Becoming a Seller

Matt

Administrator
Staff member
Reselling is quite a growing area for points and miles aficionados. It's something that I have flirted with once or twice as an amature, but never really stuck for me. Based on my knowledge of reselling, the learning curve tends to be using eBay initially, and manually selling each product, this then evolves into using a fulfillment center in order to scale.

The reason I never jumped headfirst into Reselling is that even at scale I don't love the margins, and I don't love the risks that come with having a low margin product. For example, if you sell technology then a product change (EG a new version of a laptop) can force you to firesale your product, and if you have scaled inventory up, this could be a big hit.

However, I like aspects of reselling, such as:
  • The entrepreneurial nature of it.
  • The knowledge of supply/demand and pricing.
  • Learning about the supply chain.
  • Understanding a market segment.
Becoming a seller

I wonder if we can take these reseller skills and leverage the margins by selling our own product instead? The evolution of that concept would be:

Stage 1 Sell directly (akin to the eBay days)
Stage 2 Outsource to fulfillment (can FBA, Sears, et al fulfill a product we build?)
Stage 3 Introduce Affiliate sales

This process has a ramp up time, Stage 1 is more labor intensive than reselling, because you are both creating a product and slowly selling it. Higher margins offset this, but it remains a time of 'growth'. However, once you reach Stage 2 you are in a place where you are taking hands off the operation, and it becomes more self maintaining. Stage 3 is a great place, as you start to 'play the bank' and let others do the work for a cut of the profit.

Implementation
A great choice for this might be a book, as you only 'manufacture' once. An online course has similar scope. However both do have a considerable front load in terms of effort. Instead, I'm considering selling a product that could be made to order as a test run. It's actually a cosmetic product, and I'm going to check into any regulations required before I do.

The advantage of a cosmetic product is that it is small (easy to store inventory, easy to ship) it has incredible markup, and low start up costs. I think we could build the company for less than $100, but I might want to put some money into the project in order to acquire some branding and professional website images.

Challenges
Customer acquisition - one does not simply build a website and make sales. SEO is required, and paid advertising. An alternative to paying upfront is to pay on success basis (build a site and offer affiliate bonuses to established sites in a niche).

Conclusion
I like this concept as it has very low startup costs, and if built as a brand it can scale. While I intend to start out with a product I want something that can grow beyond that should a customer base be developed. I'm putting this on my medium term goal radar, which means I'd like to have it rolled out in 6 months.

Most importantly, I think it is critical that people who enjoy the points and miles game are constantly thinking for the next big thing, and perhaps that doesn't involve points and miles... have any of you tried something like this before?
 
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InstinctX

Level 2 Member
A great resource for those that are looking into startup's, which may apply is: Steve Blank's "The Startup Owner's Manual." He also has a website with a slew of resources, including SEO's. He also has a wide range of videos from his workshops (http://steveblank.com)...many of them are on slideshare and can be downloaded & loaded to iTunes.

The big trend is towards Lean Startup -- it's very similar to the agile software development methodology that many companies are now using to get a minimal viable product out quickly.

Many local universities and colleges host "Startup / Entrepreneurial" series (weekly lectures) that are FREE & open to the public -- these are really geared for their MBA students; they start at the beginning of fall and spring semesters.

Example of a workshop series offered by GWU (http://entrepreneurship.research.gwu.edu/workshops-seminars). Just google a nearby college + entrepreneurship.

Definitely look into the Business Model Canvas (various resources on how to use this and with downloadable versions: http://steveblank.com/tools-and-blogs-for-entrepreneurs/#startup-tools)... it helps you think through business key drivers.
  1. Customer Segments: Who are the customers? What do they think? See? Feel? Do?
  2. Value Propositions: What’s compelling about the proposition? Why do customers buy, use?
  3. Channels: How are these propositions promoted, sold and delivered? Why? Is it working?
  4. Customer Relationships: How do you interact with the customer through their ‘journey’?
  5. Revenue Streams: How does the business earn revenue from the value propositions?
  6. Key Activities: What uniquely strategic things does the business do to deliver its proposition?
  7. Key Resources: What unique strategic assets must the business have to compete?
  8. Key Partnerships: What can the company not do so it can focus on its Key Activities?
  9. Cost Structure: What are the business’ major cost drivers? How are they linked to revenue
Additionally, SBA.org and SCORE.org offer resources for starting / launching that (company) idea / product...

In addition, if you're seeking to team up with someone with similar ideas or a partner, the rage right now is founder "dating" sites, like FounderDating, Co-FoundersLab and several others. (http://www.inc.com/bill-murphy-jr/50-ways-to-find-co-founders.html)
 
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InstinctX

Level 2 Member
The hardest part for me is coming up with a product idea that doesn't already exist. I thought about a Park n Pay mobile app (using your smartphone when you enter the parking garage at a mall (as many now have unmanned exits where you have to prepay at one of the payment booths -- this would help those that lose their parking ticket) ...but was disappointed after finding there are tons of apps and solutions already exist.

I'm struck with how simple ideas turned into huge money makers. (my SO is into Bravo's the Real Housewives ... srsly, I just happen to watch!) Bethany Frankel "invented" the Skinny Girl margarita...low cal instant margarita. She has since sold it to Boone.. and now there are now a dozen+ Skinny Girl cocktails. Before Skinny Girl was widely available, my SO would make them with Crystal light lemonade...
 

Matt

Administrator
Staff member
The hardest part for me is coming up with a product idea that doesn't already exist. I thought about a Park n Pay mobile app (using your smartphone when you enter the parking garage at a mall (as many now have unmanned exits where you have to prepay at one of the payment booths -- this would help those that lose their parking ticket) ...but was disappointed after finding there are tons of apps and solutions already exist.

I'm struck with how simple ideas turned into huge money makers. (my SO is into Bravo's the Real Housewives ... srsly, I just happen to watch!) Bethany Frankel "invented" the Skinny Girl margarita...low cal instant margarita. She has since sold it to Boone.. and now there are now a dozen+ Skinny Girl cocktails. Before Skinny Girl was widely available, my SO would make them with Crystal light lemonade...
It doesn't have to be a product that doesn't exist, it just needs to be successful... identifying niche, getting a strong brand and getting that in front of them is key.
 

Haley

I am not a robot
Cosmetics is a very difficult area to stand out from the crowd. It is, as you noted, an easy, low cost product type. So you have tons of people all doing the same thing.

I helped my daughter start-up and run a franken polish business five years ago. At that time it was pretty much an underground type fad, no easy sources for materials and no main stream marketed 'kits' or anything like that. We hooked into a blogger network (there are about a million blogs about nail polish) and she did well. Her goal was to make enough money to buy a specific thing. She did and then we shut down. It was much more work than she thought it would be, which I already knew.
 
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MickiSue

Level 2 Member
Supporter
What Haley said. You name it, and there is someone making and selling cosmetics. Search etsy for "skincare" and...“skincare” We found 6,897 items!

A blog that first gets hits from likely buyers, and eventually links to your product, might work. I eat, roughly, a Paleo diet, and read a couple of blogs with recipes for when I really need cookies, etc. One is an RN working from home and selling both essential oils and items made with essential oils on her etsy page.

FWIW, I doubt that etsy sellers pay much attention, if any, to licensing laws.
 

Matt

Administrator
Staff member
Cosmetics is a very difficult area to stand out from the crowd. It is, as you noted, an easy, low cost product type. So you have tons of people all doing the same thing.
But I see that as an opportunity. Because there is such a low cost/ mass market for these things it comes down to packaging and marketing. As such, I think with a strong campaign you can turn a nameless product into a brand with relative ease. The challenge of customer acquisition will come to the sales funnel.

Starting out with SEO and Ads and moving through having the right look and feel to the site, along with a good quality sales processor.

I really think it is do-able. But before I proceed I may want to think more about how to turn it to full (or almost full) automation quicker than originally planned as I don't really have time to be managing it directly.
 

Haley

I am not a robot
Find the influencers.

I'd contact Birchbox, Ipsy, and so on. The subscribtion box thing is going main stream in a big way and might have opportunities.
 
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