Will Mitchell from StartupBros.com did an AMA on Reddit yesterday and below is the information I found most helpful.
It seems a lot of people want to start an import business but have quite tight budgets – realistically, how viable do you think it is to start an import business with only $5k and no plans to fly to China?
Far beyond realistic my man! I’m BIG on minimizing risk and applying the lean startup methodology to any venture. Our process requires about $100 minimum to get started, but I recommend $250. With $250, you can get your first set of 5-10 samples in the door and get the ball rolling. Obviously, the higher your bankroll and risk tolerance – the quicker your business can ultimately grow. But we’ve had clients that start with $50 and hit $100k in sales within 3-months. It’s not at all unrealistic, you just need to know what you’re doing. This business can be expensive because so many people make the same few mistakes when starting out…
Its true you can get some samples for $100 – $250, but I’ve found that the real investment comes in marketing your product. Without 15+ reviews I find its a grind to get any sort of organic sales on your initial sample order. I’ve seen a lot of folks on here saying its more realistic to start with a couple thousand with most of that set aside for marketing and using things like Zonblast and bidding aggressively with PPC.
It’s all about how you grow. There are many things you can do in between the sample stage and marketing a new brand and a new product. I’d never recommend a client to make that jump so soon (and we make it very clear that differentiation of your product and creating a brand is much tougher). It’s all about starting simple-stupid and building more complexity into it as you go. Then it isn’t overwhelming…
I’d say my #1 job for StartupBros clients is to help them work on the right things at the right time. You can really Google yourself into an abyss with importing/FBA/ecommerce/arbitrage – especially if you’re not very clear on the differences before going in. There’s a lot of overlap, and it can be confusing (took me 3-5 years to fully grasp).
For product reviews, we actually have a very cool process – we have a private forum for our clients, and they sell each other their products at cost in exchange for reviews, feedback, help, etc. You can also do this with friends/family/your own network – just set up an Amazon coupon to sell the product at cost (of course set your product limits). There’s lots of little tricks (such as inserting keyword data into the URL you give those pseudo-buyers), but that’s the concept…
Just last week, we had a client take a brand new product (page 16) and after 5 of these pseudo-sales, he was on page 1 (8th position) for his main keyword. He sold his 30 remaining units to real customers within a few days.
Also – I haven’t used Zonblast. I have some clients who have been mentioning it lately, so it could be a useful tool – but I couldn’t say either way without trying it. I will say that I’ve seen several hundred of these ‘must-have’ tools come and go – and they are usually only useful to people who really understand these business principles/concepts first. They never help new people figure it out, you have to have the context to apply it to.
I’ve heard of amazon buying private label businesses. Do you have any idea what kind of metrics they are looking for or do you have any info from people who have sold their business to amazon?
I actually haven’t heard of this, I’ll definitely check it out. I know Amazon does their own private label products sometimes, but it’s usually been in short runs up until now. I know one person who sold Diapers.com and Soap.com to Amazon back in 2011, but that was a major deal ($545mm). I have heard of Amazon contacting suppliers to become a distributor, but haven’t heard of any straight up acquisitions. If Amazon was to acquire private label brands – I’d imagine they would be very focused on intangible assets (brand equity, customer list, etc) than anything they could not integrate directly into their system (your website, warehouse, employees, processes, etc)
Is there a surefire way to know if your product will sell? For example I found a product that has 294 reviews and reciently people are leaving 1-2 reviews a day or so. So if on average 1 out of 100 people leave reviews would it be adequate to assume this product is selling around 700 units a week? Basically the question is how do you determine if a product will sell? Looking at sales rank, reviews, etc? Thanks!!
Anybody who tells you there is a sure-fire way to find profitable product is not being honest. It’s like saying ‘How do I know if this startup idea will work’ – there’s no way to know without taking some risks and making shit happen. I will tell you that in the process we’ve developed for our clients, none of the metrics you mentioned play any factor at all. We cover our process in-depth (and even give out our client product research workbook for free) during our free training webinars – definitely worth watching a replay of that if you’re confused on product research (but I won’t link of course). I’m all about minimizing risks and the lean startup methodology – so I recommend clients start with what we call the sample-selling-process. Buying and selling a sample is what separate the winners from the losers in this business.
Any advice on haggling your first order prices?
For your samples, I would not recommend haggling at all. Big buyers are used to placing sample orders and just waiting for them to arrive. You can definitely make yourself seem like a small buyer by trying to negotiate on that first sample, or asking for tracking info the day after you order, etc. So be careful with that… Sample orders usually cost $40-150, and our clients typically make 80-200% of their money back on that first sample order (obviously this varies greatly if they’re giving away products for reviews, and their business strategy in general)
How about negotiating one the first bulk purchase of 1,000+ units? I’m working on this now and I want to squeeze as much of their margin as possible but I also don’t want to offend them or harm the relationship.
Negotiation is tough, it’s abstract, off the cuff, and very much based on the parties involved. One hack that we’ve come up with for our clients is to NEVER be the boss during negotiations. You always want to be a secretary, purchasing agent, etc. This will give you a lot of flexibility to leave the table (Ok, I’ll ask my boss and let you know tomorrow), or even be assertive without damaging the relationship (I know we’re friends, but my boss is saying these prices are just too high…) That’s one of our client’s favorites, but like I said – negotiation is an abstract and situational art. We have 6 or 7 different negotiation hacks, and an entire framework of communicating with suppliers – and still get tons of questions about it. It’s best to just get in there and start doing it.