AndyNZ
New Contributor
Hi all,
Thought i'd do a wee write up about this crazy journey of what was initially a side hustle stemming from me being a tight arse, to a business which makes more than my job as a BDM for a multi-million dollar engineering firm. It's been a crazy, frustrating, satisfying ride to this point thats for sure. I hope you enjoy the read and im sure ill enjoy recalling the last 12 months.
As a side note, during this whole time i was studying with next to no income, had just bought my first house, and had literally just enough to cover the payment on one order of product...this is important for later and relates to the thread title.
The tight arse moment
So, it started because i was/am/probably will always be, a bit of a tight arse. I was in the market for a product, a want product, not something i or anyone ever needs, but one a lot of people in my target market do buy. I shopped around and was shocked at the cost i was up for, think around $2400NZD ($1600USD). I come from an engineering background, and looking at the product i knew the manufacturing cost, especially at scale, was peanuts compared to the $ value this product was selling for...and it was a really simple product. I thought, i bet i can buy this cheaper from Asia, i'll do some research.
Research
I began where i only knew to, Alibaba. I searched for the product i was after, or close too, and began to contact every "manufacturer" i could. I literally sent out a couple of hundred emails, with each reply i began to vet suppliers. I had a few criteria, range available, language boundaries, payment terms, price, and the big one, MOQ. I quickly learnt that if i wanted "my" product, i was going to have to buy 15x what "I" needed...not a problem though right, sell the other 14, mine becomes "free" and i make a few bucks. I did some numbers on 15 units, landed cost, shipping etc, and realized i stood to make a fair chunk of change. With some help from Walter on here (thanks Walter) i decided on a supplier who was a manufacturer, not just a re-seller (plenty pretending to be the prior i found) and pulled the trigger. There was significant risk here, 1) the product is made to order so i couldn't get a samples before placing an order, 2) There is engineering involved, and if i'd made one small specification mistake the whole order would be useless, and 3) my first order was into the 5 digit range.
While this was going on i looked at the market i'd be selling into. I used a local site called TradeMe, similar to Ebay, and checked out how much interest there was in what i was going to be selling by checking the amount of "watchers" on the auctions that were applicable. I quickly learned there was a strong demand for the product even at the $2400 selling point. I decided on using TradeMe to sell the product and built these selling costs into my cost forecast.
Product arrives
After the order was placed there was a 45 days manufacture lead time, plus another 5 weeks before i would have product in my hands...it seemed like eternity. I did a quality check upon arrival and all seemed good, a few minor issues but with some elbow grease things were right as rain. Speaking of rain, the day i picked the product up (nearly 6cbm) i hired an open deck truck. It was pissing down with rain on my way to pick the goods up, but somehow a gap in the weather as i was loading them appeared and i swear i raced back to my storage facility with that rain nipping at my heels the whole way....it was stressful to say the least.
Sell, Sell, Sell
At least that was my plan. All my market research was telling me at my price point these things were going to fly.....well 4 weeks later, with E commerce listing costs eating a way i hadn't sold a single item. Worry was setting in and at this stage due to no work, study, and house costs, i had literally $70 to my name. I'd pushed my finances to the edge and i had no back up plan, i was all in. It was approaching a weekend where i had a friend flying in to catch up and go to a rugby test match and i barely had enough money for a few beers at the game. I did what i could only think to do, hit the pavement, go door knocking with product at potential re-sellers businesses, and hope like hell someone would buy some product off me. I'd been at it a few hours with no success and was on my way home feeling defeated when i stumbled across a business id never seen before but one that looked like a potential re-seller. I walked in and sold 3 on the spot, cash in hand....oh my what a feeling!!!! To say that weekend was a big one would be an understatement!!
Pivot
I eventually sold out, all 14 units, with demand presenting itself for more. But id learned from my mistakes and so set in motion a plan to bring in more, but with a different business model. There was a key value add to my product i was missing, and one that took capital intensive assets to bring to market, however, if i switched to a B2B model, and wholesaled to re-sellers, they could provide the value add, and the scale i wanted. I got things underway and began my marketing, social media and website development. I contacted all my previous customers B2B and B2C and asked for photos of my product in use, i was bombarded by happy customers and great photos which was an awesome feeling. I cold called some more re-sellers with my new marketing, website, and B-Cards in place and got a fair amount of interest. I set up warehousing and distribution, i was extremely lucky here, my family owns a freight company so i arranged storage and freight through them at rates so good it's disgusting, i operate on full 3PL. I was, and still am, running so lean no-one, not even the big players in the market, could match my price points. I started wining market share, but with growth comes growth pains, lack of capital for inventory and constant stocking out was a massive issue.
Now
Right now i have just accessed a pool of capital and have ordered not just a few CBM of stock, but literal container loads. I have 24 re-sellers nationwide and I stocked out again just this week (not so good). In the last two months I've turned over just over $35,000NZD ($24,000USD) with a 41% net margin. I'm finally reaching scale from my suppliers and am set to hit a major price break point which will increase the net margin further. The years looking really promising and with the contracts i'm working on right now i'm set to turn $250,000 in my first year of proper business....unreal. I'm still working my job as security for now but the plan is to move away from this next year and take this on full time.
To do list
Website needs an upgrade - I need to add better marketing photos and add inventory levels to the product on the site for B2B clients to access. At the moment customers call and ask what i have which isn't so efficient.
Hard copy catalogs of product need design, print and to be distributed. I plan to send these nationwide to all the customers i haven't been going after due to consistency of supply issues at my end. You only get one shot with a customer and i don't plan on letting them down due to no stock on their first deal with my business.
Expanding my range - I'm running a "best cost" strategy which consists of differentiated product, cost leadership vs competitors, and a reduced overhead spend. I need to differentiate my product and this is in the works now with 4 new products due soon that have not been seen in my market before. These products are close substitutes, not something entirely different or new.
I guess this moral of the story is sometimes being a tightarse isn't so bad.
I plan to keep this updated with happenings and its a good way for me to write down all the shit in my head, a constant whirlwind of whats next.
If you read through this cheers, i hope it wasn't too dull. If you have any questions please fire away, i left out a lot of really in depth detail as it was already long enough.
Cheers
Andy
Thought i'd do a wee write up about this crazy journey of what was initially a side hustle stemming from me being a tight arse, to a business which makes more than my job as a BDM for a multi-million dollar engineering firm. It's been a crazy, frustrating, satisfying ride to this point thats for sure. I hope you enjoy the read and im sure ill enjoy recalling the last 12 months.
As a side note, during this whole time i was studying with next to no income, had just bought my first house, and had literally just enough to cover the payment on one order of product...this is important for later and relates to the thread title.
The tight arse moment
So, it started because i was/am/probably will always be, a bit of a tight arse. I was in the market for a product, a want product, not something i or anyone ever needs, but one a lot of people in my target market do buy. I shopped around and was shocked at the cost i was up for, think around $2400NZD ($1600USD). I come from an engineering background, and looking at the product i knew the manufacturing cost, especially at scale, was peanuts compared to the $ value this product was selling for...and it was a really simple product. I thought, i bet i can buy this cheaper from Asia, i'll do some research.
Research
I began where i only knew to, Alibaba. I searched for the product i was after, or close too, and began to contact every "manufacturer" i could. I literally sent out a couple of hundred emails, with each reply i began to vet suppliers. I had a few criteria, range available, language boundaries, payment terms, price, and the big one, MOQ. I quickly learnt that if i wanted "my" product, i was going to have to buy 15x what "I" needed...not a problem though right, sell the other 14, mine becomes "free" and i make a few bucks. I did some numbers on 15 units, landed cost, shipping etc, and realized i stood to make a fair chunk of change. With some help from Walter on here (thanks Walter) i decided on a supplier who was a manufacturer, not just a re-seller (plenty pretending to be the prior i found) and pulled the trigger. There was significant risk here, 1) the product is made to order so i couldn't get a samples before placing an order, 2) There is engineering involved, and if i'd made one small specification mistake the whole order would be useless, and 3) my first order was into the 5 digit range.
While this was going on i looked at the market i'd be selling into. I used a local site called TradeMe, similar to Ebay, and checked out how much interest there was in what i was going to be selling by checking the amount of "watchers" on the auctions that were applicable. I quickly learned there was a strong demand for the product even at the $2400 selling point. I decided on using TradeMe to sell the product and built these selling costs into my cost forecast.
Product arrives
After the order was placed there was a 45 days manufacture lead time, plus another 5 weeks before i would have product in my hands...it seemed like eternity. I did a quality check upon arrival and all seemed good, a few minor issues but with some elbow grease things were right as rain. Speaking of rain, the day i picked the product up (nearly 6cbm) i hired an open deck truck. It was pissing down with rain on my way to pick the goods up, but somehow a gap in the weather as i was loading them appeared and i swear i raced back to my storage facility with that rain nipping at my heels the whole way....it was stressful to say the least.
Sell, Sell, Sell
At least that was my plan. All my market research was telling me at my price point these things were going to fly.....well 4 weeks later, with E commerce listing costs eating a way i hadn't sold a single item. Worry was setting in and at this stage due to no work, study, and house costs, i had literally $70 to my name. I'd pushed my finances to the edge and i had no back up plan, i was all in. It was approaching a weekend where i had a friend flying in to catch up and go to a rugby test match and i barely had enough money for a few beers at the game. I did what i could only think to do, hit the pavement, go door knocking with product at potential re-sellers businesses, and hope like hell someone would buy some product off me. I'd been at it a few hours with no success and was on my way home feeling defeated when i stumbled across a business id never seen before but one that looked like a potential re-seller. I walked in and sold 3 on the spot, cash in hand....oh my what a feeling!!!! To say that weekend was a big one would be an understatement!!
Pivot
I eventually sold out, all 14 units, with demand presenting itself for more. But id learned from my mistakes and so set in motion a plan to bring in more, but with a different business model. There was a key value add to my product i was missing, and one that took capital intensive assets to bring to market, however, if i switched to a B2B model, and wholesaled to re-sellers, they could provide the value add, and the scale i wanted. I got things underway and began my marketing, social media and website development. I contacted all my previous customers B2B and B2C and asked for photos of my product in use, i was bombarded by happy customers and great photos which was an awesome feeling. I cold called some more re-sellers with my new marketing, website, and B-Cards in place and got a fair amount of interest. I set up warehousing and distribution, i was extremely lucky here, my family owns a freight company so i arranged storage and freight through them at rates so good it's disgusting, i operate on full 3PL. I was, and still am, running so lean no-one, not even the big players in the market, could match my price points. I started wining market share, but with growth comes growth pains, lack of capital for inventory and constant stocking out was a massive issue.
Now
Right now i have just accessed a pool of capital and have ordered not just a few CBM of stock, but literal container loads. I have 24 re-sellers nationwide and I stocked out again just this week (not so good). In the last two months I've turned over just over $35,000NZD ($24,000USD) with a 41% net margin. I'm finally reaching scale from my suppliers and am set to hit a major price break point which will increase the net margin further. The years looking really promising and with the contracts i'm working on right now i'm set to turn $250,000 in my first year of proper business....unreal. I'm still working my job as security for now but the plan is to move away from this next year and take this on full time.
To do list
Website needs an upgrade - I need to add better marketing photos and add inventory levels to the product on the site for B2B clients to access. At the moment customers call and ask what i have which isn't so efficient.
Hard copy catalogs of product need design, print and to be distributed. I plan to send these nationwide to all the customers i haven't been going after due to consistency of supply issues at my end. You only get one shot with a customer and i don't plan on letting them down due to no stock on their first deal with my business.
Expanding my range - I'm running a "best cost" strategy which consists of differentiated product, cost leadership vs competitors, and a reduced overhead spend. I need to differentiate my product and this is in the works now with 4 new products due soon that have not been seen in my market before. These products are close substitutes, not something entirely different or new.
I guess this moral of the story is sometimes being a tightarse isn't so bad.
I plan to keep this updated with happenings and its a good way for me to write down all the shit in my head, a constant whirlwind of whats next.
If you read through this cheers, i hope it wasn't too dull. If you have any questions please fire away, i left out a lot of really in depth detail as it was already long enough.
Cheers
Andy
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