The majority of questions I receive is on the topic of “How do I get started?” or “What can I do with this money?” or “How do I invest?” My reply to everyone is usually, follow your passion. If you don’t know what that is yet, think of something that you like doing, something that you like to buy, or a hobby that interests you. Any topic of interest can find a way to get behind a product or service that you can do yourself. Doing something that you love and is of interest to you is the best job in the world; in fact it’s not even a job anymore when you love what you do. For me, it was my passion of cars and modifying them to go faster.
1.) Brand yourself from day one. For businesses starting out, if you have not developed a brand yet and need a good graphic designer to bring your idea to life, the number one recommendation I can give is: 99 Designs. You have 1000’s of designers all over the world fighting to give you the best design, choose from 1000’s of logos all designed to your liking. After you pick a logo, you can even get a custom website designed.
2.) Hire a professional coder. If you think it’s expensive to hire a professional, wait until you hire an amateur! This is the guy that is called your “web guy.” He is the guy that will make your website function and running smoothly.
3.) Find a manufacture, this is the hard part. Finding the right manufacture for your product. Avoid trading companies and avoid middlemen. Ask very specific questions like: “What kind of machines do you have in house?” or “Do you make this in-house?” or “How many employees do you have?” It is imperative that you find the source to avoid costly mark ups. I do not advise taking on manufacturing or producing goods in-house, leave this to big manufactures, you are the e-commerce part. Your time is needed to sell, not make! Finding a manufacturer
is taught in the academy.
4.) Always buy in bulk, but before you do, you must do a competitive market analysis. Analyze your competition, see what price points they are selling at, and compare to your cost and adjust your margins. The better you build your brand, the bigger you look, the more you can sell your products for. You may be able to charge double what the competitor charges because you are backed by a known brand or you have better packaging.
5.) Aim for healthy margins. You should always be doubling your money when you are the manufacture. On some parts we make for $1, we sell for $20, that’s a 2000% mark up! Some parts have 5x mark up, and some parts have 1x mark up. Mark up is your cost times a number. So if its 1x mark up, its 100% mark up. 2x is 200% 10x is 1000% mark up. So $1 cost selling for $10 is 1000% mark up. It all depends on your market analysis. A good market up is 4x cost, this way you can wholesale your parts at 30-40% and still be doubling your money.
6.) Remember you want to be a manufacture, not a reseller. When you a reseller of goods, you’re lucky if you get 30% margins. Most companies will sell to you at 30% off or even less, this is NOT the type of e-commerce store you want to be. You can do both, but the money is in building a brand that other resellers can sell your product. 80% of my business is in manufacturing, while the other 20% is in reselling.
7.) Wholesaling. Since you are one with the manufacture and you have found the source, you can also wholesale your products to people that have not yet found the source or are looking for a manufacture just as you were.
8.) Packaging is also key. Presentation is how your products will stand out from the rest. Take pics of your product in use or lifestyle photos. Make sure your products are professionally photoshopped. You MUST Photoshop your pictures! Take the extra time to write thorough descriptions and details and combine with great pictures.
9.) It is very risky to buy in bulk, but this is where it will pay off, the bigger the risk, the bigger the reward! You may have to buy stock, that you think will sit on the shelf for 6 months to a year, but later down the road, when you have done this multiple times, you will see the return.
10.) It is always more lucrative to stock products yourself, than to have a fulfillment center do it for you. You may need to hire friends and family to help you package and ship your goods, but this is all part of the hustle. I remember having my friends come over and taking trips to the post office and FedEx from my parent’s basement 10 years ago.
11.) Use your house or garage is your home office until you have no choice to expand. There was a time, when my entire 6 bedroom house was filled with inventory, before I expanded to my first warehouse. When that warehouse was filled to the brim, fitting 5 employees in a 200 sq ft office, it was time to expand again. Expand only when needed, and you will have less risk of overhead.