In the previous blog post, Manuel went over some great strategy and techniques on how you can pitch your products to retailers and wholesalers across the world.
Today’s blog post marks the final blog post of this great series. This post will be all about thinking forward and expanding your business into other areas.
Amazon is still the number one E-commerce marketplace in the world, and it will be for a long time. Although we believe that Amazon has some disadvantages for sellers who wish to have complete control over their business, you should always list your product there. Currently, the markets which we recommend expanding to, are:
These marketplaces have a much lower volume than their US counterpart, however, the traffic and sales are increasing year-on-year and Amazon has been investing heavily to attract buyers & sellers to their marketplaces outside the US.
There are a number of ECommerce marketplaces that allow you to list your products, some also have a similar fulfillment service like Amazon FBA. While not all ECommerce marketplaces are ideal(some have very low sales volume), this will allow you to increase your brand visibility and target markets which your competition is unlikely to target.
In my opinion, the marketplaces that make the most sense to register a seller account are:
Having your own ECommerce store is only to have complete control over your brand & pricing. One of the things I like about having an ECommerce store is that I have complete freedom when it comes to:
However, the best thing about having your own store is that it’s a challenge! While Amazon definitely needs some mastering – all the buyer traffic is already there! With your own store, you need to spend an enormous amount of time dedicated to bringing traffic to your website.
While this requires a lot of hard work and testing, in my opinion, it’s more rewarding and it can be scaled significantly once you have a working formula
We feel this step is the most important part of any business. A successful business is a scaleable business. While you should always retain control over the key tasks of your business, it is important to delegate tasks, especially those tasks that are time-consuming or you have no expertise in.
With the rise of freelancing and outsourcing websites, it is very easy to find very skilled freelancers or companies for your business. In my opinion, these are the tasks that you should definitely outsource:
Of course, what tasks you outsource depends entirely on you, however, if you want to scale your business and achieve freedom, you need to delegate tasks.
This blog post concludes our Zero To Hero: Building a Brand series, we hope that this series proved helpful in your efforts to build a truly successful and global brand.
Building a brand takes a lot of effort, however with the right strategy in place, you will have a company that has great products and it’s loved by its customers.
We would appreciate any feedback you have on this series and if there is anything we can help you with, kindly leave a comment below.
All the best & happy selling,
Duncan & Manuel
My background is actually retail, so I naturally started out with retail before moving onto Amazon. When a friend told me about FBA I didn’t even know that Amazon let’s third parties sell on Amazon.
I thought they only sell their own product. I am glad that friend pointed me to FBA, otherwise it would have been a lot more difficult to get my brand off the ground.
It has been nearly 3 years since I started my own business and as I said I started in retail. I had collected many contacts in retail and that was the natural way to go for me.
Looking back I am happy I started out in retail as it helped my brand immensely to get exposure while creating a second income trough Amazon.
The ultimate goal of any brand or company is to get their products in front of as many customers as possible. The only way to do this is by listing your products through all the sales channels that are available to brands.
The most powerful or “rewarding” sales channel is retail and wholesaling. Retail has the power to move your product quickly, thus getting huge exposure for your brand and products.
Retail is notoriously one of the hardest sales channels to get into. Your products must not only be appealing to consumers, but also packaging and marketing materials have to be of a higher standard than E-commerce.
However, one of the hardest challenges is finding retailers who are willing to take on a new brand and its products. Retailers often don’t take huge risks with their capital and prefer to invest in brands that are already established or brands that carry really unique products. So the key is to have unique products rather than generic.
Selling a Garlic Press that has some accessory doesn’t make you unique. The retailer will buy this product from his trusted source.
Larger items also have the issue of shelf space; which in retail is limited. On top of that you can’t just knock on a retailers door and expect a smooth and fast process.
Retailers have decision maker hierarchies and it is often difficult to get to the right decision maker. Often times retailers already have their suppliers or connections and they aren’t open to a new supplier. Reasons being that they already may have great buying conditions and relationships with their existing suppliers.
In some cases I worked on a potential retailer for over 2 years before getting an order (in my previous job) and in those 2 years there were 3 changes on decision makers and I had to start from the beginning again.
The new guy might not be open to you as the previous guy was and maybe he is already bringing sources/suppliers to the job and you need to start all over again convincing the new guy.
On top of that most larger retailers get emails and phone calls every day from new suppliers wanting to sell them their product. So it is a long and windy road to get into retail, sometimes as much as 2 – 3 years. But once you have your foot inside the door you are in a great position.
One word – relationship. If you have a good relationship the price or your product doesn’t really matter.
Someone is likely to buy from you if you have a relationship with him right? The more credentials you have and the more history you have with a person the more likely that person is to buy from you right?
An example. Let’s say you need a new health insurance. You already have an insurance from your trusted childhood friend (let’s call him Steve). Steve is quite expensive and maybe his insurance package doesn’t even have a lot of benefits.
But you still buy from him because he’s your friend and you’ve known him for years & on top of that you trust him. You even have him over at your house for BBQ’s, you meet up for beers etc.
You get a phone call from an insurance company trying to sell you a new health insurance with much better benefits. You don’t know this company but the offer sounds appealing.
You take the offer and go to Steve and tell him he needs to make the same offer or you buy from this new insurance company. Steve probably can’t make the same offer but he’ll adjust his old package and give you more benefits, maybe even at a better price. On top of that he throws in a coupon or voucher for shopping at Amazon.
You close the deal with Steve. That’s the power of relationships. And that’s how retailers work – they have their trusted sources and relationships. “You need to become Steve”.
Many of those relationships especially in the “old days” included some sort of bribery. For example if you switch to a new supplier that supplier would buy out your entire old stock from the old supplier. Back in the 90’s it wasn’t unheard of that a new supplier would invite you over on his yacht and take a trip down to the South of France.
Thankfully these “unfair” tactics aren’t accepted anymore – at least not with multinational retailers. There are strict enforcements in terms of bribery in big retailers. However, the relationship factor still plays a key role in doing business.
Today its just called “wining and dining” a customer. You take the customer out for a steak dinner and a nice bottle of wine and you probably don’t even end up talking business but a few days later you’ll get an order.
Now the key is to build a relationship with the buyer. You probably won’t be able to close a deal for months or even years because every offer you send to a new prospect ends up in the “trash” inbox.
1) Start out by visiting local stores that have maybe 20-30 stores in the area/country or state. Try to get an appointment with the Manager or Purchasing Department. Once you have an appointment prepare yourself with:
A store can probably take up 5 pieces per item/per store. So 30 stores makes 150 pieces, not bad for a first order.
2) Once you are listed in a smaller or local store look into larger retailers that have 100-200 stores.
Same principle applies in terms of preparation but you are probably not the only one knocking on their doors. So you need a bit of track record with a smaller retailer or your online portfolio.
Retailers with more than 100 or 200 stores probably have their own purchasing department, maybe even a buying office in Asia. So you need to get to the decision maker.
There are several ways to get to decision makers but the most effective yet also most frowned upon are cold calls.
Email the decision makers or better cold call first. There are cold call guidelines for free on the internet. Key is to let the buyer speak and you only listen.
Most buyers just want to talk about how great they are, let them. You need to make them feel that they have the upper hand.
After your first cold call, follow up on the topics and email a proposal as discussed in the call.
Give it a few days and then either email or call again.
3) Exhibiting your products at a local or international exhibition is the best way to find retailers and wholesalers.
This time the buyers come to you and all you really have to do is follow up with the topics of the discussion.
The key takeaway here is that getting into retail really is a marathon not a sprint but it can be very rewarding:
The best thing about retail are re-orders. You might not make much money on the first order but if the item sells well re-orders will come and often times in much larger quantities than the 1st order. The good thing then is that the entire process is already set up and all you have to do is to place an order with your factory, knowing the entire process with the retailer. Or if you have stock back home you can just send in the new order to the retailer from your warehouse.
From some retailers I get re-orders every 1-2 months for the same product and all I have to do is place an order to the factory and ship the item to the customer.
These orders can be 2-5,000 pieces each time. Sometimes I make 1$ on a product, sometimes 5$. So in 1 day I can make 25,000$ in profits not really doing anything (a bit exaggerated – there’s still work to do ).
Imagine how many months you’ll have to sell on Amazon for an order and profit that large.
Getting into retail is very hard but as I said it can be very rewarding. It’s not a sprint so some deals can take 2 or more years but if the client is worth it don’t give up. Obviously the above is just a short visit into the topic, there’s much more to it such as contracts, advertisement material, sampling, pricing structures etc.
If you need more help on the subject or are interested in growing your business into retail don’t look any further. I am working on material that is coming out in the coming weeks that should help immensely
All the best and happy selling,
In this blog post I’ll talk about packagings and branding on your product. I’ll give you a brief overview on why photography, packaging and marketing materials are so important when building a brand.
Why are great product pictures important? When people come to your website or Amazon listing the first thing they do is to look at your pictures. The customer bases his immediate buying decision on your photos.
It seems so obvious but yet I see so many listings with very poor product photography. Even if the product itself is great a poor picture can decrease your conversion immensely.
Let’s take a look at two examples:
I look for a wooden cutting board on Amazon and I find a few listings. The well performing listings (even if not the best product) have great listings.
Take a look at this photo:
And now take a look at this photo of a listing that is performing poorly.
This product is actually equally good and the seller even stresses out FSC certification (sustainably harvested wood). Me personally I wood rather buy the FSC certified product but the picture is turning me off.
My suggestions is if you are not a professional photographer then please hire someone to take photos for you.
Yes, great photos may cost you a bit of money but it is a one time investment and it will pay itself off. Also while sometimes Photoshop can be used for retouching, adding shades and effects I do not recommend using Photoshop to edit your product picture into an environment. It just looks cheap.
I’ve posted about custom packaging in a previous blog post (https://importdojo.com/best-packaging-practice-how-to-create-a-great-private-label-packaging/) which I think is a comprehensive guide. Have a look and get some ideas there.
The point is to think outside the box and reflect the product on the packaging. E.g. the Nike Air packaging or Cigars in a wooden box that reflect a humidor.
Make sure that you use enough carton strength when shipping your products. The unit packaging needs to be at least 26ECT (Edge Crush Test) – see above blog post.
Until your product reaches your customer there are many hands involved that handle your packaging. So you’ll want a sturdy and compact packaging.
Use thick carton (32ECT minimum) for export cartons and add a sticker that says “Fragile – handle with care”. No matter if the product inside is fragile or not, this will improve chances your cartons are handled more delicately by the courier or logistics company.
Add insert cards as simple as the below one where you can ask your customers to leave a review or also sign up on your website so that you can collect email addresses.
Also include Instruction Manuals (if applicable). Even if your product is self-explanatory some customers appreciate a guide on how to use a product. You can even add some tips or reference another product of your’s that will make the customer come back. For example if I sell my French Press I also add: “in the unfortunate case that you break your glass, we have a replacement glass available on Amazon”. Another example would be to reference a spare part that is only available trough you. Or something along that line.
Having great photos is essential to show the visual aspect of your products. Great photos will help you sell your product, especially on Amazon where customers often look at the photos to determine if they should make the purchase.
If you don’t use external marketing methods such as YouTube videos to showcase the features of the product, chances are that great photos are your only way of attracting customers to your brand.
When it comes to selling products, most sellers only focus on the product itself. A lot of people don’t realize that the product packaging is also a part of your product. This applies especially if you rely heavily on marketing or want to expand into retail and wholesaling.
Look at YouTube for example, a lot of product review channels put a lot of focus on a brand’s packaging. What this means is that good packaging will help you sell more of your product.
Another thing to note is that great packaging can also help you get more positive feedback or reviews on Amazon. These days online shoppers purchase a lot of products at any given time, by making sure that your packaging wows the customer, they are more likely to remember your brand and comment positively on the experience.
Great brands put a lot of effort in making their products look good, and so should you! With proper product branding you will help attract more customers and gain more confidence in your brand.
I hope this post was useful. Please feel free to comment or share
All the best and happy sourcing,
Welcome to another part of our Building a Brand Blog Series. In last week’s blog post we went over a brief introduction on social media and which social networks are best for Ecommerce sellers or importers.
This week’s blog post will be on a completely different, but equally important subject – Inventory Storage & Fulfillment. When it comes to product-based businesses such as ours, it’s important to not only get your logistics right, but also have the best rates and fast shipping.
I have used both FBM(Fulfilled by Merchant) and also FBA so I will also give my point of view on what works and what doesn’t. Although my main focus is on FBA, I normally still leave some units in a storage facility either to reduce my Amazon fees or to fulfill any orders from my own Ecommerce store.
This blog post will be all about how you can manage your inventory effectively and save fees when compared to Amazon. I will also show you how you can use a third-party fulfillment center to take advantage of busy periods such as the Chinese New Year or the December holiday seasons.
So let’s have a look at what options are there for importers or sellers and explore different ways on how you can manage your inventory effectively.
If using a third-party fulfillment centre, ideally it should be as similar to Amazon FBA as possible in terms of service and efficiency. However, here are some features I look for when making my decision:
Fulfillment centers offer a lot of advantages for ecommerce sellers who want to expand towards other sales channels. Some of the benefits are:
As you can see, choosing the right fulfillment center has a lot of benefits and if you’re planning on launching your own store, a FC outside of FBA is recommended.
Prep centres are storage facilities specifically used for preparing or assembling your products according to your requirements. FBA prep centres will make sure to prepare your shipments according to Amazon’s guidelines. This service might be very useful if you want to make sure that you have everything in order or if your product(s) come in multiple pieces and need assembly.
Nowadays prep centers have evolved and offer multiple services, including:
Please note that prep centers don’t fulfill any customer orders, they should be exclusively used for storage, inspection and prepping.
When choosing a fulfillment center or storage facility, location is very important. Since ideally you want to save on shipping costs from your supplier/manufacturer to the destination(if not an FBA warehouse). When it comes to locations, my preference would be coastal states in the US. In particular:
If your supplier is in China or any other Asian country, Los Angeles would be my choice. LA has both the busiest port and airport in the US in terms of cargo, making it an ideal destination to ship your inventory. Also, a lot of fulfillment centers and storage facilities are situated around LAX airport or close to the port.
Shipping your goods domestically will always be cheaper, so the only way to save time and money with your imports is to pick the closest location in the US from your supplier/manufacturer.
Image Source: Forbes
Amazon’s multi-channel fulfillment service where you can use FBA to fulfill third-party orders such as Ebay or your own ecommerce store. This is extremely convenient if you want to have all the shipping and fulfillment in one place. However, in my opinion, the
Amazon fees are quite high and you even have to pay extra to have a multi-channel order.
If you don’t have a lot of sales from other channels you can use Amazon’s multi-channel fulfillment, however, if you really want ultimate control over pricing and customer experience on your own website, you should pick a third-party FC.
Fulfillment centers, prep companies and storage facilities allow you to diversify how you manage your inventory. If you sell on your own ecommerce store or have large/oversize items, a fulfillment center will help you reduce your fees substantially.
I would still suggest you to use FBA if most of your sales come from Amazon, however, ideally you would want to expand into other sales channels. By using a FC you would have ultimate control on pricing and customer experience.
In next week’s blog post we will talk about Product Branding. Manuel will guide you on the best practices on how to brand your product effectively and create stunning inserts and marketing materials.
We hope this blog post was helpful and as always, if you have any questions, kindly leave a comment below.
All the best and happy selling,
Totally off topic today but I feel like sharing this famous German paranoia. In German we have a saying which is called “Existenzangst” and literally means being afraid of loosing your livelihood.
Meaning you are constantly afraid of loosing your job, income, running out of money and ending up on the street. It’s ridiculous but ever since I’ve become an Entrepreneur I have this almost every day.
I admit, I too am scared (or anxious) and worry all the time so I wanted to get to the bottom of this. Am I the only one feeling like this? Let me try to get this off my chest.
What’s the worst that could happen to me today? I am really just typing as I go and put out my thoughts.
I really want to evaluate my very own situation and if you also have these "existence fears” feel free to do the same :)
Lets take a look:
Lets look at it in more detail:
Lets say one of these 30% income streams tanks. I still have 70% of my income and need to find a new way to make up for the missing 30%.
Since I will still have 70% of my income & I’ll actually be in a comfortable situation. And I would just have to increase workload for a few months.
Lets just say all of this happens at once. It is not the end of the world. I still have some savings and my health. While I don’t really like the idea of going back to a job I have over 3 years where I ran multiple business and built income streams from the scratch.
I’ll likely go apply for a job at a retailer's buying office (Amazon, Walmart) here in Hong Kong and on top of my 17 years of retail experience I now have 3 years of running my own business, a best seller book about importing from China and a round of online courses, interviews, public speaking that I can add to my CV. So I am pretty sure that I will find a job again. And that’s really worst case scenario.
Then again lets take another scenario. Let’s just say I lost all my income streams but I still have saved up lets say 50,000US$ from all these ventures. Would I immediately look for a new job? Probably not. Reason being that I have yet to travel the world and see things. Not that I haven’t traveled yet but I haven’t really TRAVELED yet. I mean hiking the Pacific Crest Trail in the US for 6 months, going to Machu Picchu in Peru, living on a beach hut in Brazil for a year and so much more to do. And the best thing is when you travel on a budget or do what’s called “Geo Arbitrage” you don’t need much. Don’t know what that is? Geo Arbitrage is when you live in Thailand (or anywhere else where you have low living costs) for 500$ a month on the beach eating seafood and drink coconut water all day. Obviously if I would have a child, a car, a mortgage etc. things would be different and I’d have to get a job pretty quickly. But again - it’’s not the end of the world.
Think of the time that you worked for yourself as a time out in where you enhanced your own skills, tested your leadership abilities and hopefully had a lot of fun doing it. And you’ve added things to your CV. You didn’t really take time off for 3 years doing nothing, you tried to build something. And that’s worth something when you sit at an interview. I am pretty sure that will get you the job.
But lets not get ahead of myself, I work hard every day so that I can keep doing what I am doing. And I guess you are too :)
My message today I guess is that we should all stop worrying so much. It isn’t as bad as it looks like. My second message today and I keep saying this to everyone - DIVERSIFY.
Just by looking at what I wrote I again realized myself how important it is to have different income streams. AND it is another reminder to build even more income streams.
An income stream that is bigger than 30% is actually worrying - unless you make millions anyway :)
Back in the day when I worked for the lighting manufacturer one of our biggest clients (a very large DIY store) went belly up. Over 500 stores (thats big for Germany) closed over the next couple of months and suppliers (the company I worked for) weren’t going to see any money anytime soon. That customer made up over 70% of the companies turnover. Thankfully the management saw this coming and invested into hiring sales staff and building more clients. But it was still a big loss for the company. Anyway, just a small story but same principle. Build more income streams and you don’t have to worry all the time.
If you have these fears once in a while sit down and look at what you’ve built already since you joined the entrepreneurial world.
Copy my thought process above and see where you stand. Look at what you have already accomplished. Let me know in the comment section, I am really curios to know if I am the only one feeling this way :)
Even if you are just at the beginning and scared of the path in front of you, if you never try you’ll never know and you’ll miss out - I promise :)
All the best to us in 2017 and happy sourcing!
In last week’s blog post we had a brief introduction on E-commerce and the key steps you should take to create your own sales channel. Another way to create a powerful sales channel is through Social Media.
Social Media is essential to get your target audience to find your brand and connect with influential figures in your niche. In the past few years, social media has become the number one medium for promotion and businesses who want to achieve long term success need to have a social media strategy in place.
We often hear how social media is powerful and important for brands around the world. The main reasons why social media is the platform of choice is:
Facebook is without a doubt the most popular social network to use. Although having(and growing) your own Facebook page is essential for your brand, the advantage Facebook has over other platforms is an affordable and converting advertising platform.
Initially, the best strategy to use Facebook Advertising is to find your target audience. No other advertising platform in the world allows you to segment your audience by:
When launching a new brand, my strategy is to have a budget of $5 a day maximum to find my target audience, that way, when the time comes to launch my product, I know already who to target. Facebook also allows you to target audiences who liked a particular page, so if you have a fitness brand and want to target female audiences aged 18-25 who like Nike, Adidas & Under Armour; you can do that with FB Ads.
What this allows is to have better converting Ads and more clicks to your sponsored posts. One suggestion I can give is to not direct the audience to your Amazon listing(unless you have a lot of positive reviews), but instead to your website/landing page to collect email addresses.
We will talk in more detail about Facebook Advertising in the coming weeks, however, as a business in 2017 and beyond, you need to be on Facebook – it’s where your target market hangs out most of the time so take advantage of it!
Instagram is the platform of choice if you want to showcase your products, brand and your story. The visual aspect of Instagram allows you to truly differentiate yourself from your competitors. Since Instagram is owned by Facebook, you can use their advertising platform to also target Instagram users.
What I really like about Instagram though, is the ability to connect with authority in your niche and even larger brands. This makes it the perfect social media platform alongside YouTube to gain massive exposure for your brand.
However, the downside of Instagram is that you only have one clickable link in your whole profile – The Bio. This makes it very hard to direct audiences to click the link, for this reason, although Instagram can be used to drive sales, the main use of the platform is to gain exposure.
Twitter is one of the top social media networks, however, their follower base has been declining in recent years so in my opinion, other social media platforms are much better. Twitter works best for announcements or to give news regarding your brand or products.
I would still suggest you to have a Twitter account though, not only it works great for some niches such as fitness, yoga and cosmetics; but also because as a brand you need to be everywhere! The more places you are, being social media platforms, marketplaces or countries, the better.
So while in some cases twitter can work great, it’s not an ideal platform for Ecommerce sellers.
Out of all the most popular social media platforms, snapchat is the newest one. However, they are quickly gaining a large following(particularly amongst younger audiences) and they are set to go public soon. Snapchat is a video-based application that allows you for to share videos which are only available for a limited amount of time.
This is a great app if you want to make quick promotional videos or even use it to make instruction-based videos on your products. However, unlike most social media platforms, Snapchat only applies to certain categories.
Nonetheless, if your market is mostly younger audiences, you need to use the app as it’s quickly becoming the number 1 social media platform amongst the younger generation.
YouTube is by far the best social media platform for exposure and driving insane amounts of traffic to your website or Amazon listing. With the introduction of their Video Advertising Platform, you can quickly gain enough exposure or even go viral. It’s not uncommon for unknown brands to go viral and get massive sales via YouTube. Video based ads convert much better also, however, at $0.20 a click, it can become quite expensive.
The power of YouTube relies in a pool of YouTubers from all kinds of niches, in fact, if you can find influencers or brand ambassadors willing to make an unboxing review or How-To-Guides for your product, you will get more sales than any other method, such as PPC or FB Ads.
The major tips I can give regarding YouTube are:
If used right, YouTube can be the single platform that elevates your brand from a small business to a well-known brand loved by its audiences. Unless you have enough video making or editing experience, I wouldn’t suggest you make YouTube videos yourself(as a brand), instead, outsource the whole process or even better, leverage the audience of other YouTubers.
Pinterest is a social media platform that very different from the rest. It focuses mainly on images where they are structured using pins and boards. What makes Pinterest unique is that the platform has a majority of women followers, so if your brand or products are aimed at this demographic, you need to focus your marketing efforts on Pinterest.
Pinterest, unlike Instagram, has clickable images, so every image you put in the platform can be directed to your website or Amazon listing. This becomes really powerful when your follower base get bigger as it can help increase conversions.
Social media and E-Commerce are a perfect match for each other! No other platform gives you the ability to showcase your products in front of thousands of potential buyers. When it comes to promoting your products on social media, you need to focus on these points:
However, the most powerful way to gain followers and exposure to your brand via social media is by advertising. Facebook and YouTube provide the best converting advertising platforms and give you a lot of data about your customer behaviour.
Amazon PPC can get very expensive after a while and social media is another great way to drive traffic. It is recommended to not drive traffic directly to your Amazon listing via social media advertising, but instead, use the following strategy:
By driving traffic to your website you have the ability to collect email subscribers. Email subscribers allow you to:
Social Media Marketing can be a great asset to have for your business. No other tool comes close when it comes to connecting with your target audiences and getting exposure for your brand. Keep in mind that social media is a slow process and not every platform will suit your brand.
We recommend focusing your efforts on 2 or 3 social media platforms and outsource the rest to a virtual assistant.
In next week’s blog post we will discuss Inventory Management, FBA Prep and Storage. Amazon has been constantly increasing their fees so it makes sense to look for alternative options to store part or all of your inventory.
We hope this short guide prove helpful and as always, if you have any questions, kindly leave a comment below.
All the best and happy selling,
Zero To Hero: Building a Brand Series
In last week’s blog post, Manuel explored in detail how to deal with overseas manufacturers and the best practices for Private Label. In today’s blog post we will focus about building your own E-commerce store. While selling on Amazon has numerous benefits, nothing beats the feeling of having your own store and having full control over your brand.
While the process is time consuming and requires some capital investment, in the long run it will pay off. Here at ImportDojo we always recommend to expand into new countries and to have more than one sales channel – nothing beats having your own sales channel!
A website is not only an additional sales channel, but also an asset. If you manage to build up enough sales volume, the valuation of the site can be added to your company’s overall valuation. It’s never wise to build a business solely on someone else’s platform(Amazon/Ebay), by having your own website you have an additional channel to drive traffic to.
Marketplaces like Amazon and Ebay have a lot of sellers competing for the same customers. This causes price wars and more often than not, it’s a race to the bottom. By having your own website, you can control your pricing, make your own offers and be in control of what you charge.
A website offers endless possibilities when it comes to customization. Marketplaces have guidelines which restrict the amount of customization you can make. With your own site, you have complete say on what goes into the design, colours and overall branding.
Through email marketing and social media, you can truly connect with customers in a much more meaningful way than Amazon. Amazon limits sellers on having buyer’s information and restricts communication with them. When you have your own website, you can focus more on the customers and listen to their needs.
Although building an online store requires minimum capital investment, marketing will require a significant amount of money. This can be difficult in the early stages as you also need to outsource website copywriting, blogs and design.
This is by far the biggest challenge of an online store. With Amazon, sellers don’t need to focus much on traffic(except Amazon PPC) as the marketplace gets enormous traffic. With your store, chances are you won’t have visitors on day 1 so you need to dedicate a lot of effort for driving traffic. These include:
Luckily many platforms have made this part easy. However, you still need a lot of time to make the design of your store ideal. Most platforms like Shopify and BigCommerce have a lot of integrations which helps you sync inventory across all marketplaces.
Besides the design, the most important parts of a website are:
This can be easily done with the use of integrations, plugins and premium themes.
Between the blog, website copy and your email capture & sequence, you need to write a lot of content. If you’re not a good writer, you need to outsource all of the writing which requires a lot of capital initially.
When writing content, a good tip is to diversify content not just on your niche but the whole category or subcategory. Use different long tail keywords that cover different topics and once you monitor traffic and engagement for a few months, you will find out what your audience is interested in.
You can use the data to release new products based on what your audience wants.
The about us page allows you to tell your brand story, mission and goals behind your products. This page is very important as it gives a “face” to your brand that customers can identify themselves to.
The store should be simple and easy to navigate. Like Amazon, include keyword focused descriptions and great images.
A blog not only give important updates and information about your niche, but it also helps drive traffic to your site and build up SEO.
The most important policies you should put on your website are:
The beauty of selling on Amazon is that you don’t have to worry about driving external traffic to your products. Aside from Amazon Sponsored Ads and Facebook Ads, Amazon generates enough traffic to their marketplace. What makes Amazon unique is that the traffic is mostly buyers.
When it comes to your own website, getting traffic will be the major challenge. However, there are a number of ways to drive traffic(and sales) to your E-commerce store.
Like Amazon Sponsored Ads, pay per click marketing is very powerful in driving traffic towards your products. The most popular pay per click networks are Google Adwords and Bing, when it comes to these two however, you will have higher competition on keywords so your strategy has to focus on long tail, less popular keywords.
This is a similar technique to the one Manuel used for his French Press Case Study. When you’re a new brand, chances are that few people know about you. In this case you have 2 options:
Bloggers are perfect for gaining exposure! They are trusted by their audiences and gain consistent traffic to their blogs. When choosing bloggers to promote your brand or products, take into consideration the following:
One advice is to find someone that truly fits your brand, audiences can tell if someone is truly passionate about your product(s), so be very careful in who you pick. Once you filter down the blogger(s) of your choice, you need to contact them. You can do this either via their website(normally they have a specific Advertisers page) or via social media. Based on experience, these two incentives work best:
The second option normally works best as the blogger will be more incentivised to promote your brand. Bloggers are a great way to drive high amounts of traffic both to your Amazon listing and your website. If a blogger proves very successful, a good option would be for your brand to sponsor the blog as you get a permanent advertising presence.
Social Media Marketing is the number one tool to drive traffic to your website and get exposure for your brand. Although building a following takes some time, you can drive huge amount of sales and traffic with targeted discounts or giveaways. The most popular social networks for E-commerce are:
Building your own e-commerce store requires a lot of work and patience. However, the benefit of having your own platform and customers is very rewarding. While the Amazon platform will most likely always be the main source of revenue, having an additional sales channel that you fully control is the ultimate step towards having a strong brand.
We hope this blog post was helpful in clearing up some issues you may have when starting your own website and while e-commerce is a vast topic, this guide can surely point you in the right direction. In next week’s blog post will will dive into Social Media Marketing. Social Media has become a really powerful tool to drive traffic, sales and awareness of your brand – so having a social media marketing strategy is essential to quickly grow your customer base.
If you have any questions regarding this blog post, please leave a comment below. The aim of this series is to find out your concerns regarding importing & e-commerce, so we would really love to hear from you!
All the best & happy selling,
I’ve probably written about this topic for as long as the blog is up (March 2015) but I’d like to give you a summary of the most important parts of manufacturing overseas in this blog series on how to build a brand.
WARNING – LONG POST 🙂
So here goes:
There are a lot of statistics I could give you but I wouldn’t know where to begin. I want to break down China and its manufacturing in a few sentences.
Believe it or not, China is still the biggest production site by far. While there are several countries in the vicinity, such as Vietnam, Thailand, and Bangladesh, they simply do not have the infrastructure that China does. Imagine you need sanitary items, furniture, household appliances, insurance, and a smart phone. You walk into a Wal-Mart. You can find practically anything you need in there and that’s within 10,000 square feet. That pretty much sums up China’s infrastructure.
Factory A provides plastic and tooling, Factory B provides packaging, Factory C provides raw material and components, and Factory D assembles everything. They are all within a stone’s throw away from each other.
Most of the factory bosses are related to each other. They set up a perfect system within their “community.”
I’ll give you an example, and I am not kidding you, 95% of the world’s supply of electrical multi-sockets comes from a small town in Cixi near Ningbo/Shanghai. When I say “small” I actually mean small for China.
There are over 1.4 million people in this town. When you step into “Ningbo Kaifeng” (World largest factory for electrical multisockets) you are overwhelmed. And when you step outside of the building you see five competitors across the street. All the factory bosses are related to each other. And down the street they can find everything they need – factories that make packaging, tooling, plastic, steel, and so on.
The Chinese are so effective in terms of production and infrastructure that some first world countries could really learn a lot.
The big retailers figured out a long time ago that nearly every large corporation, retailer, discounter, or online shop has a buying office somewhere in China/Hong Kong. I know this because I have been in the industry for over 17 years. When you walk into a factory and look at the production line you see cartons of goods with famous names on them. Whether it is a fan from Home Depot, an audio speaker from Target, or a ceramic pot from Bed, Bath, & Beyond, they were all made in China. Most products are made in specific areas.
Here are a few examples:
These are the main areas for production. However, nowadays production is also shifting inland to take advantage of lower labor and production costs.
First things first. You need to understand that certifications are based on directives and legislations. So for example the GPSD in Europe (General Product Safety Directive Legislation) or the CPSC for the US (Consumer Products Safety Commission) says that a product needs to meet certain standards and need to be safe in general to import or bring to the market. Simple right? Unfortunately not. The GPSD has tons of directives under its belt such as the CE, RoHS, REACH directive). Which means that for each product or category there are further sub-categories that have directives which tell you exactly what your product needs to meet. Wait a minute, what exactly are you saying? I can’t read all this technical jargon….
Ever went onto Google to look what your product needs to meet under which directive? Found a site and then there’s a 200 page PDF that tells you in technical mumbo jumbo what the directive is about and after reading that you still don’t know what to do? Well this is where a lot of people struggle (I am actually working on a course as of writing this that will take the guesswork out and make you understand what you need to know)
So which certificates do I need and do I need them all?
Yes and No
The good news first. No you do not have to have all tests and certificates done by third party laboratories (both the US and Europe). What would suffice in (almost) all cases would be a declaration of conformity. Wow really? Yes, and here is the “however”. If you trust your suppliers blindly that all raw materials are free of hazardous chemicals, comply with electromagnetic compatibility (electronics for example) or meet certain other standards then that would be very foolish. If your supplier can’t provide any certification and claims that he complies with everything you ask for thats a huge red flag. I also understand that you don’t want to invest in any certification not knowing if it will sell. And this is the most important part where you as a entrepreneur and business person need to come to a decision. A) Is my product potentially dangerous (can it explode??). B) Is my product relatively simple and can’t harm anyone (e.g. leather wallet)? Once you’ve figured out what you need for your product you need to evaluate what should be invested. Lets take an example. For the sake of it lets look at a simple and a complicated product.
Solar powered garden light for 1.2$. Comes with nothing but a few cables, some plastic and a solar cell. Simple right? Technically I have to meet the following: LVD (EMC), ROHS, REACH & CE in general for Europe. Now if I were to test all of these the costs would amount to roughly 2000USD with a very cheap Chinese laboratory. If it was TUV or SGS the costs would be triple that. Now what if I am going to order 1,000 pieces and my testing costs would already cost more? That doesn’t make sense. In this case I suggest to get self declaration of the above regulations and save yourself these costs. Obviously you’d still want your supplier to declare that he can fulfil those requirements so look for suppliers who already deal with customers in the country you want to import to and have a good reputation or can back up their claim that the item is compliant with raw material certificates for example (from the raw material supplier).
Small Electric fan heater 5.9$. Comes also with a few cables, some plastic, a plug and a PCB. Simple right? No. You see, I need to plug this product into the socket (230Volts plus) and the potential dangers are very high. If the unit tips over or a child puts a cover on top, the entire unit can burn up (and the house with it). Also here technically I have to meet the following: LVD (EMC), ROHS, REACH & CE in general for Europe. Ideally I will also want a GS mark for Germany because this is a product consumers want to have with GS. On top of that I want abnormal testing from TUV for example. Abnormal testing means they would test what happens if you cover the unit with a blanket or if it tips over that the unit switches off automatically. A good supplier knows that there needs to be a tip over switch installed and overheating fuse included. This abnormal test alone costs 4-5,000USD. A GS mark costs somewhere in the same vicinity (2-4000US$). The other tests (LVD, RoHS, REACH & CE) are roughly 2,000USD. Now we are looking at 10-12,000USD investment costs. Would I do all these testings before purchasing? Yes, 1000%. I do not want to risk my business or anyone else’s life because I wanted cheap. You may say ok but I don’t have that kind of money. Then you need to find a supplier who either has these certificates already or is willing to invest the money for you. If you can’t find one then its simple – the product is not for you and your budget. You can still go for it without all the testing and certifications but I think we are on the same page here that that would be a very foolish decision in case anything happens.
Now I can’t go into hundreds of products or case studies here, that just isn’t possible. But I think you see my point. First I need to evaluate if the trouble is worth it and if I even want to deal with complicated products.
If the answer is yes then the strategy is pretty clear I think – test and get certificates. If you don’t dare to sell these risky (but profitable) products go the easy way and pick simple products or walk away.
Some items really don’t make sense to import (together with the antidumping rate items). These items are usually license-required items, large items or items that are manufactured in a low-income country near you.
China is getting some competition from a few countries, not only because of labor costs but also due to government import restrictions (antidumping fees for example).
Products that are difficult for importing:
For the above items you would need to obtain proper licenses first and this can be quite difficult. So the above might not be your first choice of import.
A lot of people are concerned when they produce their own design in China that the supplier will copy it and sell to other sellers.
First I would like to point out that in my nearly 12 years in China I have had almost only good experiences with suppliers even with my own designs and exclusivity agreements.
Let’s look at your options and what it actually means to have NDA’s or Exclusivity Agreements in China and how likely it is to enforce it or hold up in a court.
Lets look at the terminology first and what they mean:
Whats an NDA and when do you use it?
An NDA or Non-Disclosure Agreement is used when you have your own product design and want that developed by a factory in China. You basically agree with the factory that they are not allowed to disclose, share or produce your design (or even ideas) with any other customer or supplier. Neither local or overseas. In most cases if you have your own design a tooling is likely need to be made. The first step you take before you send any designs to a factory is to ask them to sign the NDA.
To produce your design it is very likely that the factory needs to make a mould or tooling for you. With this tooling – parts of your product will be manufactured and eventually assembled into the final product.
(Categories like Textile or Food do not need tooling). Toolings are often included in the price quoted to you when you hand over your design. However you can also opt to pay for the tooling if you want to own the tooling as well.
Toolings can go anywhere from 1,000-30,000+USD depending on the size of the product. Yes, things can get pretty expensive.
Can I move my own tooling to a secure location?
Toolings are usually very large and heavy as they are made out of die-cast in most cases. Moving them requires quite some logistics.
So if you are unsure that your supplier is going to use them for other customers you should move them to a secure location (e.g. a rented warehouse). This can easily cost a few hundred US$.
And every time you would place an order this tooling needs to be moved to the factory and after production back to the warehouse. An expensive enterprise.
So having said all that if you feel you need to have your tooling secure somewhere else you should not work with this factory in the first place.
So whats the best way to go about having your own designs & tooling?
My tip is to work with a sourcing agent that can help you find reliable and trustworthy factories.
Don’t go onto Alibaba and randomly look for factories that could make your product. You don’t know them, they don’t know you and are unlikely to help you anyway.
Even if they tell you: “no problem, we can make it for you” they are likely to copy your product or sell the idea to other sellers the minute you place an order.
Just the other day a reader of mine told me he found a trading company on Alibaba for his design and placed an order of 300 pieces.
When he got contacted by the actual factory about labels and other things they needed from him he found out that the trading company placed a total of 500 pieces with that factory.
They ordered an additional 200 pieces (without the knowledge of the client & even with the clients logo) for themselves probably to sell it on Aliexpress or even Amazon themselves.
Work with the factory of your trust. Even if the product you are now looking to manufacture doesn’t fit into their assortment. Factories have a large network and contacts with other factories.
Ask them to help you source a factory that can make your product whom they trust. I’d he happy to pay a few cents more for this type of help if it means I get connected to someone trustworthy.
Ideally your existing factory can help you manufacture your new design.
Mutual Exclusivity Agreement
Let say you find a product on Alibaba or at the shows and you want to buy this product exclusively to sell on Amazon. Suppliers are likely not to give you a Exclusivity Agreement if you don’t purchase high quantities from them or if you haven’t had any previous business with them. FBA sellers are in general very small customers for factories. The 1000 pieces (if even) you & I are going to want to place as a trial order cause more trouble to the factory than you could imagine. Setting up production and purchasing raw material for only a 1000 pieces is an expensive endeavour for factories. Most raw material suppliers have MOQ’s of 5000 pieces (per raw material) and up. So getting the material for 1000 pieces can be quite expensive. While some factories may have stock left of material or might agree to purchase the larger quantity from the raw material supplier in order to produce your order it is unlikely to happen in reality. Having said that you could approach things a little different to get your exclusivity:
You could ask the supplier to sign exclusivity agreements for 6 months. Meaning you could agree on a quantity that you will place within those 6 months and if you don’t reach the quantity the contract will be voided.
Which will give you the time to figure out if the product is selling and the supplier on the other hand isn’t forced to sign a deal for a long time.
After this period of 6 months the contract/agreement can be reviewed and extended for a longer period. Even if the supplier does not agree to an extension you have at least a head start of 6 months on other sellers.
Validity of agreements & contracts:
In the FB groups I often see question like: “How are those agreements going to hold up and what are your chances of winning an NDA dispute in China if you find out your supplier has betrayed you?”
Well to be honest the chances are slim. Does it help to have an agreement in Chinese? No. Even if you hire an expensive lawyer in China and win the case by the time you resolve the issue your expenses will have ballooned into thousands of $.
So unless you have a patent it isn’t even worth it pursuing a law suit.
You will also have difficulties finding out if your supplier actually used your tooling for another client. An un-trustworthy supplier will find many ways to wiggle himself out of the situation.
For example he could claim a disgruntled engineer of the company left the factory and took the designs to the next factory he started to work for. You won’t be able to proof him differently.
So whats the point of having an agreement at all and whats best approach?
To ask a supplier to sign an agreement or NDA shows that you mean serious business and they will take you and your project more seriously. If he doesn’t agree to it in the first place move on to the next supplier.
Work with a supplier whom you trust and have worked with for many months/years already. You will still need to have agreements in place with that supplier but the understanding is entirely different.
If you work with a supplier and you let him know he can grow his business with you over the years he will honour your agreement. The contract is more or less a formality.
Either place orders with a factory for ODM (products off the rack) in the beginning and eventually propose your ideas and designs after you worked with them for a while or hire a Sourcing Agent who can help you get you in touch with trustworthy factories.
For example in my case study I actually got exclusivity for my product (for an initial 1000 pieces order).
And the supplier honoured it. How do I know that? As you know my case study is public and people who join the course can see contacts of my supplier within the course.
After I launched my product and case study only a few days went by and my supplier contacted me to tell me that he had received quotation requests from 2 different US sellers already. Those 2 people wanted to copy my process (they even used my email templates and quotation forms that I offer in my course). The supplier refused to offer my product to those 2 guys. Thats not to say that they can’t go anywhere else but at least I know I have a reliable and trustworthy supplier.
So its all about finding the right supplier and develop a relationship with him. You will want to have agreements in place even after a long relationship but again, thats just really formality and if you found a trustworthy supplier they will honour agreements and in 95% of the cases help you if you have to claim money for example (defect or returned goods).
The point I want to get across to you is not to worry too much about getting copied in China if you approach things professionally.
Getting copied will happen eventually because either:
Take the head-start that you have with your product and move on. Thats how this business is.
And remember the above goes only for your own designs. It is a different story if you are buying products off the rack maybe with small modifications from a supplier that you found on Alibaba for example. In these cases it doesn’t make much sense to have NDA’s or Exclusivity Agreements because it is not your design in the first place. It belongs to the supplier. However if you make significant modifications and are able to place larger orders it makes sense to have agreements.
Most people start out on Alibaba because they cannot come to China. While I do recommend to come to China it doesn’t make sense if you are just starting out. If you are starting out, head over here to my Alibaba screencast which helps on choosing a supplier: https://importdojo.com/alibaba-hacks/
I ll cover three topics about sample management:
Once you have settled on a supplier for your new product it is time to purchase a sample. Most suppliers will charge you for sending a sample. There is usually no way around this unless you have worked with the supplier for a longer time.
Even for me, being here and dealing with suppliers on a daily basis I can’t guarantee that I don’t have to pay for a sample.
Here are some Insider tips to “try” to get a sample for free.
If none of these work I recommend you to agree with the supplier to deduct the sample costs from the official (larger) order. At least this way you save the sample costs if you decide to order from this particular supplier.
Be wary of sample costs in general
On one occasion I was sourcing for a textile accessory. The item itself can be made for approx 2 USD.
I screened around 10 suppliers and eventually narrowed my selection down to 5 suppliers. They were all in a similar price range.
When it came down to ordering samples one of the suppliers (who was also the most expensive) asked me for a sample fee of 100 USD to be transferred to his bank account. That didn’t make sense. I immediately knew it must be a trading company with no factory background.
They probably outsource the work to a factory because they have no own facilities. Eliminate suppliers that have high sample costs right in the beginning.
Samples are usually 10-50% more expensive than the originally quoted price. It is a common practice to charge more for samples, as many of the samples need to be handmade for the customer, especially if you have some sort of modification request.
Another reason why samples are usually more expensive than the quoted price is that they want to see if you are serious & sincere about placing a larger order later.
I can tell you that from my own experience as a manufacturer. I get about 5 sample requests per week and all of them want it for free. If a buyer is not willing to pay for a sample I won’t send it to him because I will be thinking he just wants to get a sample and there will be no follow up order.
Sometimes suppliers have stock of their items. If you do not need to have any modifications done, or you just want to check the quality before asking for more, request a sample they have in stock. If they have stock, they usually charge the regular (MOQ) price.
In my 12 years living and working in China I have learned to communicate with Chinese suppliers in different ways compared to communicating with Western companies.
What is being said or promised on the phone/chat or email is not always being followed by the factory or the supplier. Often you will find that something you said or agreed on is being done completely different.
For example you ordered a sample of a certain product in a certain color & quantity but what you receive is completely different from what you asked/paid for.
Unfortunately the chain of command in factories is not always direct. So when your sales contact gives your sample order to his sample or engineering team there may be 2 or 3 people in between.
In between often some information gets lost. So eventually the person responsible for making your sample will receive different instructions that deviate from your original briefing. Often there will be no meetings held on projects from clients (like we are used to in the western world), but rather a quick email to another person that has not fully understood what you actually want or need.
Often there will be no message or notification that your project may be urgent or requires special attention. That might be a simple instruction, for example telling the sample team to make the sample with a US plug or adapter. No one has told the sample team and common sense is unfortunately not requested when being a worker in the factory.
Which brings us to:
I can’t stress enough how important it is to supervise & monitor your order/samples or other projects that you have with your supplier. Westerners work differently. We are more detailed and we expect people to have the same common sense that most of us have. Information will get lost. You need to plan for it.
After each discussion on the phone/chat or email you should follow up with written and agreed on-points. Try to think of everything for the supplier and make it as easy as possible for him to follow up & complete your instructions. Give him a “goodie” at the end of the email to advise him of the potential to be working with you.
For example (content in BLUE are my notes for you):
Thanks for the talk just now. I would like to summarize the discussed points:
– Sample to be sent to ……. (your address)
– Sample needs to be in working mode. A non-working sample is not accepted, as the sample will undergo quality tests by my third party laboratory. (this part doesn’t need to be true but he will think twice before sending you a sample in poor condition)
– Sample needs to have a US plug (attach him a picture of a US plug-make it easy for him)
– Please make sure the sample is tested on your side before being sent out.
– Please attach your model number & supplier name-tag to the sample as I am getting many samples and would like to know who sent which sample. (this way you will not lose reference of which supplier made your sample if you order from more than one)
– Make sure you mention “samples of no commercial value” to the Sample Invoice (in order to avoid customs tax on samples at your destination).
Please give me a written confirmation of all discussed points and your understanding.
If the sample works out well and everything is as it is agreed on, expect an order of… pcs.
Here a few more tips on communication & supervision with your supplier:
Once you have a feeling on what you need to pay attention to it gets a lot easier and your sample orders in China will be a lot smoother.
I’ve been saying this forever and I still see people shipping their products from China without inspecting their products by professionals but my recommendation is never ever ship without inspecting your goods.
Especially not if you ship directly to Amazon. If there’s a problem it’s too late to re-work the goods (in most cases) or ship back to China.
There are several third-party inspection companies in Asia. Some of the big names are: Buereau Veritas, TUV-SUD, TUV-RHEINLAND, and AsiaInspection (which I personally use) to name a few. The first three are usually expensive but also very thorough. AsiaInspection is a simple and cost efficient service that should work in the beginning for you. Register on their website and simply create an order with them. You can fill out all the details or even better ask your supplier to send them a sample.
Simple steps: You ask your supplier for a date when you can send an inspector (usually around 70-80% of the finished production), you book the inspection online and the Inspector will go to the factory on the arranged date.
Once the inspection is completed they will send you an inspection report. Based on this report you can either:
Only when you are entirely satisfied should you release the shipment. In most cases there will be minor findings, such as scratches, dents, or packaging issues. If this doesn’t bother you then release. If there are major problems like faulty wires or wrong colours, ask your supplier to re-work the goods.
Trust me, he will re-work, as he is still waiting to get the full payment. Remember, NEVER pay everything up front. Once everything is as it should be you can give your logistics provider the order to pick up the goods and send them to the port.
You are of course entitled to skip this process, but it is highly recommended, especially for first-timers and for order amounts above 1,000USD.
Pheeww that was a long post but I hope that this serves as a refreshment or reminder on what to pay attention to 🙂
Next week in our blog series we’ll talk about eCommerce, what channels exist, how to build an audience, social media following and more so stay tuned 🙂
If you enjoyed this post please comment or share on your social media 🙂
All the best and happy sourcing,
This is the 7th post in our Brand Building Series and today it’s my turn to talk about this next blog post.
In this post I’ll talk about private label versus your own design and why being unique (in the long run) is better.
I will also talk about Industry Research & Demographics (Who will be your customer?) because I feel this goes hand in hand with the decision on choosing a product.
Before we discuss private label versus your own design I will dig into Research & Demographics first – who will be your customer? Is there enough demand? Your customers or target market can also determine whether you go for private label or your own design.
I’ve talked in previous blog posts on how to choose a product and do your industry research. So I won’t go too much into detail in this post, check out the post I did on this a while ago: https://importdojo.com/the-ultimate-guide-on-how-to-find-a-product/
Let’s imagine that you aren’t sure yet which product you want to sell in but you have a certain industry in mind. I always say follow your passion or something that you can relate to.
After all it doesn’t make sense to start selling Bluetooth speakers when you know nothing about them let alone explain features or answer technical questions of your customers.
So ideally you start with something that you can at least relate to or feel that you can improve on.
Let’s pick an industry. As some of you know this from me already – I love hiking and trail running here in Hong Kong, so lets look at that niche 🙂
Me last week hiking/trail running in HK’s mountains
1) I go onto Google and start my search.
2) I check the first few links and I find a site that has a compilation of the top 10 products – makes it very easy for me.
Here’s the Top 10:
3) Next thing I do is go onto Google.trends.com and enter “trail running”.
It is a very trendy topic as you can see
4) Now lets look at particular states in the US:
Colorado, Utah, Washington, Arizona, North Carolina are the top 5.
If I look into cities as you can see there is a very high demand in Denver, Portland, Seattle, Austin & San Francisco (& a few more).
I know from living here in HK there is very high demand as well. Now if Amazon would have a store here that would be probably my first item to put up on as a listing.
As an alternative I could also set up an eCommerce shop here in Hong Kong (there’s my next business idea).
However I am going to focus on selling a product in the US now either on Amazon or my own eCommerce shop.
Next thing to do would be to research the particular top 10 products and then focus on either the highest demand or the product I can affiliate myself with the most.
After I pick a product I go onto Google keywords planner. I pick “trail running jacket” and as you can see there’s a very high demand (100,000 – 1Million monthly searches on Google).
If I were to go after shoes it would even be 1M-10M per month. Thats a lot of potential customers 🙂
What do I do now with all those numbers? Nothing for now since I still am far away from launching a product, but the point of this exercise is that I become aware of the trends, the search and interest volume of my potential clients and how I can take that to my advantage.
E.g. I can set up my own shop or sell on Amazon and drive traffic via targeted Facebook ads (or Google) to my listing. And I can specify that by country, state, city and interest. I am not going into detail now (thats for later) but just a quick look at a Facebook campaign with these keywords and targets generates a audience of 790,000 people. Something for later when my product is live (or during the launch).
Now obviously this is just a brief and short trip into researching demographics and interests. But as you can see from above, there’s literally a million potential clients for me.
Obviously I would now have to do my product research, find suppliers etc but this will be a post for next week.
What you can do from here on is to look up the competition on Amazon and how you can improve a product or even get unique ideas. See also our blow post from 2 weeks ago here.
Lets assume that you have your product and industry well researched. What do you pick now? Private Label or having your own design?
Lets look at the options:
2-3 years ago Amazon FBA private labelling became the No.1 way to start your new business with a small capital. Simple – find a lightweight product, fits in a shoe box and costs less than 2$.
So many people jumped onto that train that today we have immense competition on Amazon. While there are still categories and products out there that have small competition, its getting more and more difficult for everyone.
I am sorry to tell you but those days where you start off with 1000$ or less are over. I still see success stories with private labelling however starting capital should be at least 3-5,000USD. You are going to want to order a quantity (say 500-1000 pieces) that last you 1-3 months when you launch, especially if your product goes well. You will need capital for marketing (PPC, Facebook ads etc., influencer campaigns), logistic costs from China, inspection costs, photography and business set up costs. If you are looking at higher priced items from China – because they have less competition, 5000US$ are easily spent on product costs only.
How does private label work? By now I think most of you how it works but basically you are buying a product off the shelve from a manufacturer, maybe improve it (see last blog post), put your own logo on the product or packaging and send it to Amazon. Obviously there are many steps in between but thats pretty much it in a nutshell.
Does private labelling still work? Yes it does, but the competition is just immense right now that you’ll want to pick your product carefully with extensive research. Perhaps instead of making it difficult for yourself with limited capital you may want to look into other private labelling like wholesale private labelling. What’s that? Check out my good friend Will Tjernlund’s speech at the Global Sources Summit last year October in HK: https://www.facebook.com/globalsources/videos/10154597697889785/
So while private labelling in its different forms is still a viable option and will make you money you will have to have a good product that stands out plus extra capital for marketing and advertising since the TOS change from October 2016 in regards to giving away products and review services has more or less collapsed as a sure way to gain traction in your first few weeks.
The most obvious downside on a private label item is that anyone can come in and hijack or have the same product up after a few weeks. Even if you are brand registered, a competitor can come in and modify the product with his factory, maybe even improve it and sell under his own listing. Within a matter of weeks you can have 4-5 competitors and the price gets driven to the ground. Think of the melon slicer that everyone tried to sell and within 2 months there were 30+ sellers of this product. Imagine you would have been the person designing this item, how long you’d been the only one making huge profits. All the other guys that came in after you had to fight for the price and customers. Basically a race to the bottom.
What are the advantages on private labelling?
Don’t get me wrong, to start out and if you are concerned about capital and big investments private labelling is a great way to get started. You’ll learn the ropes, get your first experience in China and on Amazon and you’ll be set up with your business.
Even I started with a private label but quickly moved on to create unique products.
What’s your own design and what are the risks involved? What sort of capital do you need to invest?
OK, so first off you might say – even my unique products can be copied at some point. Yes, thats true but you’ll have a head-start of at least 6-8 months and by the time the competition comes in you’ll have a lot of reviews (that he doesn’t have) and you’ve already made good money and ideally even work on your next product. Thats the business cycle anyway, you create a product, someone comes and copies you. Deal with it and move on.
Next question may even be how to avoid that anyone copies you – patents and trademarks. First you’ll definitely want to register your brand on Amazon so that anyone trying to hijack your listing has to ask you for approval – guess you won’t approve 🙂 Second you may even want to patent your design in the US (or wherever you are selling) So anyone trying to copy you has a very low chance of succeeding. You can easily report them to Amazon infringing your patents or design.
Whats the downside with your on design? There are three things that come to mind.
Whats the upsides of your own design?
I think it is pretty clear that a lot depends on your capital and assessing your risk tolerance. Investment more and get paid off (hopefully) or start small and grow slow. It is really a personal decision that I can’t take off your hands 🙂
Researching your demographics and possible target audience helps making a decision.
I hope this post has helped in some way and I look forward to your comments 🙂
All the best and happy sourcing,
18/F., Blk. B, Tung Luen Ind. Bldg. 1 Yip Shing St., Kwai Chung, Hong Kong