What I hope you will get out of this update:
- Order fulfillment options
- Introduction to Drop Shipping and Amazon Prime
- Typical Launch week issues
Once we had our web name registered and were working on designing our website, we actually had to figure out how to do business. We had another issue to figure out because although we have kept our costs low we are still hoping to get our customers to pay before we have to pay for our goods.
- We figured correctly that we needed to get as far up the value chain as we could in order to get the best pricing so that we could offer the goods at a reasonable price. We found out that we could contact some manufacturers directly and some we would have to deal with a distributor. We decided to keep things as simple as possible to start and use Canadian brands so that we could deal direct with as many manufacturers as we could. We succeeded in contacting enough manufacturers to get started, although we really weren’t yet sure how the business was going to work.
At the same time, we started to look into shipping and were surprised at the level of shipping costs in Canada as opposed to the US. Unless we were shipping over $10k of merchandise, shipping was prohibitive in every conceivable case.
- We needed another solution so through research and networking we found out about fulfillment centers. These are companies that store, warehouse and ship goods. FULFILLMENT CENTERS are paid per shipment and for storage but the key advantage is that they get much better shipping rates. They are efficient and save the business owner infrastructure costs, but don’t so far I’ve been told that our business is too small for them.
- Further research led us to Fulfillment by Amazon (FBA) where Amazon takes care of your fulfillment services (essentially they are your infrastructure and costs). They have fulfillment centers across North America for efficiency and although per unit costs are high, they don’t require any infrastructure or touch points from us.
- Basically you can have the manufacturer drop ship to Amazon and they store, pack and ship your sales. The big advantage here is shipping.
QUICK LESSON: Drop shipping is extremely popular on the internet today. Sellers can take orders and have the manufacturer ship the product directly to the customer without the seller ever having to touch it or take possession.
- Theoretically on Amazon the customers pay for shipping but any orders over $25 qualify for free shipping and if you sell on the Amazon website, your listings will get premium real estate, especially for Amazon Prime members (Note: Amazon prime 2 day shipping is big. A lot of people are on Amazon Prime!). I’m not sure if you saw the announcement this week but Amazon announced that all Amazon Prime members will be eligible for free wifi on about 75% of flights in the US. That will drive membership!! !! They had over 10m people sign up for Amazon Prime last holiday season so expect it to be big again this year.
Based on this research, we have chosen FBA to do our fulfillment as an interim solution to get us started. We only have a 6 month runway with them though so the race to find another method will be ongoing. They don’t accept our type of products from April to October. Already I have a lead through these emails so we will see where it goes.
There are many stories about the craziness start-ups go through leading up to launch day and our story is no different. The week has been filled with surprises and disappointments, problems and solutions. I started the week by emailing all our potential suppliers to check that nothing had changed and that our logistical plan would work.
- Out of the four manufacturers I had lined up to get started, two of them became unusable. One manufacturer VEGA was involved in a takeover and is in the process of revamping their sales processes so decided not to take on new customers and another one wouldn’t ship to Amazon. It was rather disappointing because we did want to feature local companies to start.
- I was naive in thinking that manufacturers would have had dealings with Amazon and learned that lesson the hard way.
- I had to scramble to find alternatives and juggle dates around to make sure everything would fit into our 1000 piece puzzle.
- I realized that doing a business part time is tough, there is a lot of networking, research and work but when you get someone who is nice and wants to go the extra mile, it makes it all worthwhile. There are people out there that want to help, it’s an amazing society we have when we open up and AUTHENTICALLY share with people.
I guess part of the fun with a start-up is getting over these hurdles and learning how to get over what seemed like incredible hurdles. It is a confidence builder for sure but creating a business on the internet is intimidating, daunting and at times scares me how complicated it is. It's easy to see why most people pay to join a web based training system....to get a community support network! YouTube on my own is just not enough some days. I'm not afraid to admit that I get scared; not scared of failure but scared of overwhelm, it's just a lot of new information.
Tomorrow we will talk about marketing and social media and this moves us one day closer to launch!
Today’s call to action is to provide any feedback you have about anything we’ve talked about so far. If you know any Office Managers that purchase snacks for the office or anyone involved in Corporate Gifting, please forward these emails and get them engaged. We are trying to find product market fit the best way we can, using our network.