How I Develop and Launch Dozens of New Products a Year
Last spring, I started on a goal of trying to recreate a million dollar brand within a year. Part of my strategy was to try and launch as many products as possible and as quickly as possible. In this post I'll detail exactly how I go about launching dozens of products a year, on my own.
Recently Mike shared his product launch strategy which a lot of listeners and readers have taken an interest in. Mike's strategy focused a lot on the marketing side of things: how to take your product from zero sales to a New Best Seller on Amazon. Combined with Mike's marketing approach and this development strategy you can consistently launch best selling products very quickly.
My Strategy Overview
- Develop the product based on an MOQ
- Have a photographer shoot photographs in China (prepare my listing)
- Upon completion of the order, ship one carton to FBA via air shipping
- Enable Sponsored Ads, Product Placement Ads, and Headline Ads
- Ship the rest via sea shipping
- Upon 25% sell-out, place a re-order, aiming to be able to ship full container (either consolidated products or single products)
My big goal during my product development and launch is to launch and validate a product as cheaply as possible.
If you're following my million-dollar journey, you know that I am trying to launch dozens of products with the goal of finding 20% home run products, 60% mediocore products, and 20% other products that might be unsuccessful. Because of the vast number of products I'm developing, I can't afford to invest $20,000 or more into testing a product (my suspicion is that most readers of this blog can't either). My goal is to get each product landed for $5,000 or less.
When I'm researching products I am always looking, above and beyond anything else, ways that I can differentiate a product. In our free guide How to Find the Perfect Product to Import from China and Sell Online, I detail a lot of the ways I am looking to differentiate products. If I can't offer any ways to improve the product either from actually physically improving the product or either from a marketing/logistics standpoint, then it's normally a deal breaker for me.
Occasionally, after I've built a relationship with a supplier I will find out that they're developing a relatively unique product for another client who doesn't sell online and/or who sells in another country. These are the dream scenarios where I can get a unique product without doing any real development. I normally only discover these products after I've formed a relationship with a supplier though.
My First Order
When it comes time to place my first order I am always trying to get as few of units as possible on the first order. I am trying to launch as many products as possible as quickly as possible so it's important that I don't have a lot of money tied up in products until I've been able to prove those products first.
Minimum Order Quantities (MOQ) are always the thing I negotiate the most, not price. Price tends to be a lot more firm in today's China. Assuming my supplier has a reasonable MOQ (meaning it works out to $5000 or less for the entire order) I always try to get 25 to 50% of this quoted amount.
Because my first order is so small, it's often difficult to order packaging and other marketing materials. Most printed materials like boxes and inserts have MOQs of around 500 pieces. I employ a few different hacks:
- I order color boxes and have my supplier keep the excess until the next order
- I order branded but product agnostic boxes and use them across multiple products
- I use white boxes with stickers
I'm ordering ultra-small on my first orders but my aim is to be shipping full containers on my second orders, which I'll get into more detail below.
Sending My First Products to Amazon via Air (and the Rest via Sea)
When my order is nearing completion, I always have one master carton (a master carton has many inner cartons/products inside) sent via air to Amazon and the rest via sea. I use an FBA prep/shipping service in Shenzhen that gets some very cheap shipping rates (unfortunately they're almost exclusively Chinese only). I air ship in a few items first for a few reasons:
- To make sure there's no catastrophic issues with my products/shipments
- Accumulate keyword traffic reports from my automatic Sponsored Product campaigns
- Build traction for my products
My main goal is to catch any catastrophic product issues on a few items before sending in a larger order. For example, things like an incorrect bar code or some critical product flaw on an item (customers will let you know if there's a serious flaw on a product, like missing parts, very quickly).
Having pallets of products sent into Amazon that have significant problems is expensive to fix and can also endanger your account. Sending a few pieces of a new product into Amazon before the bulk of my shipment is a strategy I've been using for years and one that many other people I've spoken to also do.
By having a few products actually at an FBA warehouse, I can also turn on Sponsored Product Ads and start accumulating some keyword data for my products from my automatic campaigns. When my larger sea shipment comes I can have that data reviewed and really refine my campaign to have my campaigns better optimized.
Finally, I build traction for my products. It seems to take about a month to build any traction on Amazon, which is also roughly the time in between when my air shipment arrives to FBA and when my sea shipment arrives. If all goes as planned my products start to have some serious sales velocity as soon as the bulk of my products arrive.
Planning My Sea Shipments to Save Maximum Money
My goal when developing products is to ensure that by my second order with a supplier I am able to fill an entire container with products from that supplier. Shipping LCL (less than container load) or, worse, air shipping, is incredibly expensive and unreliable. Often for a home run product I am not able to fill an entire container with that product unless I order 6+ months of inventory, which I never want to do. This is why I am normally developing multiple products with a supplier at the same time. So, for example, if I think that I will only ever be able to fill 25% of a container with one product, then I try to develop 4 products with that supplier.
I also try to plan my product selection and ordering so that my products go to one Amazon Fulfillment Center (FC) instead of many (without turning on inventory placement) so that I can ship direct to Amazon instead of using a 3PL in between. Most importantly, this means not combining oversize and standard size items (which will almost always go to different warehouses) and not having products require any prep (which again will result in them going to odd FCs). I also try to order as many products at the same time as possible so that even with split inventory I can have a shipment large enough to warrant a full container load direct to Amazon.
As soon as my supplier has a fully complete product, packaging et al, I have it professionally photographed. I have a local photographer in China who does amazing product photography for about $50 per product (which includes about a dozen shots and touch up). The price is amazing, but more importantly it saves me the time on having it done locally. Normally my photos are done by the time my air shipped products arrive at Amazon and sometimes my photos are done shortly after (and always before my sea shipment is checked in).
Before I had the luxury of a local Chinese photographer, I would have my supplier take these photographs if I trust their skills enough (this is rare). When I didn't trust their skillset I would simply have one of the products I air shipped to Amazon FBA shipped, via a multi-channel fulfillment order, to an American product photography company. The big downside is I've yet to find an American product photography company that doesn't take a minimum of 2-3 weeks (plus transit time to get the products).
Planning My Re-Orders
When I have even a sniff of my products appearing to be successful, I try to get a second order sent to my supplier. Normally I aim to re-order by the time my products have 25% sold out or so.
Unfortunately, as it normally takes anywhere from 3-4 months from the time I place an order with a supplier to the time they arrive at FBA, my successful products will almost always be out of stock for a certain period of time, often weeks. I've personally never had the problem many people report about not being able to regain rankings once a product goes out of stock, and my products being out of stock is a consequence I'm willing to endure in order to be able to launch a lot of products quickly.
Overall, my goal when launching products is to try and launch a lot of products as quickly and cheaply as possible. I tend to have a 60/20/20 philosophy: I expect 60% of my products will be average performing products, 20% will be home run products, and 20% will be unsuccessful that I never re-order.
Hey Dave, that all sounds pretty solid. I was going to say ‘but how do you know you aren’t going to have customer issues with the product that lead to negative feedback / closing of the listing? ‘ but I guess you can get around that by sending a small MOQ first up to test the waters. How small you talking? I’d have thought less than 500 pcs.
Having said that, it’s come to my attention recently that the Amazon policy police are much stricter now with soft-closing listings for as little as 5 returns in 100 sales where customers provided any kind of feedback that was assessed as negative. This presents as a big risk when placing a 500-1000 unit order. Just ask me, I found this out the hard way!!
Yep – that’s why I always go trial order – > MOQ – > Large order. Hopefully any serious flaws are detected in the trial order or at worst during the MOQ stages before a huge amount of money is invested.
For my MOQs it’s normally around $2500-5000 (pieces are kind of irrelevant as 500 $0.01 items and 500 $100 items are two different equations).
Hey guys, what are your thoughts on the Hong Kong Houseware Fair?
I’ve never been as it’s not my niche, but if it is your niche, normally the specialized shows like this are better than the ‘one size fits all’ shows like the Canton Fair or Mega Show.
Hey guys i have a unique situation that I could use your insight on.
I’m trying to source a newer, rarer product that not every factory has the mold for (yet). My supplier right now is new to this mold, I can tell as my first production had a few minor flaws. I’m not sure if they will be able to get it right in time for my business to not collapse due to returns and bad reviews.
My competitor is sourcing from a trading company. My competitor’s products are perfect, none of the minor flaws my product has, clearly their supplier has it figured out. But the trading co premium is huge, like almost 25%.
My question is, how would you go about finding the supplier that the trading co. uses?
I’m thinking of visiting the main hub town where all the suppliers for my product are located but was wondering if there was some simpler way (maybe I could ask the trading co and get t he info somehow)
There’s no easy way to backwards engineer who they’re using unless there’s some factory documentation on your packing lists, packaging, etc. You could also try using import records to see who your competitor is using but I suspect you may have already done that. Going to the town probably won’t be of huge help if you have no idea where to look. If it was me I’d probably be frank with the trading company and try to negotiate the prices down – most take a 5-10% commission. If they trust you enough, they’ll even take you to the factory to try and solve the qc issues there.
Thanks Dave. i didn’t feel like paying for a Panjiva or imptgenius acct so I just googled them and i found their supplier. Then i talked to the trading company and they said it’s the trading company’s factory so they’re like a hybrid i guess. Lots of webs of complicated relationships as i found my factory also has collaborated with some trading companies as well as produced for that trading company.
As a small FBA startup i really value the flexibility and extra mile my supplier gives, they give me things like decreased MOQs for colors that not all factories will agree to provide, and the CEO is just on skype one message away. So i’ll stick with them and build the relationship.
Yep – most suppliers in China are some hybrid model.
Hi Dave – great article as always!
Can you breakdown your 60/20/20 ratio a bit more? I think it makes complete sense but I’m wondering what you broadly classify as an average performer vs a dud. I’d imagine it can vary across product lines and categories but I’m curious as to how you sort those. Thanks!
Generally, I’d consider anything of $10k a month a homerun and anything below $2500 a dud. This is very broadly speaking though and there’s a lot of individual factors that come into play (i.e. MOQ size)