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Importing and launching a product: test order important?

Discussion in 'Product Creation, Inventing, Importing, Sourcing' started by LPPC, Jul 17, 2018.

  1. LPPC
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    LPPC Bronze Contributor

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    Hi all,

    Currently I am dropshipping a product on Amazon that is selling. I am the third seller of this product. I am planning to import a branded version of this product that is better than all the three versions of this product selling on Amazon.

    I've read @Walter Hay 's book on importing and there he mentions that it is often possible to do a test order of approximately 1/10th of the MOQ. This way you can test the product and the manufacturer.

    Now I am wondering whether it is wise to do a test order versus ordering a branded product and a much higher quantity immeditiatly after inspecting the sample... basically, how important is this test order? Is it really necessary?

    Because I thought that if you launch a product well, then it will demotivate the competition to jump into offering this better version of the product. It will be more demotivating for the competition when the product is branded and I can deliver the product constantly without it being out of stock because I ordered too small of inventory.

    So it's launching the product better vs testing the product and manufacturer (test order).
    Maybe I am overthinking this.....

    Looking forward to some insights.

    Thanks!
     
    Last edited: Jul 17, 2018
  2. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I would never place an order for a commercial quantity until I have seen a sample. That is not fail safe because it is quite common for suppliers to send a good quality sample and ship poor quality when you order a bigger quantity.

    Depending on the product it can be cost effective to put your brand on the product after you receive it. That has several advantages:
    • Easier to persuade supplier to accept a smaller order.
    • Supplier doesn't know your brand and that makes it difficult for them to take your retail market from you if they decide to do that later.
    • For some kinds of product marking, it can be cheaper to have it done locally than to pay a bigger set up charge in China.
    • Gives you more control over how the brand is applied to your product.
    • Gives you more choice in selecting the type of branding.
    In any case, I suggest that you give plenty of thought to your branding. Don't follow the typical Private Label gurus' advice to "Slap on a sticker." Why not make your brand impressive from the start.

    Walter
     
    Last edited: Jul 17, 2018
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  3. LPPC
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    LPPC Bronze Contributor

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    Thank you very much @Walter Hay! So it does happen pretty often that the quality is not up to par, did not know that....

    Also it's a real eye opener for me to know now that it is possible to have it branded elsewhere. If I do that, maybe it is better to have another Chinese company do that for me since it is often cheaper there than having it done in a 1st world country?

    You are right in that it is better to really diferentiate your product by having it customized for example. I have to weigh this option since it costs more, maybe my capital could be better spend otherwise. Maybe spending my capital on inventory for other products (bigger catalog) is better at this stage..

    Thanks again!
     
  4. jcvlds
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    jcvlds JC FASTLANE INSIDER Speedway Pass

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    Perhaps you are reading his concept of differentiation but are not truly understanding it.

    The ability to differentiate your products to your target customers typically allows you to charge somewhat of a premium and have better profit margins.

    Does this cost you more in terms of COGS? Yes.. but it results in better margins.

    If you don’t see this as an efficient use of your capital and would rather use your capital to expand your catalog, but thus have no differentiation, then yes, you will have ‘more’ product selection, but you will be competing head on with other competitors, thus competing in a commodity market. Margins will be slimmer and competition fierce.

    So what is better use for your capital?


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  5. LPPC
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    LPPC Bronze Contributor

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    The product I am going to launch is better and different (more features, bigger etc) than the competition. But it is readily available out of the factory, meaning that any other seller can buy it from the factory.

    I could differentiate it even more, but I think that would mean that it will cost me money to for example have molds made to customize the product so the competition can not readily sell the same product as me.

    The question would then be whether it is worth the capital investment to customize a product that is already better and different than the ones the competition is selling.

    How would I find out whether that is worth it? What questions should I ask myself. Maybe someone can point me in the right direction.
     
  6. Walter Hay
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    Walter Hay Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    It is not always necessary to have a substantially different product in order to benefit by differentiation.

    I have seen with my own eyes production lines in Chinese factories turning out identical products for different customers. One of those customers makes millions out of selling that product with their brand on it.

    The others make a lot less. In one example that I am thinking of, the brand is a stand-out in terms of presentation. The name is a made up one that is very catchy, and it describes the biggest benefit of using that brand.

    I won't name the brand, but will give a hypothetical example: CUMMFY. If someone sees an advert for my imaginary product with the brand name CUMMFY, they would ignore the fact that the correct spelling is COMFY, but they would get the message that the product is comfortable to wear, or use, or sit on, or sleep on etc....

    The real product I am thinking of likewise has a descriptive, invented name. They reinforce the emotional impact of their made up brand name with a slogan that adds to the desire of a buyer to possess such a product, because the slogan fits the kind of people that use such a product.

    Labeling and packaging uses a color scheme that also fits those people.

    The total effect of their clever branding is:

    Differentiation that makes people want their product although it sells for as much as 3 or 4 times the prices achieved by those others who get the same product from the same factory.

    Walter
     
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  7. jcvlds
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    jcvlds JC FASTLANE INSIDER Speedway Pass

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    Amazing example. Thanks for sharing that Walter. Made me do some thinking as well


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  8. LPPC
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    Eye-opening example, thanks!
     

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