this piece by piece. I got to do it small batch by small batch. And they'll always say no, you can it's got to be this amount, then you got to find another supplier. And I just think that that's one of the lessons. The other lesson that I take away is that I was just thinking about my own factory. One of the fact the factory that I have in Thailand is a coffee factory and we roast coffee. But you know, I was just thinking about Wow, how easy fulfillment can be if we were to do that type of business because we control the manufacturing you know, we're sitting here in Thailand where I am with a factory that has a you know, large output and you know, we supply b2b But maybe, you know, we should be looking at something where you know, where we, the benefit is that we're never going to have that kind of trouble with the manufacturer or third party that's providing the product or service. What do you think about that,
Anatoliy Labinskiy 20:14
that's how they this is the level when you are like, we didn't go forward with the video went sorry, we didn't go forward with the shoes business anymore. Like by the end of that year, we just like shut it down because we decided that size problems and the quality problems still there. And it was really shoes . It's a tough niche. I mean, it's hard niche to handle in terms of there is always higher return rate, a chargeback rate. And we went to health and beauty niche. And this is what's exactly before COVID COVID time and we scaled quite fast with already like smarter logistics and everything. Exactly. I could describe with this small like piece by piece and it's a drop shipping model. And like just like then later on step by step we were ordering like cod orders 100 orders a day, just carefully and then never done any more like never listen anymore supplier for like advance payments for the big amount to cover it. In terms of China New Year, it was March after China New Year time, this is where during the Chinese New Year we pay it in advance. So and in the Health and Beauty niche, we were thinking exactly about going and finding out the China factory, which is going to be producing under our control with our branded theme is everything which is going to be controlled by us because that was super hyped ticket margin product that was really something which is can grow fast and super helpful for people, especially for guys 35 Plus who has pain in the belt. In the back, it was a belt for the back. So but COVID happen. And we change our we switch our plans, but the thing is, yes, like a lesson has been learned. And one of the best things like I have a friend who is handling quite big fashion store fashion brand, who is mainly managing now second brands as well, all of that he moved to like a warehouse in LA, everything is there, he managed by himself, he decided to hire the team, because like we went to the agency site. And because this is exactly we won't be handling these kinds of things anymore, we're gonna be handling what we love advertising and store manage, and like management, and clients are responsible for stocks are responsible for on time delivery are responsible for customer service. So it's something which is are really like the last the last less, we just like decided this is gonna be a perfect model where we can be in the business focusing on our staff, and clients on their stuff. So and when they work in that way, that way we have experienced from past we educated our clients what to avoid. But well on the example of my friend, this is exactly what you're saying. He said as well, like it's mind blowing, like when we scale to 50 millions a year, like to stay on the like, third party factories and certain parts of our houses. It's not possible. I mean, there is a lot of pitfalls. So yeah, definitely it's one of the ways to go. When you start growing fast. You need just to start controlling thinking how you're going to be control your inventory by yourself.
Andrew Stotz 23:32
Alright, so what's a resource of yours or any other resource that you'd recommend for our listeners?
Anatoliy Labinskiy 23:39
What kinds of subjects so I have several let's
Andrew Stotz 23:42
talk about this. I mean, for those people, maybe that want to learn more and, you know, think about I mean, in my case, I was just thinking about, you know, maybe I should be looking at you know, taking the manufactured product out of my company and you know, selling it online, we don't sell online and we don't sell it through a Shopify store or anything like that. But for someone who's thinking about you know that type of business you're an expert in their what would you recommend them to go to your website to check out your podcast to read a blog or what would be the best way for them to start? Yeah,
Anatoliy Labinskiy 24:18
sure. First of all, yeah, there is couple of good like as a Forbes business called so I have like my blog there there are a couple of books has been out regarding the attendance and potential of the commerce in our world right now and some kinds of tricks and hugs plus YouTube channel, Anatoly Verbinski, I'm sharing their free for free, like valuable things about our experience about the case studies about the strategies, all of that and plus, actually, we have one ebook, which is like we can give to your audience completely for free. Like we'll provide the link for it. Usually, it's like 97 hour per book, but here is gonna be like completely free of charge for the listeners. Each all about. If you're in the advertising world, it is all about how to make the perfect ad copy, which is will be able to generate for you better conversion rate. In your ads, it's calling still my ad. It's a formula, which we are using. And we're able to generate over 320 to 23 Millions so far in the profitable results by having exactly step by step formula of writing the ad copies for every single product. So like, just I will provide the link and guys you can actually download it and loaded for by yourself. Fantastic.
Andrew Stotz 25:37
Last question. What is your number one goal for the next 12 months?
Anatoliy Labinskiy 25:44
Ah, we are diving in a lot in AI and integration to our agency. It's already in battle like last in the you mentioned before we build this year, the E commerce called Dota. Your its AI powered platform for internal use. And we actually one of the goals now to go external and expand that with the users because like on my team said that it's incredibly useful for attribution of the advertising to run the ads correctly. So one of the goals for next 12 months, it's definitely get on a better quality customers for our agency and make the agency bigger dramatically in terms of results, not in terms of the customer quantity of the customers. So now it's big attention to the quality, only the real right fit people with the minimal level of the turnover revenue in their in their business going on. And plus, my personal goal for next 12 months, it is 15 new buildings in 2024 in the real estate space, because we started this year, it's already four doors on our end, and it's only in four months. And all of them already. Two of them already finished the circle for the process two of them in the process. And now according to what we can see, we are able to close around 15 to 17 buildings next year if we're going to be doing exactly the same what we've done this year. So this is one of the things which is I'm looking out for next 12 months. Fantastic
Andrew Stotz 27:19
well listeners there you haven't another story of loss to keep you winning remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude Anatoly, I want to thank you again for joining our mission and on behalf of a starts Academy I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?
Anatoliy Labinskiy 27:44
Yeah, guys, like everyone has their like fails. So bad investments done whatever, like the most important like look on your fails as the lessons and it won't, it won't be fail anymore. Like seriously, that's the thing. Like you've done the worst investment ever. It's kind of fail. But if you look on it as an lesson, analyze it, sit down, and briefly thinking about everything what happened to you, you will feel blessed for such kind of lesson. With such kind of small loss, whatever a loss would be, when you lose like hi, Scrapper, it doesn't matter your life, your family still helps you the most important thing about that I'm the guy from Ukraine, and I was going to the border with my son when explosions were happening. My wife at that time was in Spain. And that moment, I realized one thing important in human lives. Like when I see when I have seen the war in 2022. I woke up because of the explosions and shelling in the city. I understood that all problems in the business, it's a dust to compare the real problem which human could have seen, like in such way like a war. So that's why I was that time recording out your message to my team and it was saying, we can manage anything in the business. If I will be alive on this particular part and all of you you will be safe and your families because that's a real problem. That's the real power and business can be managing all the time. So look on that and consider that as a lesson not as a fail. And
Andrew Stotz 29:25
that's a wrap on another great story to help us create, grow and protect our wealth fellow risk takers let's celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast hose Andrew Stotz saying I'll see you on the upside.
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