The Entrepreneur Forum | Financial Freedom | Starting a Business | Motivation | Money | Success

Welcome to the only entrepreneur forum dedicated to building life-changing wealth.

Build a Fastlane business. Earn real financial freedom. Join free.

Join over 80,000 entrepreneurs who have rejected the paradigm of mediocrity and said "NO!" to underpaid jobs, ascetic frugality, and suffocating savings rituals— learn how to build a Fastlane business that pays both freedom and lifestyle affluence.

Free registration at the forum removes this block.

Logistics of pre-sales for a product that hasn't been manufactured yet

Should I presell my product?

  • Yes, but do it another way than selling through Shopify (e.g. Kickstarter or something)

    Votes: 0 0.0%

  • Total voters
    10

Bekit

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
493%
Aug 13, 2018
1,135
5,601
I've been talking with a manufacturer in Mexico to get a quote for a product I've developed. They gave me the quote today and the prices seem good to me.

I put up a Shopify site and was thinking of running some ads to the site to presell the product and then ship it once it arrives.

This will help me to cover the cost of my first order.

But I haven't even seen a sample yet. (I've seen a photo of my sample, but not the actual thing.)

So the risk I'm running is this.

If I get a bunch of orders, and then for whatever reason the sample is not good, the shipment of product falls through, or I have to go back to the drawing board with the manufacturer, then I could be on the hook for refunding a bunch of people.

But after shopify and paypal take out their fees, I would have to refund more money than I collected.

So that would put me in the hole.

Specifically, for every order that a customer places for $14.90, I actually take home $14.17.

That's just $0.73 per person... but if I get 500 orders, I'm not going to like going backwards that far.

Should I hedge against this risk somehow?

Has anyone else handled this?

Any recommendations or ideas for how to do this?
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

door123

Bronze Contributor
Read Rat-Race Escape!
Speedway Pass
User Power
Value/Post Ratio
107%
Apr 4, 2020
177
189
West Coast
I've been talking with a manufacturer in Mexico to get a quote for a product I've developed. They gave me the quote today and the prices seem good to me.

I put up a Shopify site and was thinking of running some ads to the site to presell the product and then ship it once it arrives.

This will help me to cover the cost of my first order.

But I haven't even seen a sample yet. (I've seen a photo of my sample, but not the actual thing.)

So the risk I'm running is this.

If I get a bunch of orders, and then for whatever reason the sample is not good, the shipment of product falls through, or I have to go back to the drawing board with the manufacturer, then I could be on the hook for refunding a bunch of people.

But after shopify and paypal take out their fees, I would have to refund more money than I collected.

So that would put me in the hole.

Specifically, for every order that a customer places for $14.90, I actually take home $14.17.

That's just $0.73 per person... but if I get 500 orders, I'm not going to like going backwards that far.

Should I hedge against this risk somehow?

Has anyone else handled this?

Any recommendations or ideas for how to do this?

I am in the same situation. I went ahead & ordered my first 100 units of product from China that will be coming in 30 days from now. I am assuming the quality is good as the same exact product has been sold on Amazon with good reviews.

I wonder if I should start pre-selling & ship it once the product arrives.

How would you presell the product? reveal that your preselling the ad copy or on the landing page? or just indicate longer shipping times.
 

Bearcorp

Gold Contributor
Read Fastlane!
Speedway Pass
User Power
Value/Post Ratio
237%
Jul 2, 2012
711
1,684
39
Australia
Until you've received a few orders from the supplier you can't 100% sure what you're getting, If you can fund it without pre-sales first up that would be the ideal situation. Once there's trust with the supplier you can have faith in this strategy. I pre-sale all my main products, I've done it for years, early days it was a bit of Russian roulette in terms of what I was getting, I had demand and no more money to put in so I took the risk.
 

Bekit

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
493%
Aug 13, 2018
1,135
5,601
I am in the same situation. I went ahead & ordered my first 100 units of product from China that will be coming in 30 days from now. I am assuming the quality is good as the same exact product has been sold on Amazon with good reviews.

I wonder if I should start pre-selling & ship it once the product arrives.

How would you presell the product? reveal that your preselling the ad copy or on the landing page? or just indicate longer shipping times.
I just set up the site like a normal ecommerce site, but I just tried to make it clear that their order wouldn't be shipped right away.
  • The homepage says, "Now being pre-sold as the first batch of [products] are being manufactured."
  • The button copy says "Pre-order now"
  • The product description begins with a bold, ALL-CAPS notice that says, "We are currently taking pre-orders. Your [product] will be shipped to you once it is manufactured."
  • The same notice is repeated at the end of the product description.
So I figured I would just take as many orders as I could ahead of time this way, and then ship them all out once I had the product in hand.

There's just this little question of "But what if it goes wrong..."

This is a very new thing for me to do, ordering a product from a manufacturer and trying to sell it and navigating all the ins and outs of... quotes and customs and shipping and so forth.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

Bekit

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
493%
Aug 13, 2018
1,135
5,601
Until you've received a few orders from the supplier you can't 100% sure what you're getting, If you can fund it without pre-sales first up that would be the ideal situation. Once there's trust with the supplier you can have faith in this strategy. I pre-sale all my main products, I've done it for years, early days it was a bit of Russian roulette in terms of what I was getting, I had demand and no more money to put in so I took the risk.
I could fund it without pre-sales, if I place a minimum order.

But it would put me in a fairly serious pinch financially.

I guess the reason I wanted to presell it was to reduce the amount of savings I had to front, and hedge against the risk that I could end up with a bunch of product that I couldn't sell.

So really... there are two risks that I'm hedging against at the same time.
  1. I'm wanting to hedge against the risk that the product doesn't sell by funding it with pre-orders
  2. And I'm wanting to hedge against the risk that I never get the product in the first place by covering my costs of refunding people.
Maybe I just need to figure out which one is going to be more expensive and hedge against that.
 

biophase

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
474%
Jul 25, 2007
9,122
43,264
Scottsdale, AZ
What about your expenses of getting the sales? Those would all be wasted if you had to refund everyone.

I would presell after I get the sample.
 

alexkuzmov

Gold Contributor
Read Rat-Race Escape!
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
130%
Sep 20, 2019
1,014
1,318
Bulgaria
I've been talking with a manufacturer in Mexico to get a quote for a product I've developed. They gave me the quote today and the prices seem good to me.

I put up a Shopify site and was thinking of running some ads to the site to presell the product and then ship it once it arrives.

This will help me to cover the cost of my first order.

But I haven't even seen a sample yet. (I've seen a photo of my sample, but not the actual thing.)

So the risk I'm running is this.

If I get a bunch of orders, and then for whatever reason the sample is not good, the shipment of product falls through, or I have to go back to the drawing board with the manufacturer, then I could be on the hook for refunding a bunch of people.

But after shopify and paypal take out their fees, I would have to refund more money than I collected.

So that would put me in the hole.

Specifically, for every order that a customer places for $14.90, I actually take home $14.17.

That's just $0.73 per person... but if I get 500 orders, I'm not going to like going backwards that far.

Should I hedge against this risk somehow?

Has anyone else handled this?

Any recommendations or ideas for how to do this?
Selling without even seeing the product once is a crazy risk.
Is it worth the couple of hundred bucks you'll make?
Think about the logistics and the time it'll take you to return the money if things go south.

One way to minimize your risk is to borrow money from a relative or friends.
That way if things crap out, you'll be less preassured to return the money.
Another, more obvious one, is to get the product first, check quality and only then decide on pre orders.
Why the rush?
If you start getting alot of sales, what would a month delay matter?
 

Bekit

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
493%
Aug 13, 2018
1,135
5,601
What about your expenses of getting the sales? Those would all be wasted if you had to refund everyone.

I would presell after I get the sample.
Yeah that's a good point about the expenses of getting the sales.

I mean, so far, those expenses have been under $100.

And I was going to try to start by getting the site in front of my target customers in ways that didn't cost any money.

But yeah, if I started running any paid ads, then those funds would definitely be risked along with the shopify & paypal fees. So that's a good thing for me to take into account.

You could try Kickstarter to evaluate the market without having to risk making an order.
Yeah I thought about going that route. Somehow it seemed simpler to just set up a shopify store. But maybe that was just because I was impatient haha...

Selling without even seeing the product once is a crazy risk.
Is it worth the couple of hundred bucks you'll make?
Think about the logistics and the time it'll take you to return the money if things go south.

One way to minimize your risk is to borrow money from a relative or friends.
That way if things crap out, you'll be less preassured to return the money.
Another, more obvious one, is to get the product first, check quality and only then decide on pre orders.
Why the rush?
If you start getting alot of sales, what would a month delay matter?

Such a good point. Why the rush? No other reason than that I'm excited and chomping at the bit.

Thanks for pointing that out. Time to take a deep breath. You're right. A month delay is not going to make that much difference.
 

BlackMagician

Gold Contributor
Read Fastlane!
Read Unscripted!
Speedway Pass
User Power
Value/Post Ratio
236%
Jul 18, 2018
560
1,322
Mumbai, India
Get the sample first. You might not like the end product and in most of the case, you will have some changes needed and need to ask again for new samples with changes.

So first finalize the end product from your end then start selling.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

biophase

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
474%
Jul 25, 2007
9,122
43,264
Scottsdale, AZ
Yeah that's a good point about the expenses of getting the sales.

I mean, so far, those expenses have been under $100.

And I was going to try to start by getting the site in front of my target customers in ways that didn't cost any money.

How are you planning on doing that?
 

Bekit

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
493%
Aug 13, 2018
1,135
5,601
I was planning to do that by going to the groups of people who need my product the most and letting them know it exists.

In my product validation phase, I found that people were prone to gobble up this product, unprompted, as soon as they knew it existed.

I also see really strong sales numbers in competitors' similar products, which are not as good as mine.

There's a certain group of people who need it more than the general population. They are in more pain than most people regarding the need my product fills.

So I was going to target those groups first. Just go to the admins of facebook groups and let them know this is available and see if they want to share it.

If it was any other product, I'd hesitate to do this strategy, because it can get you banned real quick. But I'm pretty confident I'm going to get more responses along the lines of YES! THANK YOU! FINALLYYYY!!!! I'M SO HAPPY TO KNOW ABOUT THIS!
 

sparechange

Platinum Contributor
Speedway Pass
User Power
Value/Post Ratio
161%
Nov 11, 2016
2,804
4,502
Canada (Vancouver)
I was planning to do that by going to the groups of people who need my product the most and letting them know it exists.

In my product validation phase, I found that people were prone to gobble up this product, unprompted, as soon as they knew it existed.

I also see really strong sales numbers in competitors' similar products, which are not as good as mine.

There's a certain group of people who need it more than the general population. They are in more pain than most people regarding the need my product fills.

So I was going to target those groups first. Just go to the admins of facebook groups and let them know this is available and see if they want to share it.

If it was any other product, I'd hesitate to do this strategy, because it can get you banned real quick. But I'm pretty confident I'm going to get more responses along the lines of YES! THANK YOU! FINALLYYYY!!!! I'M SO HAPPY TO KNOW ABOUT THIS!

I believe you were a marketer in the past as a job right? Check this out...


I'm beginning to think maybe the product itself doesn't exactly matter (ok it helps to have a great one that operates with a productacracy) Although this, and pet rock show some amazing marketing execution.

Seriously can you imagine working at cards of humanity and someone came up with the idea of selling crap in a box for $6 in a meeting? I'd love to see what that conversation looked like! As silly as the idea is, they sold out 30,000 units in a day.

Rooting for you!
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

biophase

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
474%
Jul 25, 2007
9,122
43,264
Scottsdale, AZ
I was planning to do that by going to the groups of people who need my product the most and letting them know it exists.

In my product validation phase, I found that people were prone to gobble up this product, unprompted, as soon as they knew it existed.

I also see really strong sales numbers in competitors' similar products, which are not as good as mine.

There's a certain group of people who need it more than the general population. They are in more pain than most people regarding the need my product fills.

So I was going to target those groups first. Just go to the admins of facebook groups and let them know this is available and see if they want to share it.

If it was any other product, I'd hesitate to do this strategy, because it can get you banned real quick. But I'm pretty confident I'm going to get more responses along the lines of YES! THANK YOU! FINALLYYYY!!!! I'M SO HAPPY TO KNOW ABOUT THIS!

What if the admins say that you can't advertise or don't want to share it to the group? Then what?

It seems like your whole business hinges on this.
 

sparechange

Platinum Contributor
Speedway Pass
User Power
Value/Post Ratio
161%
Nov 11, 2016
2,804
4,502
Canada (Vancouver)
I was planning to do that by going to the groups of people who need my product the most and letting them know it exists.

In my product validation phase, I found that people were prone to gobble up this product, unprompted, as soon as they knew it existed.

I also see really strong sales numbers in competitors' similar products, which are not as good as mine.

There's a certain group of people who need it more than the general population. They are in more pain than most people regarding the need my product fills.

So I was going to target those groups first. Just go to the admins of facebook groups and let them know this is available and see if they want to share it.

If it was any other product, I'd hesitate to do this strategy, because it can get you banned real quick. But I'm pretty confident I'm going to get more responses along the lines of YES! THANK YOU! FINALLYYYY!!!! I'M SO HAPPY TO KNOW ABOUT THIS!

Have you looked into reaching out to social media influencers ? Get a physical sample, talk to some people with 100k+ followers (be sure to check their engagement from likes / comments and verify it's a legit account) and ask them to pitch your product, that might actually be the ''easiest'' way to verify the products a winner, link them to a sales page and analyze the data.

No idea what you would be paying for such a plug, I'd guess some people will do it for a % and others would ask for an upfront fee.
 

Bekit

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Fastlane!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
493%
Aug 13, 2018
1,135
5,601
What if the admins say that you can't advertise or don't want to share it to the group? Then what?

It seems like your whole business hinges on this.
I mean - then I would just pay for ads.

I realize I could be wrong about how I predict people will react when I pitch it to them. But based on the initial reactions I've gotten, I don't think I'm too far off in la-la-land to be expecting a positive reception.


Have you looked into reaching out to social media influencers ? Get a physical sample, talk to some people with 100k+ followers (be sure to check their engagement from likes / comments and verify it's a legit account) and ask them to pitch your product, that might actually be the ''easiest'' way to verify the products a winner, link them to a sales page and analyze the data.

No idea what you would be paying for such a plug, I'd guess some people will do it for a % and others would ask for an upfront fee.
Yeah I can definitely consider this as well.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

Walter Hay

Legendary Contributor
EPIC CONTRIBUTOR
Speedway Pass
User Power
Value/Post Ratio
401%
Sep 13, 2014
3,318
13,305
World citizen
I realize I could be wrong about how I predict people will react when I pitch it to them. But based on the initial reactions I've gotten, I don't think I'm too far off in la-la-land to be expecting a positive reception.
PATIENCE, PATIENCE, PATIENCE, The entire process could fall flat if the product is poorly made. You must have a sample before trying to sell the product, otherwise you could set the project back for weeks at least, and probably months.

Your excitement and consequent impatience could prove very costly in terms of time and money.

Walter
P.S. Unless the photo they provided has been photoshopped they should be willing to send the physical product to you.
 

biophase

Legendary Contributor
FASTLANE INSIDER
EPIC CONTRIBUTOR
Read Unscripted!
Summit Attendee
Speedway Pass
User Power
Value/Post Ratio
474%
Jul 25, 2007
9,122
43,264
Scottsdale, AZ
I mean - then I would just pay for ads.

But if you are paying for ads, then you are risking alot of money.

If you starting paying for ads, you will be risking $1-$10 a person. You were concerned with the fees you lose from refunding people on shopify, which was $0.73 a person.

I was just wondering, because the disparity of risking processing fees vs. paid advertising is so huge that nobody really worries about those fees. So if you are worried about those tiny fees, I didn't think you would risk paying for ads.

Bottom line, is that you need to be prepared to lose money going into ventures like these. I understand that you want to minimize your risk, but 5% is nothing ($0.73 / $15).
 

Johnny boy

Legendary Contributor
EPIC CONTRIBUTOR
Speedway Pass
User Power
Value/Post Ratio
621%
May 9, 2017
2,929
18,176
27
Washington State
Sell it

If the product sucks then allow returns of people who hate it.

If the product is un-sellable or doesn't even show up, you can probably get another product sent out to them before 100% of people demand refunds. You'll probably be able to still fulfill some orders because I bet 20% of them will forget they even ordered anything. I do it often. I ordered some shorts and got them over 2 months later. It was a pleasant surprise.

What if you run ads and realize it's unprofitable? You'll have a better chance of cancelling your order and saving money.
 
Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

Post New Topic

Please SEARCH before posting.
Please select the BEST category.

Post new topic

Guest post submissions offered HERE.

New Topics

Fastlane Insiders

View the forum AD FREE.
Private, unindexed content
Detailed process/execution threads
Ideas needing execution, more!

Join Fastlane Insiders.

Top