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Young Money

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Apr 27, 2018
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My first product failed and I lost a lot of money on it. Now I’m looking back at what went wrong to make sure I don’t make the same mistakes for the new business I’m starting.

Well, all I really had to do was a CENTS analysis and it became clear very fast!

First Business (Amazon FBA Product)
Control
:xx:
  • Entirely Amazon dependent
  • Complete reliance on Chinese supplier
Entry :xx:
  • Very simple product, easy to duplicate and tons of competitors in the niche
  • Cheap to manufacture
  • Little to no expertise needed for this type of product
Need :xx:
  • Not solving a problem
  • Seasonal product (after the peak season, sales collapsed and I was stuck with lots of inventory)
  • Impulse buys highly unlikely (despite the relatively low cost)
Time :check:
  • Online product which can be sold 24/7 via Amazon FBA
  • (Waking up some days and seeing I had already made hundreds of dollars felt really f&#kin good!!)
Scale :check:
  • Cheap cost to manufacture - could produce thousands of units for not too much money
  • Easy to scale, could simply ask my supplier to produce more and ship to Amazon's warehouse
  • If I advertised properly, should be able to increase ad spend to proportionately increase sales

My New Business
Control :check:
  • Not depending on Amazon this time. May use them eventually but as ONE channel of my entire distribution strategy - NOT my entire business model.
  • Will be manufacturing locally and with total control over the entire process
  • Will sell online through my website and through independent wholesalers
Entry :check:
  • High upfront cost to start
  • Product requires a level of expertise most people don't have
  • I have industry knowledge and insight
Need :check:
  • Market expected to grow exponentially
  • Lack of much online presence
  • Consumers are willing to pay more $$$ for this product
Time :check:
  • Can sell 24/7 online
  • multiple distribution options
Scale :check:
  • Once I have the design finalized, I can easily replicate and produce as many as I want
  • Won't have to suffer through long, painful lead times since I am not producing overseas
  • Product can be manufactured quickly, so don't need to keep thousands on stock and worry about excess inventory/ storage fees

So my new product gets a 5/5! I'm very excited to get back in the game and go hard on this business!

Will post more as I go along. I want to be more active with this amazing community! There is so much inspiration here; I definitely recommend becoming an insider to anyone wondering if its worth it or not. 100% it is, there is so much to learn!
 

ZF Lee

Platinum Contributor
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My first product failed and I lost a lot of money on it. Now I’m looking back at what went wrong to make sure I don’t make the same mistakes for the new business I’m starting.

Well, all I really had to do was a CENTS analysis and it became clear very fast!

First Business (Amazon FBA Product)
Control
:xx:
  • Entirely Amazon dependent
  • Complete reliance on Chinese supplier
Entry :xx:
  • Very simple product, easy to duplicate and tons of competitors in the niche
  • Cheap to manufacture
  • Little to no expertise needed for this type of product
Need :xx:
  • Not solving a problem
  • Seasonal product (after the peak season, sales collapsed and I was stuck with lots of inventory)
  • Impulse buys highly unlikely (despite the relatively low cost)
Time :check:
  • Online product which can be sold 24/7 via Amazon FBA
  • (Waking up some days and seeing I had already made hundreds of dollars felt really f&#kin good!!)
Scale :check:
  • Cheap cost to manufacture - could produce thousands of units for not too much money
  • Easy to scale, could simply ask my supplier to produce more and ship to Amazon's warehouse
  • If I advertised properly, should be able to increase ad spend to proportionately increase sales

My New Business
Control :check:
  • Not depending on Amazon this time. May use them eventually but as ONE channel of my entire distribution strategy - NOT my entire business model.
  • Will be manufacturing locally and with total control over the entire process
  • Will sell online through my website and through independent wholesalers
Entry :check:
  • High upfront cost to start
  • Product requires a level of expertise most people don't have
  • I have industry knowledge and insight
Need :check:
  • Market expected to grow exponentially
  • Lack of much online presence
  • Consumers are willing to pay more $$$ for this product
Time :check:
  • Can sell 24/7 online
  • multiple distribution options
Scale :check:
  • Once I have the design finalized, I can easily replicate and produce as many as I want
  • Won't have to suffer through long, painful lead times since I am not producing overseas
  • Product can be manufactured quickly, so don't need to keep thousands on stock and worry about excess inventory/ storage fees

So my new product gets a 5/5! I'm very excited to get back in the game and go hard on this business!

Will post more as I go along. I want to be more active with this amazing community! There is so much inspiration here; I definitely recommend becoming an insider to anyone wondering if its worth it or not. 100% it is, there is so much to learn!
Congrats on your improvements!
Fantastic that you managed to learn something from your past mistakes, and come up with something new!

Looking forward to your progress.
You opening an Insiders thread? About time!
 

RazorCut

Legendary Contributor
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Excellent breakdown. And the journey will have been worth the costs as you have failed forward, learn't from them, adapted and pivoted. You cannot beat hands on experience. I'm always wary of people following the Amazon FBA path. It's been extremely popular and I used it myself (but I got out probably close to 5 years ago). However it fails miserably regarding control.

Even all those years back I could see the way it was going. People cherry picking your best selling products, researching for your supplier/manufacturer, FBAing their newly purchased stock and latching on to your listing at a lower selling point. Then it's just a race to the bottom. In no time at all going from $10 profit a sale to 50c.

Yes we had 1000's of products but Pareto's law means the lions share of your sales will come from your top 10 products. Having ONLY one sales channel (that encourages open season) is a recipe for disaster.

It's why I think there was a mass increase in 'Guru's selling courses in the Amazon FBA model. Sellers were getting hammered with competition forcing down margins so pivoted to selling shovels rather than dig out a spent gold mine.

Amazon is cutthroat, brutal even. People latching on to your bespoke product with knock off's and sometimes even with a completely different product and it taking an age to get them removed whilst in the meantime all the great feedback you built up gets trashed as people complain.

I have no idea as to how Amazon police this nowadays but back then trying to get anything done about it was akin to banging your head against a brick wall.

Look forward to reading more.
 

amp0193

Legendary Contributor
EPIC CONTRIBUTOR
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I've Read UNSCRIPTED
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May 27, 2013
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United States
My first product failed and I lost a lot of money on it. Now I’m looking back at what went wrong to make sure I don’t make the same mistakes for the new business I’m starting.

Well, all I really had to do was a CENTS analysis and it became clear very fast!

First Business (Amazon FBA Product)
Control
:xx:
  • Entirely Amazon dependent
  • Complete reliance on Chinese supplier
Entry :xx:
  • Very simple product, easy to duplicate and tons of competitors in the niche
  • Cheap to manufacture
  • Little to no expertise needed for this type of product
Need :xx:
  • Not solving a problem
  • Seasonal product (after the peak season, sales collapsed and I was stuck with lots of inventory)
  • Impulse buys highly unlikely (despite the relatively low cost)
Time :check:
  • Online product which can be sold 24/7 via Amazon FBA
  • (Waking up some days and seeing I had already made hundreds of dollars felt really f&#kin good!!)
Scale :check:
  • Cheap cost to manufacture - could produce thousands of units for not too much money
  • Easy to scale, could simply ask my supplier to produce more and ship to Amazon's warehouse
  • If I advertised properly, should be able to increase ad spend to proportionately increase sales

My New Business
Control :check:
  • Not depending on Amazon this time. May use them eventually but as ONE channel of my entire distribution strategy - NOT my entire business model.
  • Will be manufacturing locally and with total control over the entire process
  • Will sell online through my website and through independent wholesalers
Entry :check:
  • High upfront cost to start
  • Product requires a level of expertise most people don't have
  • I have industry knowledge and insight
Need :check:
  • Market expected to grow exponentially
  • Lack of much online presence
  • Consumers are willing to pay more $$$ for this product
Time :check:
  • Can sell 24/7 online
  • multiple distribution options
Scale :check:
  • Once I have the design finalized, I can easily replicate and produce as many as I want
  • Won't have to suffer through long, painful lead times since I am not producing overseas
  • Product can be manufactured quickly, so don't need to keep thousands on stock and worry about excess inventory/ storage fees

So my new product gets a 5/5! I'm very excited to get back in the game and go hard on this business!

Will post more as I go along. I want to be more active with this amazing community! There is so much inspiration here; I definitely recommend becoming an insider to anyone wondering if its worth it or not. 100% it is, there is so much to learn!

Great lessons learned. New business sounds a lot stronger.

I think you’re misunderstanding scale. Scale is the number of people you can sell to (or the magnitude of each sale, if number of clients is small).

Meaning, is this a product that millions will buy? Or that a few clients will pay millions for?

It’s not how easy/quick it is to manufacture, although that does help facilitate growth and is a part of it.


“If you want to make millions, you need to impact millions”

Are you going to be a big fish in a small pond, or are you going to be in a big pond? That’s scale.
 

Young Money

Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Apr 27, 2018
34
75
113
Canada
Excellent breakdown. And the journey will have been worth the costs as you have failed forward, learn't from them, adapted and pivoted. You cannot beat hands on experience. I'm always wary of people following the Amazon FBA path. It's been extremely popular and I used it myself (but I got out probably close to 5 years ago). However it fails miserably regarding control.

Even all those years back I could see the way it was going. People cherry picking your best selling products, researching for your supplier/manufacturer, FBAing their newly purchased stock and latching on to your listing at a lower selling point. Then it's just a race to the bottom. In no time at all going from $10 profit a sale to 50c.

Yes we had 1000's of products but Pareto's law means the lions share of your sales will come from your top 10 products. Having ONLY one sales channel (that encourages open season) is a recipe for disaster.

It's why I think there was a mass increase in 'Guru's selling courses in the Amazon FBA model. Sellers were getting hammered with competition forcing down margins so pivoted to selling shovels rather than dig out a spent gold mine.

Amazon is cutthroat, brutal even. People latching on to your bespoke product with knock off's and sometimes even with a completely different product and it taking an age to get them removed whilst in the meantime all the great feedback you built up gets trashed as people complain.

I have no idea as to how Amazon police this nowadays but back then trying to get anything done about it was akin to banging your head against a brick wall.

Look forward to reading more.

Thanks for the encouragement. Interesting to hear your perspective on FBA. Yes, race to the bottom is right!! And the high PPC cost just diminished any profit I hoped to make. I sold all 750 units of my product eventually, but I ended up in the hole.

I must admit to having been swept up in the excitement from all the youtube gurus. I knew better, but my FOMO was so rampant from seeing "gurus" sales numbers, the lambos, nice houses etc, so I blocked out any doubts I had and went forward with a product I should have known was a mistake.

Yes, it should have been obvious from all the high priced courses that popped up that the FBA model wasn't as easy to strike gold as before.. if it was, then why are all these people spilling their secrets instead of just practicing what they preach to get richer? Because they charge $1,000 for a course, sell 1,000 of em and make a cool million just like that!

Well it was an expensive lesson for me to learn, but invaluable none the less. I won't let excitement get in the way of smart business decisions this time!
 

Young Money

Contributor
Read Millionaire Fastlane
I've Read UNSCRIPTED
Apr 27, 2018
34
75
113
Canada
Great lessons learned. New business sounds a lot stronger.

I think you’re misunderstanding scale. Scale is the number of people you can sell to (or the magnitude of each sale, if number of clients is small).

Meaning, is this a product that millions will buy? Or that a few clients will pay millions for?

It’s not how easy/quick it is to manufacture, although that does help facilitate growth and is a part of it.


“If you want to make millions, you need to impact millions”

Are you going to be a big fish in a small pond, or are you going to be in a big pond? That’s scale.

Right. I sort of mixed up my definition of scale.

The magnitude on my product is not bad, a few hundred bucks/unit, which is about 10X my last product. And it is something that millions will buy so it is a good scale-able product.

Thanks for clarifying. I'm reading your "Building an Empire" thread right now and its pure GOLD!
 

100ToOne

Silver Contributor
Speedway Pass
Jul 1, 2018
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660
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Glad to see you attempting again, in sure you'll succeed this time.

I would like however to remind any reader and myself of MJ Demarcos topic on is "CENTS stopping you from taking action".

While idk the reasons why OP failed at his first product, violating CENTS MAY but usually doesn't make your business fail. If that was the case, many supermarkets would have failed, but they don't. There are many reasons why it does fail however, in my case failed basic accounting and management.

So as MJ said, if it doesn't follow CENTS but had potential of making money, do it. With more experience you can then make a business that follows CENTS.
 

amp0193

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Right. I sort of mixed up my definition of scale.

The magnitude on my product is not bad, a few hundred bucks/unit, which is about 10X my last product. And it is something that millions will buy so it is a good scale-able product.

Thanks for clarifying. I'm reading your "Building an Empire" thread right now and its pure GOLD!

A high price point is great, you should be able to comfortably buy paid traffic. I will never sell cheap products again.

Glad you like the thread. Anything I can ever do to help, just let me know
 

Jiersk

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Jun 3, 2020
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Interesting read.

Good to see you draw lessons from past experiences and adjusting your present strategies, Young Money.

Kinda funny, I'm currently starting up an AMZ FBA project myself. However I'm fully aware of the Control violation. The idea is to use AMZ as a springboard, get a feel for how well the product does and get a bit of brand recognition going. Then I'll create a website specifically for the product, likely through shopify.

Looking forward to seeing your growth! Good luck!
 

NorthernDuke

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Sep 12, 2020
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I was on the path of Amazon FBA as well, and only just an hour ago decided "screw this" and left that idea behind. I spent 1k on Viral Launch (hoping to get some of that back) and 2K on the StartupBros E-commerce courses (I can get all of that back, thanks to their money back guarentee).
To be fair, their courses are solid, with a lot of good information in them, but I think we're at a point in time where Amazon isn't viable anymore. Literally anything within reason can be found on the platform. The founder started out in 2002 and made a killing (good for him), but those days are gone.
 

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