How to Fund Your First Inventory Purchase When Launching a New Product

Case Studies From 5 Successful Ecommerce Launches

David Renteln
Aug 8, 2017 · 3 min read

Ecommerce is a fast-growing category of business. Some of the largest companies in the world are now ecommerce companies that started selling physical goods.

Here’s just a quick look at a few examples of some well-known ecommerce companies out now:

  • Amazon — The OG physical goods ecommerce company
Amazon started selling books and now has diversified into just about everything.
  • Zappos — Shoes (acq Amazon)
  • Warby Parker — Prescription Glasses
  • Harry’s Razors — Shaving (Razors)
  • Nasty Gal — Clothing
  • Dollar Shave Club — Shaving (Razors) (acq. Unilever)
  • Chubbies — Shorts
  • Bonobos — Pants (acq. Walmart)
  • Casper — Mattresses
  • Soylent — Food
  • Nature Box — Natural Foods
  • Trunk Club — Clothing (acq. Nordstrom)
  • Bulletproof — Foods

There are many pros and cons to starting a physical goods company via ecommerce. Here are a few:

Pros:

  1. Bring in revenue on day 1
  2. Manage inventory more effectively
  3. Don’t give up margin to middle men in retail

Cons:

  1. Somewhat limited initially to a tech savvy audience
  2. Requires some technical expertise to build the platform

A large issue (after acquiring customers) for companies that sell physical goods especially via ecommerce is that they usually need a certain amount of money in order to afford an MOQ (minimum order quantity) from a manufacturer. The largest and most efficient manufacturers often have the largest MOQs. The more specialized the good, the fewer manufacturers there are and the harder it is to get them to agree to make your product.


Case Studies

Below are a few brief examples around how to overcome the MOQ problem:

Produce and Test Content

Bulletproof — Dave Asprey began blogging and building a following a long time ahead of launching any products. When he finally decided to launch, he had tons of potential customers waiting.

Crowd Fund

Soylent — When I co-founded Soylent we made a compelling case on our crowdfunding video and brought in significant non-dilutive capital and gauged demand at the same time.

Launch an MVP

Zappos — Began by selling shoes online that they didn’t ever own. They gradually progressed from buying a pair of shoes from a nearby store and shipping it to a customer, to initiating direct shipments from manufacturers, to holding inventory themselves in order to become a “service company that just happens to sell shoes”.¹

Use Personal Savings

Toms Shoes — Founder Mycoskie sold his online education business for 500k which allowed him to finance and afford his first order of shoes. Although he didn’t start his company via ecommerce the challenges here were similar.

Raise Money

Harry’s — Raised 4 million pre-launch and then after hitting a backlog in the first two months went on to raise 122.5 million to buy their german manufacturer.


While there is no universal law that says you have to do all of these or in any particular order, it would likely be wise to ensure that you have a reasonable number of potential customers before you spend too much money getting a ton of product.

Good luck getting that MOQ!

David Renteln

Written by

Cofounder and former CMO of Soylent. I write about marketing, entrepreneurship, food tech and whatever else I find interesting.

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