Lessons From Years of Building E-com Brands: What Would I Do Differently Knowing What I Know Now?
As some of you may know, I built a private label art supplies brand in 2015 and recently sold it after 2.5 years of sales, after reaching 7 figures in annual sales.
Since then, many sellers asked me what I would do differently if I had to start it all over again.
The answer is a lot! Starting out I didn’t know anything. I was learning it all on the fly. I made tons of mistakes. But I did more right than wrong and got better over the years which allowed me the chance to stay alive and even thrive.
This article is about giving you what I didn’t have then, a battle-tested and honest road-map of what’s most important to do in the beginning of your private label or E-commerce journey.
Stage 1: Product Research
Nothing you will ever do in the lifetime of your business will be as important as the product research and selection process.
It’s hard to polish a turd, and on the flip side, it’s really fun to launch and market great, unique, or simply in demand products.
I don’t care if the product is big or small, light or heavy, has global brand competition or not. What I care about is:
• There’s strong demand and sales for products like this already (shout out www.algopix.com).
• The google trends graphs for the most important keywords are going up, or at the very least are stable. If they’re going down, get out.
• There’s no potential for intellectual property issues. A good place to start is with common sense. If the product looks like it belongs on QVC with a live salesman demonstrating it, you probably want to check for patents (Can be done at $300 and sometimes less). If It’s a towel and you just chose a cool design for it, you’ll probably be alright (Disclaimer: I’m not a lawyer and this isn’t legal advice. My awesome IP lawyer is www.arelaw.com/professional/cmacedo and he ain’t cheap).
• Good profit margins based on my target retail price (Preferably at least 30% profit from the gross sales price but I usually aim for higher because there’s marketing, returns, storage and admin costs to count for).
• The ability for me to make this product better than what’s already out there or create a better experience for the customers (Start by checking all the negative reviews for similar products and make yours better based on those complaints if possible).
• Bonus points for products that are connected to people’s passion or to a deep or serious need, and of course for products that run out and need to be purchased again and again (Not just consumables).
•Be careful with seasonal products such as things only sold in the summer or winter. They can be great of course, but just know what you’re getting yourself into and plan accordingly.
If you find a product that meets all of the above criteria, you can move on to the next stage
Stage 2: Product Design & Sourcing
Now that you’ve decided what product(s) you want to make, it’s time for the design and manufacturing stages:
For designs, as a general rule, I stay away from fiverr. Not for me. I go to Upwork or sometimes 99designs and find the right skill for my budget. I was always able to find great help at whatever my budget was. Even when it was very low.
I always purchased my UPCs from www.nationwidebarcode.com
Since design has less critical pit falls in it, I’ll focus on sourcing, and specifically sourcing from China, where I feel like there’s a lot to talk about.
I use Alibaba to source products and my personal process of searching for and choosing suppliers is as follows:
• Usually I look for suppliers, not products. Since I’m doing OEM (product modification) anyway, I’m looking for any supplier in my field.
• I make sure they’re “Gold Suppliers” and that they accept Trade Assurance (I had to use that twice and it worked well for me).
• I make the biggest list of suppliers I can (usually around 30–60) and I sort them by Gold Supplier years from low to high.
• I send them all my initial email and start conversations with all of them (I use a very detailed Excel sheet to track all conversations and details).
• As the conversations build with the suppliers, I learn what to ask and I get a feeling for what is true and what isn’t based on what everyone is telling me.
• I ask my top 10 choices or so to send me samples to my address in China (A sample center that receives, consolidates and ships samples for western companies) and I have all the samples sent to me in NYC.
• Once I get the samples I inspect the quality and start price / quantity talks with the suppliers I’m interested in.
• Once I chose a supplier I’ll sign the Proforma Invoice, pay 30% and wait for production.
• With new suppliers I always do the first 1 or 2 transactions through Trade Assurance but after that I move it to wire transfers unless they give me a reason to worry.
Important note: If you’re sourcing a product that you’re going to make changes to (OEM / advanced OEM) then you need to understand how things work on the manufacturers / supplier’s side so that you can make the best decisions.
What’s important to note is that the suppliers typically work on thin margins. The Chinese government offers VAT rebates to the exporters of record in China (your supplier) to encourage exports. The rebates range from about 3% to 17%.
The supplier only get’s this money a month or so after the goods have left China, and they need to pay some of that for things like FOB and other expenses. Because of that, suppliers often add a little bit (and sometimes a lot) of a cushion on the product prices so that they can make a little money on the front end too.
The reason I say all of this is because as westerners dealing with China, many of us tend to push the envelope with what we want from them and at what price.
Manufacturing OEM products can be a big job with a lot of moving parts. With the more complicated stuff, often times suppliers won’t be willing to do all that work unless they feel comfortable that it’ll be worth their time.
For that reason, while I always strive for the best prices for me, I also always ask my suppliers if they are making enough money themselves on the prices that they’re quoting me. Usually they would be happy that I just asked and on 2 occasions that made all the difference in getting exactly what I wanted.
Stage 3: Community Building
Community building is the process of building a community of your potential customers around your product or brand on social media and on your website.
I start the community building at the same time as I start the product design and production because they can and should work hand in hand. And also because I want to have a community to launch my products to when they are ready.
If you already have a brand or products out there don’t worry, there’s never a bad time to start.
When building a community at the same time as the product I ask all the influencers and followers to help design the product, it’s features and it’s look so that ultimately, I’ll be making exactly what they want to buy.
I’ll also be drawing them into my brand with their participation, and I’ll also be collecting the leads and getting ready to market to them towards the pre-launch and launch phase.
Stage 4: The Launch
About a month before a product is ready to launch I like to start posting and emailing all kinds of teasers to my audience and build anticipation (and scarcity). Close to the launch date I’ll send a discount offer to those lists and I’ll launch.
Nowadays I feel like it’s important to win on Amazon so I funnel my traffic to Amazon through a landing page because I want to get the boost in sales on amazon but I don’t want to hurt that listing’s conversation rate which is important for its ranking there.
Typically, I’ll also incorporate a giveaway into the launch so that I’ll really super charge the sales on Amazon in the beginning to send all the right signals to their algorithms but I will never use a giveaway service for that. That’s a can of worms I stay away from. What I will do is use a “Facebook offer” ad to target real and relevant shoppers on FB and offer them the discount codes. This is cheap and very effective.
A Few Random Honorable Mentions:
- www.flexport.com was a great Freight Forwarder to me.
- Rakuten super logistics was a great additional 3PL for me. Although if your products are big and you happen to need an additional 3PL, you’re probably better off with www.redstagfulfillment.com
- Speaking of big products. If your products are big and especially if they cost around $100 and over you should be prepared with a reverse engineering strategy (shout out www.tradeportusa.com).
- I wish I would’ve launched in Amazon Europe sooner. I waited until almost 2 years of sales before I did that only to find out it wasn’t hard at all and generated great sales. I started by only storing in the UK and selling in all EU marketplaces.
- Thank you Brian R Johnson for giving me those PPC consultations in early 2016 (I wonder if you remember). They really gave me a good foundation that allowed me to build my own PPC skills to a decent level.
These guidelines are a good place to start your journey but every situation is unique so post your questions or feedback in the comment section below or send me a message on LinkedIn (www.linkedin.com/in/moshe-hurwitz-9b631316/) and please like or share this article if enjoyed it.
Enjoy the journey,