Remaking an old-school B2B company into an e-commerce success story would not have been possible without a lot of hustle and the power of a knowledgeable network.
In 2017, after Dan and Kim Hannon moved to Palm Beach County, they acquired Aabaco Environmental Industries, a spill containment and safety supply company that had been selling products used to clean chemical or oil spills since 1984.
At the time, Aabaco had no e-commerce but did have six national distributors as longtime clients. “But we were only selling them between five and eight products, that was one of the reasons why we bought the company,” Dan said. He figured, being a sales guy, opportunity knocked.
As the Hannons were just getting started learning about how to run a new company in a new industry, they were accepted into Cohort 11 of Goldman Sachs 10,000 Small Businesses at Miami Dade College (10KSB), a free 16-week program for growth-stage small businesses that so far has graduated 526 entrepreneurs who generated $796 million in revenues and 9,734 full-time jobs in our community.
IN COMES HELP FROM 10KSB
In addition to getting in,struction using Babson curriculum, “you basically get to hang out and network with like-minded people that all have the same problems, everything from employment and HR all the way up to inventory control and sales and marketing,” Dan said.
The power of that been-there-done-that network, which includes 10KSB alumni, helped take Aabaco to the next level, he said. “Getting involved in 10KSB completely changed not only our lives but the absolute course and direction of our company.”
The 10KSB program and the entrepreneurs in that network made the Hannons see that the path to success was through e-commerce. Dan noted that, at the time, Aabaco had no inventory management system and no way to process and track shipments. “Everybody thinks it’s easy and says ‘I’ll just sell it online.’ Well, that’s great, now you’re competing against the entire world. How are you going to make money doing it?”
His 10KSB advisor, Marcy Rosenbaum, put him in touch with business owners and experts she thought could help him, particularly e-commerce alumni of the program, and he called every one of them. “I’m a sponge, I want to know how it works, what makes it works, why it didn’t work.”
Dan met a Miami Cohort 3 alum, Pat Barnhill of Specialist ID, at a national 10KSB summit. “He pseudo-adopted my wife and I and forced us into e-commerce,” said Dan. Barnhill helped every step of the way.
E-COMMERCE GROWTH TAKES OFF
That push into ecommerce started in 2018. With the first item the Hannons placed on Amazon, they lost $12 on every unit sold, but they learned a lot and kept at it, Dan said. “As we grew, we kept adding products and expanding, and then COVID hit and holy cow, everything blew up.”
At Pat’s suggestion, Aabaco’s team put together a collection of their products into a pandemic survival kit. “We put it on Amazon, and long story short, the U.S. Navy found us online and began ordering. A few weeks later they had catapulted us from a few hundred orders to selling 30,000 units.”
Before COVID, Aabaco was shipping 200 to 300 orders a month. In May, the company shipped over 16,000 orders, and peaked in July with over 34,000 before settling back at 18,000 in September.
Government contracting work has come flooding in, thanks to learning more about navigating certifications and the e-commerce push. That includes work from Miami-Dade County, Miami Dade EMS, Miami Dade Fire Rescue, Palm Beach Gardens Fire Rescue, the local Jupiter Police Department, the Navy and SNF Holdings, which manages the water districts in 26 states.
The Hannons’ first year in the business generated $286,000 in revenue. Year two they doubled that, and in year three they doubled again to $1.2 million. This year they are on track for $10 million. “We hustle. There were days I was here from 6 a.m. to 1:30 in the morning packing orders myself. We refused to let the opportunity pass us by, we absolutely refused.”
Here are lessons Dan Hannon learned jumping into e-commerce:
- Before you list a product on e-commerce, you need to know who you are competing with and what your possible margin would be after all expenses, including the platforms’ fees and shipping.
- Products should have at least a 2x-3x markup because you’re going to need to advertise, promote and spend PPC money in order to be seen.
- Formulate an e-commerce strategy. Know what you are going to list at what price and the volume you have available to sell. Know how you’re going to scale if the item takes off. “What happens if the order volume goes from 300 a month to 34,000 a month, which is what happened to us.”
- Other important considerations: Do you have enough warehouse space to fill large order volume? Do you have enough staff? Is there an inventory management system to track inventory across all selling channels? Do you have capital to keep up with demand if your product line takes off?
- You also need to know when to cut bait and move on from certain products. This is one of the hardest things to do because we all say we’ll give it a little more time and we’ll spend a little more than expected on pay per click hoping something clicks.
“Honestly, there are so many things we did not account for when launching our e-commerce business. However, we were extremely fortunate to have a network of companies from Goldman that were there to help when we needed it the most.”
The Hannons plan to be a resource for other 10KSB scholars and alumni so the power of the network will continue to thrive.
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Photos provided by Aabaco