We’re launching new a physical product. An Amazon FBA private label product, to be precise.
And I thought to myself: this is a once-in-a-lifetime opportunity to show you how to make money in e-commerce from start to finish. I talk about business a lot, so why don’t I just show you?
I’ll set the scene.
It’s May 2016. 11 Celsius/52 Fahrenheit right now. Overcast skies. We just went out for dinner (Chinese), and now it’s back to work.
Let’s talk strategy.
Here’s my understanding of successful e-commerce in 3 steps:
(1) SELL SOMETHING PEOPLE ALREADY NEED…
Design a product that meets a pre-existing need (something that’s already making sales for other companies). You can see whether or not people want your thing by looking at it’s BSR (Best-Seller Rank) on Amazon (the closer to #1 the best-seller, the better) and by using the Google Keyword Planner tool to see how many monthly searches for the product there are on Google. Large platforms like Amazon and Google have tons of customer information. All you need to do it tap it.
(2) …THROUGH A HIGH-TRAFFIC SALES CHANNEL…
Next, sell it through a sales channel where buyers for your specific product are likely to be. Amazon is a sales channel. eBay is a sales channel. Facebook stores. Jet.com. Craigslist. Etsy. Your own e-commerce site. Third-party online retail. Physical retail. Anything that attracts traffic and takes sales is a channel. You can certainly sell in your own online store, but why not take advantage of a channel that already has trust and millions of shoppers with credit cards on file? And among channels like these, Amazon’s the largest. That’s why we’re in the business of producing honest reviews for Amazon businesses.
(3) …WITH HIGH MARGINS.
Once you’ve found a product with pre-existing demand, source it. Source it for $10, sell it through a sales channel with traffic for $50. Make $40. That’s your profit. Ideally, you want to at least 3x or 4x your money. Make the product physically small and light. This cuts the costs on shipping, returns, packaging, and everything else. And most importantly, it should have the potential to be an aspirational brand. One thing that makes a physical product worth more than its materials is the implied sense of identity that comes with it.
So that’s the strategy behind what we’ll be doing. Back to our product.
It hasn’t hit the market yet. You actually get to see some pre-launch work.
Here’s what we’ve done so far:
> the product has been sourced. We bought 1500 units of a single SKU. That’s the other thing. Avoid products with different sizes and colors. If “medium black” is where 80% of the sales are, just make that one to begin with.
> it’s in the fashion space.
> because it’s in the fashion space, we had to get ungated by Amazon to sell there. If you want to know about the ungating process, leave a comment. I can make a separate piece about it if there’s enough interest.
> we’ve enabled our account to sell on Amazon.com (USA), Amazon.ca (Canada), and Amazon.com.mx (Mexico).
The plan is to focus on Amazon.com as our first sales channel, optimize it, then expand to other countries later on. As well as roll out our own e-commerce store and third-party online retail. And you’ll get to see it all.
We’ve paid our Chinese supplier by wire transfer. It’s been 4 weeks since then, and production’s done. Now, it’s time to ship.
I’m having our supplier ship directly from China via DHL to 2 locations: 300 to an Amazon.com FBA warehouse for our Amazon launch, and 1200 to our location. We’ve worked with this supplier before, but they’ve never actually shipped to an Amazon warehouse, so here’s the instructions I gave them:
We’re sending 300 to Amazon.com for an HonestFew promotion of 100–150 units to get the organic sales flowing in.
Then, 1200 to our location so that we can ship to different Amazons or online channels depending on what’s doing well for us. We’ll eat some of the shipping costs in order to stay flexible around which sales channels we use.
During production/shipping, pre-marketing for the launch is always a good idea.
Tip: never pay to make something before you know how you’re going to sell it.
My marketing efforts so far are focused on Instagram:
I’m building an Instagram audience so that when we launch the product, I can present it to them at a discount. Instagram is where mainstream consumer attention is, at the time of writing. Older generations are adopting it (it’s having it’s “mom” moment right now), and so that’s where my efforts are. The customers for this product are men, 25–55, pay attention to how they dress, and spend some disposable income on gadgets, tech, fashion, and grooming products. 3 weeks ago, I had 0 followers. Now, I have over 500. When I use Instagram, I look for content that my target audience would like, I screenshot it, I repost with credit, and use a few hashtags here and there. I could be doing better on the hashtags.
But posting well-curated pictures doesn’t guarantee followers. I pair Instagram with Instagress, which is software that can manage your account activity for you: liking, commenting, and following on your behalf. The photos that you like, comment, and follow for are based on a set of hashtags that I chose. I want to target people who are exhibiting buying behavior with similar items, so I chose to engage people using hashtags like #newsuit #newwallet #newpocketsquare #newcufflinks #suitup #fredperry (a brand with a similar customer base to ours), and the names of some mens fashion subscription boxes, because any guy who’s taking a picture of his monthly box of menwear stuff has shown not just general interest but BUYING behavior in our market.
The plan is to convert these followers into paying customers when the product launches. I’ll drive traffic to our Amazon listing via Instagram posts, contests, giveaways, and direct messaging on Instagram.
In addition, we’ll use HonestFew to start getting organic sales on Amazon and grow that sales channel.
And you’re going to see it all. Live.
See you next week.