Rick Watson is the Founder and CEO of RMW Commerce Consulting, which was founded in February of 2019 after Rick spent the last 20 years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, Barnes & Noble, and Merchantry. In addition to his expertise, he has a vast network of industry experts and talent across marketing, business development, and solutions providers to add bench strength to larger projects and initiatives.
On this episode, Rick and I talk about how he helps investors and management teams grow their digital commerce initiatives from assessment, to planning, all the way through execution.
What is RMW Commerce Consulting
Rick Watson: Yeah, so the company was founded about four years ago. Really on the back of me, having been an entrepreneur and operator in the e commerce industry for the past 20 plus years, and I really work with two types of companies.
One is private equity backed brands in the middle market to help them create plans to grow their digital commerce channels and to help them execute those changes that are required to realize the results that they want.
So that's sort of about half of the business. And the other half of the business is actually work with e commerce software providers, usually venture back. Some of them are private equity back. A lot of times are between series A and series C. A lot of it is around go to market strategy. How do we help explain our message to the market better?
And then actually go to market through sales and marketing tactics to do that in the most effective way possible. Usually a lot of times, technology companies, they know a lot about technology, but they don't know a lot about sales and marketing. And so having been through a lot of that in my own history really helps me guide founders to things that could help grow their software companies faster.
Alex Bond: And other people that I've talked to that are kind of in a similar position of yourself in terms of understanding, clients don't always understand sales or marketing as well. Part of the difficulty is that they have tried certain techniques or tactics in sales and marketing. It didn't work.
And now that idea is pretty much off the table and is part of your responsibility to come in and make sure that. You know that can be put back on the table if executed properly and kind of the difference between those two things?
Rick Watson: Yeah, look there's a million reasons that an idea can fail it doesn't necessarily always mean that the idea is bad there could be some kernel of the idea that is that's in there that makes sense maybe it's right idea wrong audience wrong idea right audience right idea right audience bad execution.
That execution could be like, you don't explain your idea very well. Like, you actually do have the right idea if we talk to you about it, but you're not talking about it in the right way that your prospects understand.
Like, you don't understand who's your ideal customer. How does that customer buy? What alternatives are they looking between? Not just your software, they're looking at other options. So, really, just looking at an entire business.
Consulting firm vs. Growth agency
Alex Bond: I am interested if there is a definite difference between a consulting firm and a growth agency. Are those just different words?
Rick Watson: A consulting firm, I would say, generally speaking, even these names are different in different markets. I find that what Europeans call a consulting agency is what we would normally call like a software development agency here in the US.
But consulting firm, I generally see it's like a temporary engagement. Like you have a mission, you get in. You could accomplish a mission and you get out growth agency is generally someone who is managing some part of the business for you on some kind of retainer or a success fee, like a conversion rate enhancement firm, and you're selling the time of that individual person for those outcomes.
So that's kind of what I see as some of the differences from from an agency. Like you have like a whole bunch of people selling, you know, a specific expertise, usually software development or conversion enhancement or creative design services, whereas for me, my consultant is more on the strategy consulting side.
So I help people assess like whatever situation is like, number one is like if you don't understand what your real problem is, you're probably going to solve the wrong problem. That's sort of step one. And then second is like, how do you benchmark your business compared to other peers and not best in class in your industry, and then come up with a plan for growth.
And then companies might decide to like, hey, this is a great plan. I'm going to take it and do it on my own. Like they don't need me after that, which is totally fine. They also might retain me as an advisor later on where I'm not implementing those changes for them, but I could be giving them certain course corrections during their time with me and using kind of the power of my network.
It's like, hey, do you know someone who does this? Hey, we're evaluating a new warehouse management system. What are the three vendors that we should talk to these sorts of things? Whereas I find agencies are more like doing the work for you.
Alex Bond: What I'm hearing you say, Rick, is that you can kind of come in with a little bit less bias where you can come in a little bit more objectively and say, look, I think we need to relook at this, especially on the back end. Like you were saying, is that you can be a double checker a little bit where you can say this is working or this isn't.
Rick Watson: Yeah, and I would say my work really splits between like, sometimes clients come in with a plan and they just want to know, like, is this plan any good? Like, what are we not thinking about?
And so then help work with them on that plan or if they don't have time to build a plan I can help them build a plan from scratch whether that's like an organizational plan or technology roadmap or a profit and loss statement for like a new line of business you know that they're getting into but it's really the bulk of my business is advisory.
Initial assessment process
Alex Bond: So we'll kind of attack this conversation in those sections. In your initial meeting with a client, you'll perform due diligence on a business and their technology, marketing, operations, all that jazz, as well as a website audit and third party marketplace audit. What are some of the specific things that you're looking for during that assessment process?
Rick Watson: Yeah, look, I'm looking for an org chart. I'm looking for their financials, forward looking and planning. So like, and backward looking, so like what are your last three years of cash flows and profit and loss statements by category by product line, depends on the time of the business.
If it's a SaaS business, obviously we're looking for like number of customers and growth and acquisition. If it's a brand, it could be sales, cost of revenue. You know, contribution, variable expenses, fixed expenses, net operating margin. And so financials is a big part, organizational design, any organizational issues, I'll actually interview staff to the extent they, this is part of the engagement, again, it's consulting.
It's really what the client, what does the client have a problem with that I can help solve? And that's really why I'm here. If I don't, if they don't want me to talk to their staff, I won't. And so that's, that's part of it. And then kind of technology and architecture diagrams. So like people process technology looking at their business like this is how we're doing business today.
This is our goal. This is where we want to be. First of all, just making sure that they have a proper goal. They sometimes they want me to help them come up with that goal because I worked with a baby car seat manufacturer last year, and they were a couple hundred million dollar business and they were making like three million dollars online and they know they could be making more.
It just has never been a priority for them. But like how much more is the question they came to be with? And so part of that is just understanding like what is the e commerce potential of this business? So helping them come up with that goal. Then once you understand what the goal is and how they want to serve the customer, you can actually understand like what capabilities we need.
You need a website. You need dropship software, you need a marketing agency, you need, you know, this technology, you need an organization to run those software platforms if you're not going to outsource them all. And then you start to put together a roadmap, like, what things do I do first, second, third?
Like, what is my punch list, literally, of things to do? I need, like, okay, if I'm going to need Shopify, I need to find an agency, unless I have, like, developer on Soundstaff, which one should I pick? How much is that going to cost me, like, helping them? So, all those things go into... Like, I'm a little bit blurring between assessment and, and planning here, but assessment is really kind of the first part of that is like, what's the current state?
Alex Bond: Yeah, because what I'm hearing you say, Rick, is that there's kind of a difference between, you know, identifying specifically, maybe the answer to a question, you know, it sounds like an in your example, a company says, we're leaving money on the table, how much money and then you go, okay, we're leaving, you're leaving X amount of dollars on the table.
But here's why, or here's how to solve that problem, you know, and, and that's kind of where I hear the strategic planning part come in is, is you could actually assess, answer some questions, start to work towards a problem and solution under that foundation. I think that's really interesting.
Rick Watson: Yeah. And kind of going back to the assessment for. I mean, really assessment is the beginning of any engagement because otherwise, if you don't know the client's business, you know, might as well ask someone on the Internet because you're not going to get good advice, but assessment is really popular on its own as part of due diligence.
So if company a wants to buy company be really the question in your kind of. Terminology, it's like, is this a good company or not? And if I acquire this firm, what's going to break first if I try to grow it? Those are usually the assessment questions. Particularly like for an investor, if you're buying a company, those things happen pretty quickly, like within a number of weeks and months.
And so they want me to come in, parachute in, analyze as much as I can in two weeks, and give them my best guess for like, Is this good or not and tell them the risks and then I, you know, hit the ejector seat and then I'm out.
Alex Bond: Yeah. How long can we stretch it until it snaps, right? So part of the RMW brand is being able to bring an outside perspective like we were talking about to a company's inner workings.
But in that process, also acting like a proprietor, you know, as if it's your own money is what your website says. So how do you approach both of these seemingly opposite philosophies simultaneously?
Rick Watson: Yeah, look, I mean, part of it is just the people I, I hire and bring to engagements. So I bring other operators to engagements. Yeah, look, there's different types of people that can analyze a business. Obviously there are people who have been professional consultants, their whole career, they've never run their own business, but they, they like telling other people how to run their businesses. And seemingly that's what I'm doing now.
But for most of my career, probably 95% of it, I was actually operating businesses. And so I think that's the kind of the mindset I bring to an engagement. Is if a client is asking me, like, how much is this worth, where should I spend this money that will make me the most money or avoid the most costs, right?
Whatever it is, their goal is my job. And at least the way I consider my job is like, how can I spend this money as if it were my own? Because I think, I personally think that's very rare in the consulting business because it's very easy to spend someone else's money very freely And so the more practical I can make plans the easier it is for clients to implement those plans.
Strategic planning
Rick Watson: I think it's definitely some of the most common services I provide. Usually it's a specific question. For instance, I want to enter a new market. I have these three choices help me decide which new market to enter and why, you know, the question I asked before, like if we're going to make this a much larger e commerce business, how much larger could it be and how do we get there?
That's a strategic planning exercise. Those are just very common examples of those areas, but every strategic planning exercise naturally starts with some assessment because obviously you have to understand the starting point with an assessment, you don't necessarily need to know a goal, you just need to know what it is today as part of the next step.
That's unique in a strategic plan, in addition to actually making the plan is to, is to help the client really shape what the goal should be and is it a good goal or not. Like what's a realistic goal?
Alex Bond: Yeah. And that's part of your responsibility right? And these companies will come in. This is totally outta curiosity. Will a company come in essentially asked you to answer this question for them, you know where we're leaving money on the table, you just actually gave a really good example, but then they actually get your answer and then go to a different growth agency or consulting firm. How does that make you feel?
Rick Watson: Yeah, no look to me, it's great because my goal is diagnosis and planning I'm not trying to run conversion rate optimization company I'm not trying to run a design services firm you know like there's a lot of types of businesses I'm not trying to run.
And the way I talk to agencies is like imagine the client doesn't know what they want yet and you try to talk to them and you ask any agency like what does that have what happens to you when you do that.
Usually it means that you're not going to close any business for like two years because the client still hasn't figured out if this is an important problem, how important is it, how much they're willing to pay for it. You know, do I do this now or later, et cetera, like who they're going to sign it to internally.
To me, I could be like a good friend of an agency because I can talk to the client six to eight months before they're ready to get an agency and to help them decide like these are the types of agencies you should be looking at my goal is to be on it's a good way to put it.
Because one of the ways I describe it is like I want to be on the brand side of the table as they navigate change which I think is rare in the industry because otherwise like imagine you're a CEO of a brand.
You're getting pitched all day. You know, every agency is like, oh, we're going to build this for you. And one says, oh, you don't have to build this yourself. You can get it off the shelf. The next one says, oh, this has to be totally custom because your business is unique and it's going to look much better.
If it's custom, those are hugely different total cost of ownership over the next couple of years. It could mean different, like hiring, it could mean you might not have the margin to support that, but the agency is never going to know that because they're just pitching what they know how to do.
Alex Bond: And Rick, that puts you in an extremely advantageous position when other companies are clearly, you know, pitching what they think the solution or the answer is, because it aligns with the services that they provide, you could actually come in.
And since you're not really trying to solve the problem, you're just trying to help in whatever faction that you possibly can, you can look at all of them and say, I like this. This is bullshit. I like this. You know, I mean, you can actually really advocate on behalf of the client in a transparent way, you know.
Rick Watson: Yeah. And look, I'll be honest, like every agency, every software platform doesn't necessarily like that. So, like, if you're a platform, and they want to send you business. They want to know that you're not going to send it to somebody else. But the reality is with enough time on task, like my job is just to be open.
I want to have relationships with anyone and I don't want a bad, like my goal isn't a bad mouth anyone. So like, I'm just saying like, if company a wants me to help them adopt company a, the only way I would send them to company B is if like, it was just a bad fit and before I sent them somewhere else, I would go back to company a and we would have a conversation about it.
Like, this is what I learned. You thought it was a fit for them. Can you explain to me now that, you know, these things, is it still a fit? And sometimes I've even found that those companies are like, yeah, you know what? It's not a fit. They like fess up to it. That's actually illuminating.
And I also think it's like, it's very valuable for clients because then I can go back to the client saying like actually, both of these companies pitched you, I went back to both of them and actually company a bowed out.
Alex Bond: Yeah. It makes it easier for them to make a decision. They don't have to sit and waffle for 6 to 8 months or something like that. So strategic planning, right? That this stage is broken down into supply chain and logistics planning, a DTC growth plan go to market planning, right? Which of these plans is the most overlooked by clients and usually requires the most overhaul?
Rick Watson: Yeah, I mean, a lot of it depends on the type of customer, you know, if they're coming to me, it's because usually the brand has been around for a while and has, it's very used to selling through stores and retail and like big box, like Lowe's or Home Depot or Walmart and Target.
And they're not as used to selling like the up and coming Shopify brands, like they're just not used to selling online, at least as a percentage of the revenue. Usually it's very small. And so direct to consumer is kind of an afterthought. It's like no one's primary job. And so particularly if a new investor buys a brand and sees an opportunity, like, look, this is a good brand.
People like the brand, but you have no relationship with your customer. Like you've outsourced all the selling to the retailers. You can't go to a website and like. Buy directly from the manufacturer and you can't like tell your brand story. And I think you'll know that as like a, as a brand promoter and designer, you need a place to tell your story.
And before that used to be like your fifth Avenue store in New York city. Now, you know, your story on, on your phone, whether it's through social channels or through your own website or. Or whatever it is.
Alex Bond: Oftentimes in a very concise way, you know, in 140 characters or less type of way.
Rick Watson: 100%. And so these types of brands understand that, look, we need to change the way we do business as a brand to get closer to our consumers, attract more younger consumers to the brand, rather than just people who are shopping in stores. And as a result, we need to add a direct consumer line of business. And so I kind of help them through that planning process.
Business optimization
Alex Bond: The last section of services that you provide is business optimization. Is your goal during the stage to optimize business operations as soon as possible or once you implement the plans provided in the strategic planning stage?
Rick Watson: I would say there's two types of optimization projects. One is where Advances It was my plan already, meaning like this is what I told you to do and you want me to stay involved with you as, as I hire agencies for you, help you hire the right staff to execute this change, help integrate these software systems through, you know, the configuration of my team or an integration firm that.
You know that we help you hire and then project manage this entire project through it's a mix of like strategy, project management, and then like coordination between multiple vendors and and the staff of the, of the brand or company that tends to be sort of the bigger change management projects.
I'm just using an example is someone's moving from. Like salesforce commerce cloud to shopify plus and that's a big project especially if you're a hundred million dollar brand you have multiple software systems that all need to be taken care of and move into new infrastructure before you're able to put a new website live and so we can help you through that process.
We're not going to design and code your website. We're not going to market it for you We're going to help identify like who's doing those things This part is your team is doing this part. You've hired a marketing agency to do it. We can help you do that.
This part, a design build firm is going to do it. So that's just, that's one example, like in a replatform, which is helping guide a replatform effort is one of the services that we have done quite a number of times.
Alex Bond: And during that kind of project management is what I'm hearing you say, Rick, are you guys, or is the client making sure that no stone is left unturned?
Rick Watson: It's really our job to make sure no stone is unturned, but look, the reality is everything is a collaboration. We'll have a baseline plan and will help will plan as much as we can with the client and then we'll lead planning sessions with all the vendors that are involved in the projects because a project like that.
A lot of times these big projects that are 3 to 6 months long there are team effort and multiple different parties all have a part to play. And so our job is to make sure that every vendor knows these are your requirements. These are the dates you need to hit and this is the budget you need to hit based on discussion with the clients.
And if there is something missing, you know, kind of similar to the other discussion, like for us acting like operators, the more we can act like an operator, the more the client sees us as a extension of their team, unless they see us as like somebody they have to manage, they see us as like somebody who's like taking care of stuff for them.
Alex Bond: They don't need another thing to to worry about or to make kind of like watch over or helicopter.
Rick Watson: So, yeah, our job is like, we go back to the client and we're like, hey, you forgot, like, you told me you were going to do the same because this vendor needs it because this project needs to get done. And so sometimes we go back to the clients and you're like, these are the three things you need to do by this date and help them understand what they need to produce.
Alex Bond: I can understand the amount value that like accountability can have in that sort of scenario, you know, where, where it's nothing like strict. It's just people all trying to do their jobs to make the most successful thing possible. So I appreciate that our companies, we talked about this a little bit, but our companies typically working with you from, you know, this kind of front to back process or do they pick and choose some of these services, you know.
Rick Watson: Yeah, I mean, the biggest projects, it's more front to back. I would say medium sized project. That's usually starting sometimes they can start at strategic planning and then continue into some kind of change management project or optimization and sometimes it's like, okay, we already know we want to do. We just want you to help us execute it.
So it's like this project management part on it. Or it's maybe it's like if it's a software company. Sometimes people come to us with a specific project. And we dive in and we discover that that's this is not the real problem Like so what the client thought the problem was isn't the real problem with the business i'm going to use an example like You know a company said that hey, we want to expand it to new markets Like this is the business today.
We want to expand to one of these three markets a b or c help us Help me pick a b or c that's really the mission and it turns out you dive into the business and they have Plenty enough business in their current market.
They're already doing three things and they're doing none of them well enough, but one of their things that they're doing has much more potential in the others. And if they actually remove things that they're doing today, their business will be much more successful because they'll serve the most profitable customers better.
