Spotting Hot Sellers

On Sep 6, 2011, at 12:13 PM, PT wrote:

Dear John

 

thank you very much for your reply.

 

The background

The product is produced in the Uk by a good friend of mine, who has agreed to me being the sole reseller for N America.

***Impossible.  I can get your friend's product by buying it through my friend in Liverpool.  Your friend would not know my friend is exporting it to me.  The only way your friend can stop me from getting around your "exclusive" is for you friend to cut off all domestic UK sales.***

 

His product has no presence in the USA at this time and although there are other such products out there, this product is more effective and has some USP's

 

I have renamed it for the USA market , redesigned the label, it now complies with USA customs requirements and I understand is legal to import into N America. It is non hazardous, non toxic and non flammable.

*** Was the renaming and redesigning demanded by USA customers?  Or did you do this on your own?***

 

My problems are mainly pricing  , distribution methods and costs

 

I am concerned that after purchasing the units, shipping , import duty ( which I think would be 6.1% max) etc my margin will be too low.

 

I am struggling to determine what is my break even price as there are so many variables, mainly due to transport costs , especially on small orders. How do I get an order of say 20 units from one shop on the East coast and not make a loss??

 

I have decided to concentrate on East coast USA rug  & carpet  retailers to keep the transport costs low as possible. I estimated that the max price for a product of this type would be say $17-19 USD including sales tax.?

 

I estimated that the retailer would want 45%- 50% markup and worked it backwards.

Would you say this is a realistic  margin and the best method?

***Here is the problem: customers, not pricing, distrib and costs.  You are guessing there are customers.  You need to test that hypothesis, but you are not in a position to do so, being in the UK.  If I was advising your friend, I would say sell your product FOB Liverpool to a USA importer, and forget about it.  Let the USA importer do all the work, handle all the problems.  Of course, there is no role for you in this scenario, but there you have it.***

 

Max retail price  less 50% , less unit cost, transport cost and duties = break even  wholesale price.

 

I have spoken to some buyers of larger chain stores such as Home depot and sent samples. This hasnt produced results as yet

***And it will not...***

so I feel we have to get the product in the small shops first and get a presence.

***Very likely,  but again, you are not in a position to do that, and if you are slightly successful, at any rate before you get a return on your investment, others will simply go around you.***

 

So far I think Home Depot appear to be the most straightforward to deal with in they have a 70 page document detailing how they conduct business with new supplier.

***Don't ignore that you cannot comply with those 70 pages, and the 50 more with an actual order.  And every error or ommission comes out of what they pay you.  It is not uncommon for a new small business to end up owing Home Depot several thousand dollars on the first shipment.***

 

I would like this to be the first of many products but product selection is obviously key. How do you spot a good margin product? I did see  a few  of your videos on products on You Tube.

***this question is coming up more and more, so I suspect there is someone flogging the idea that success is a matter of spotting a series of hot sellers...  to answer your question, no one spots a good margin product, one develops one.  That is the way it has always been, and is now.  ***

 

 

The other point is the formula only has a UK patent which I think is a  problem and I hope I can convince the supplier to at least apply for a US patent once sales start.

***Patents are a waste of time and money, and actually harm your prospects. You need customers, not monopolies.***

 

I would be very grateful for any advice you can offer on pricing, transport costs and how I can make this excellent product sell in the US.

***My advice is to understand your opinion does not matter, it only gets you into trouble, only the opinion of the paying customer matters.  Until and unless you start with the paying customer, all the other effort is a waste of time and money.  And you are in no position to make money with the product you found.

The approach you propose is not unique, but it is always infecund.  What I teach is how to start a business that is doable and achieves your goals.  In essence you'd have to forget about all of the above...  What I teach is to NOT do what you are doing.  

If you find success in your method, please do share it with me.  It will be the first time I've seen it work, and I'll tell everyone I was wrong.

John

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