How to Create a Physical Product and Sell It Online: Case Study

Time for the launch of a brand new case study: creating a product line from scratch and selling it online.

This is the intro to my new case study and I will be detailing the process from the start as things happen.

I hope this case study will give you guys a good window into the whole process of product creation.

You’ll have to follow along with this case study to see how things pan out over time.

I have every confidence this new project is going to be a big success. But, anything can happen and I’ll document both my success and my failures here.

But I’m hoping for success.

Intro to Creating Your Own Product Line & Branding It

This is one case study I’ve been wanting to detail for a long while, but it’s taken almost a year to get the ball rolling.

I’ve been working with my brother to create a physical line of products and working out how to sell these products online. We are finally almost at the point where we can start selling them.

Creating your own product from scratch and selling it online is a complicated process. I can see WHY most internet marketers stick to the easier revenue models that don’t require as much commitment in time and resources to product.

However, the rewards of a successful product can eclipse whatever money you can earn through Adsense, Media.net, or affiliate marketing.

I’m hoping in 2017, I can shoot my month income up significantly through products.

This model of making money (product creating & eCommerce) is new for me.

I’ve played around with many different online revenue models over the years such as Adsense, Media.net, Amazon Associates, Affiliate Offers, Lead Generation, but I’ve shied away from eCommerce and product creation. I have not even tried drop shipping, which is the gentle halfway point between affiliate marketing and eCommerce.

I’m going into this model full force and planning on making it a smashing success.

I’ve already invested some serious money into this.

Over the past six months, I’ve spent over $26,000 USD on the product line (the cost of manufacturing the new products).  The next product run will probably cost me around the same (another $25,000).

This has been an exciting experience and it’s taught us a lot about how to create a product from scratch and sell it — from coming up with a product idea, finding where to manufacture the product, getting it made, then figuring out the sales platform and the distribution platform. Then of course, there is the marketing aspect which is arguably just as important as creating and sourcing a new product.

Right now, we at the ‘getting it made‘ step. We’ve already worked out the sales & distribution, so it’s just a matter of getting things set up to start selling. We are targeting many different niches with these products, so it’s not one single product, but many different products.

The biggest challenge (so far) has been to actually source the product. Most people who want to create a product opt to just use Alibaba (a sort of McDonald’s for product creation). They look at a product, get a sample, then wire the Chinese factory some money and get the final product shipping to the US (usually Amazon for Amazon FBA).

However, in our case, it was not so easy with our niche.

First of all, we wanted a legit product, no some Chinese white-labeled crap that’s the same as every other product (we are entering a very competitive niche). As such, we wanted to find a good supplier who made an awesome product. This took a lot of effort and searching on our part for months.

To actually land a deal with a legit factory, my brother had to physically contact the factory, arrange to meet them in person, and tour the factory. Even then, the factory owners did not want to take us on, due to the high demand they have selling their own products. My brother had to beg, plead, flatter and everything in between to get them to agree to make our products.

Fast forward 4 months later, and here we are. Some of the inventory has arrived and we are still waiting for more inventory to come. I expect within about a month, we should have everything ready to go.

We are actually creating an entire line of products for different categories, not just a single product. I’d say we have about 8 different products in total. Some are sourced from one factory, the others are from a different source.

The Product Problem

Creating a product or line of products is a common pursuit for internet marketers. At one point, several years ago, it was a gold mine of opportunity.

Now, that gold mine is starting to look a bit washed up.

Why? The problem is that every marketer and wannabe marketer is doing the same thing now with products and Amazon. People look at a market segment, see some glimmer of opportunity, source a product from Alibaba and flood the Amazon market with yet another white labeled product.

The problem is, this product offers exactly the same thing as EVERY OTHER product in that niche. In fact, many of these products all come from the same factory with just a new logo slapped on. There’s nothing new or innovative about these products.

Even more, the factories themselves are getting in on the game and directly releasing those products themselves onto the amazon marketplace. And why not — it makes sense. What happens when you as a re-seller try to go up against the same factories selling the product you buy from them? You lose the price war.

Trying to stand out from the competition is tough. You need some savvy marketing AND a good product now to succeed. Maybe you can make a dent by releasing white labeled products into as many different Amazon niches as you possibly can, but I suspect this strategy has a time limit — you will eventually be priced out of the market or lose to better, more innovative product competition.

If you are going to create a product to sell — especially on the Amazon marketplace, you need to focus on creating a BRAND, not a white labeled product. Even better, if your brand offers some unique twist that the competition does not.

The Launching of a New Product Line

It’s been interesting coming up with a line of products.

There were a couple choices we had:

  1. find an opportunity and create a product for an unknown niche
  2. look out our portfolio of websites and create a product in a niche we are established in.

The whole internet craze for Amazon FBA usually involves the first choice.

You look at amazon products targeting a niche (or a niche targeting amazon), try and find a market opening, and get your products manufactured (usually in China) then shipped to the Amazon warehouses and start selling on Amazon.

We opted for the second, by creating a product in a niche that we are firmly established in. The reason is pretty obvious: we can leverage our authority in the niche to sell our product. This means we can easily harness our facebook page, our newsletter, and our highly-traffic site to push our products.

Selling Our Products: The How

Once we have the product (in the process currently), we need to figure out the sales platform.

Do we try to sell on Amazon via FBA or do we try to sell via our own channel (Shopify via our own website)?r maybe a combination of both.

Or maybe a combination of both.

The answer for us is both, but at different times.

Amazon, of course, is a huge opportunity. It’s the biggest marketplace in the world and if you find success there, your sales can build up a life of their own that’s NOT dependent on your own website traffic. It’s distinct income source.

However, Amazon FBA also involves figuring out how to ship the products to the Amazon warehouse. There are also tax issues to deal with, especially if you are NOT American and do not live in the US. This involves setting up a corporate structure.

If you don’t want to pay something like a 30 percent withholding tax, you need to create an offshore US company.

There are also the considerable FBA fees you pay. You need to pay for your warehouse ‘space’ to Amazon and you will pay 8-15 percent on every sale and you pay shipping fees.

So you gain a bigger market and Amazon deals with the orders and shipping, but you pay a lot more. This means your profit margin goes way down.

On the other hand, if you choose to sell your own products from Shopify (or another self-hosting platform), you keep more money, but you deal with the hassle of taking orders and shipping them out. There are also alternative FBA options outside of Amazon. That is, you can use a different fulfillment center that will hold your inventory (just like Amazon) and ship out any orders. The price you pay is usually quite a bit lower than what Amazon charges.

The benefit here for us is that we can use an FBA service that’s very cheap, being in a cheap-labor country like Thailand. This makes this option quite attractive (and cheap).

For now, we will be using a local FBA service to handle all the orders and hold the inventory. We will be using Shopify on our own domain as the sales channel. The plan is to also start selling on Amazon, via Amazon FBA next year. But we will start with our own sales platform and gauge the sales at first.

Fortunately, we already have the infrastructure to help push sales. Our Facebook page has hundreds of thousands of followers and our website gets 4-7 thousand visitors a day. We also rank at the top of google search for every product we are selling. We can easily link to our sales page on our ranking content pages by adding our own products to our pages to drive search traffic to our sales website.

In the future when we sell on Amazon, we can change those links on our content pages on our authority site to the Amazon page, using our affiliate link. This means that instead of paying 15 percent per sale, we only pay 15% – 8.5% commission, meaning Amazon only takes 6.5 percent instead of 15, for anything bought under our own affiliate links!

Marketing the Products: The How

Marketing our product is key. Without this, the product will fail.

Fortunately, we have some good ideas kicking around on how to go about this.

It’s a huge boost having a large website in the niche and trusted reputations to help ‘back’ our product. At the very least it gives our product credibility. And we can easily refer search traffic to our store right away. We have an advantage here that ‘other’ marketers who have launched a product don’t likely have.

For example, we can market our product to our newsletter readers — I expect a good number of sales RIGHT AWAY just from this. It’s also very useful for building up Amazon reviews (when we start selling on Amazon) as you can ask your loyal newsletter readers to leave you a review on Amazon.

We can also update our ranking website content, where relevant, to point to our product pages on our store. This can help bring targeted search traffic to our actual store pages. Note that we will only do this on RELEVANT pages on our site. Both our authority site and our product store are on different domains. We want to keep our authority site ‘separate’ from our brand site. In time, we expect our brand site’s store pages to start ranking very high for those product terms (and we will bolster the new site with links from our authority site). In the short term though, we can refer targeted traffic from the established site to the new site.

The new ‘store’ site will also have a detailed content strategy as well. We are creating a lot of general ‘information’ articles — not directly related to the products (or loosely related). If we can build up or brand site to have some authority in the niche, then this is an independent revenue stream right there that does not depend on our authority site, the amazon marketplace, or anything else.

We’ve also decided to create another third website, this one an ‘Amazon’ niche site. However, this ‘niche’ site targets the same product categories that our brand site will be selling. The plan is that in 1 to 2 years, the Amazon niche site will rank for ‘review’ and ‘best’ type product category terms. We can then link to our product store OR link our product on Amazon with our own affiliate link, if we are on Amazon. This is another potential source of revenue not related to our authority site or our new brand site.

There are other marketing strategies we’ll pursue as well. Facebook Advertising and Google Adwords.

However, we also want to reach out to social influencers in the niche and send them our products to review. There are other methods we’ve considered as well to try (viral style articles, videos, etc). I’ll detail more about this in the future.

As you see, we have a pretty good idea on how to market our product. The plan is to use our internet marketing expertise to help bolster our product!

The Final Word

We have NOT yet launched our product as we are still in the process of receiving our inventory. There’s a considerable amount of ‘work’ left.

I suspect we’ll start actually selling our products in about a month or two.

Once we go live with our store, I’ll update this case study with some actual hard sales data. The first product run is going to be a test — we need to see exactly how the sales tally up. Based on that data, we can optimize things and go from there.

I’m very interested in selling our products via Amazon FBA as well, but this probably won’t be for 6 months at least. We need to start selling on our own store first and order another round of products first.

After the first few months of selling, we’ll have a good idea on how our products are doing and formulate an Amazon strategy.

I’m also interested in creating another separate product line for one of my websites as the niche is very suitable for creating and selling a product. For that potential project, however, I will go the more traditional route and source the product from China and launch on Amazon first rather than directly trying to find a factory ourselves and launching multiple products in different categories at once.

Before trying my hand at another, brand-new product category (in a completely different niche), I want to focus on the current product and get some ‘experience’ first. So it’s unlikely I’ll be starting that one for at least 6 to 8 months.

In the meantime, expect an update WHEN we officially launch our product.

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