- Patrick Muir
- On May 25, 2015
- 0 Comments
In January I detailed the strategy I was going to following for the $25K Challenge:
- Resell inventory from local manufacturers
- Import an existing product from China
- Create or license a brand
- Invent a new product
I successfully resold several products from local manufacturers – Barney Butter and Newman’s Own Organic Dried Fruit. The key lesson I learned was that it is difficult to make money reselling product because someone could simply resell the same item for slightly cheaper. Reselling products is a very competitive because it’s easy to do and therefore lots of people do it.
Reselling was also time consuming. I could not get my suppliers to create custom packaging sizes and label properly for Amazon. These companies operate on thin margins and are built to sell large quantities of product to retailers. It doesn’t make sense for these companies to do anything custom because it’s too expensive for them. So instead, I had to repackage product and label these products. It was time consuming and would prevent success of moving to more profitable and sustainable strategies.
But reselling product was helpful in learning how the Amazon system works. I now have a much better understanding of how the FBA process works. I know this learning will be helpful in eliminating mistakes as I scale the process.
Besides reselling product, I’ve also imported existing products from Amazon – soap molds. I choose soap molds because they were cheap to import, light weight, and I could still make money by air freight rather than ship by container. The margin percentage I make on soap molds is 4x the margin percentage I make on reselling product.
I created my own brand – Sapone – to sell my soap molds. I was no longer competiting against other resellers, but competiting against other brands. I used SnagShout to seed reviews and get a five star rating on each soap mold product.
This process was also a learning experience. I now understand how to communicate with suppliers in China and get suppliers to package and label products properly for Amazon. Product that is packaged and labeled properly saves time from doing it myself.
It’s now time to ramp up my learning and vastly increase my investment. To do this I will have to import containers full of product. This new challenge is tricky. On my trip to China I attempted to visit with freight forwarding companies, but had no confidence I was talking to a company that could deliver. Instead I received some recommendations and I’ve chosen Shapiro as my freight forwarding partner to import containers full of product. I’m not endorsing Shapiro yet, but my experience so far has been impressive. I feel like my hand is being held through this process.
I’m also starting to build a custom licensed product. This also requires importing from China.
The $25K Challenge is going to look very different in the coming months as far more money is invested and the complexity is increased. But I’m hopeful that what I’ve learned so far will pay off.