Hard Lessons from Designing My First Product

Recently I went through the entire process of designing and manufacturing my own product, all the way from early sketches through a final production run.

As a newbie to product design, I learned a ton and want to share my experience with you.  You’ll learn:

  • The exact product I created, including a link to the Amazon listing
  • The financial metrics for costs, profit and more
  • What I’d do differently the next time I design a product

 

Subscribe: iTunes | Stitcher

(With your host Andrew Youderian of eCommerceFuel.com)

Welcome to “The eCommerceFuel Podcast,” the show dedicated to helping seven-figure-plus store owners build incredible businesses and amazing lives. I’m your host, Andrew Youderian.

Today on the show, it’s just me. I won’t be offended if you, you know, you skip over to NPR, Guy Raz. He’s got that soothing voice when, you know… It’s gonna be a lot of me, at least 20 minutes of me, so I won’t be offended if you don’t stick around.

But if you do stick around, I wanna talk about something more in-depth that I have touched on in passing on the show, maybe with people in, you know, individual conversations, and that is a product that I designed from scratch, had built for me over in China and brought back over to the U.S. to sell on Amazon.

And talk about that experience, talk about trying to get open with it. It’s not super frequently people talk about their specific products. I’ll be sharing the listing to the Amazon products, you can go check it out. You can see what it looks like.

So, sharing the product itself, some of the unit economics, how much it cost me to have made, how much I sold it for, the economics in the lower batch run versus the higher volume run that I did, and most importantly, all the mistakes I made along the way. So, I hope it’s interesting for you. Especially if you haven’t done your own product before, particularly, I hope this is helpful, from a learning standpoint.

But before we jump in, I wanna give a big “Thank you” to our sponsors, first to Liquid Web, who has the best, fastest, most stable platform for hosting your WooCommerce store anywhere you can find online. One cool thing they do is they have a staging platform for your store that lets you do a few things. You can make a copy of your store and stress test it, so if you wanna go in and try to break it, try out new changes without having to be live, it’s super easy to do.

And like I mentioned on the stress-testing side, you can mimic 100 people connecting to it, 1,000 people visiting your site, to see how things like your order processing works, your add to cart works, just your general sites feed. All these different things so that when you do have a moment where you have to be able to shine for primetime, maybe it’s “Shark Tank,” maybe it’s Black Friday, you’re confident you’re ready to go.

So, if you’re using WooCommerce, you need to be on Liquid Web. You can learn more about them at ecommercefuel.com/liquidweb.

And then secondly, a big “Thank you,” to Klaviyo, Klaviyo, who makes email marketing automation incredibly easy and powerful. And they rolled out this year, a very impressive lifetime value feature. A lot of people talk about lifetime value, almost no one knows what their actual customer’s lifetime value is, unless you’re on Klaviyo. And they can calculate your backward looking LTV for customers, forward-looking predictive LTV.

You can even create segments in Klaviyo of your highest LTV customers to create lookalike audiences in Facebook to be able to do prospecting that’s a little more dialed in, for hopefully profitable customers. Very cool stuff. So, if you’re not using them, that’s just one of the very cutting edge things you can do with their platform. You can get started for free at ecommercefuel.com/klaviyo.

So, the story of this product starts when I was on a road trip with my family. We were driving way back off the main road in the back country, and I had this big massive atlas with paper off road maps. A lot of people tease me for liking…I’m a map savant, love maps. People tease me for them, especially Amy. But, you know, when you’re off road and especially when in places where we don’t have cell phone coverage, they’re super helpful.

So, I had this big massive atlas I was using, top of the map, and there’s no good place to put it. It kept getting ripped up and bent. There wasn’t a good place in the car to put it. At the same time, I’d been shopping for a seat back organizer as well, and so like the thought crossed my mind, like, “Hey, when I get home I wanna buy a seat back organizer that has a really big map pocket so I can put these huge massive road atlases in there.”

So, I got home and started shopping online, and I couldn’t find any that I liked. All of the seat back organizers were made for kids. You know, they weren’t very well made. They were cheap. They were like 10 bucks on Amazon. They were all marketed toward people hauling around kids in a minivan, and they definitely didn’t have any map holders.

At the time I thought, you know, “Hey, I’ve been looking to design something.” I don’t know the process. I’d love to get a little more involved in Amazon so that I know that world a little bit more. And so I made a decision like, “Hey, great. Let’s design one of these things. And so the design side sketched stuff out on just a piece of paper, you know, four or five really in-depth sketches with, you know, with measurements and things like that, and then graduated to a, just a basic CAD drawing program.

I used something called DraftSite, which is free, I believe, and just lets you mark things up with all the measurements. I could put logos, I could drop pictures, text, measurements, everything in there. It worked out pretty well. I’ll drop a picture of one of the, you know, one of the designs in the show notes for this.

So, once I had those, I submitted the designs to somebody on July 14th. And I used a sourcing agent in China, which they did a pretty good job. Doing it again, I probably wouldn’t, because it cut into my margin. They’re helpful upfront, but once you get things going, I think you can build that rapport with the factory. You’re just trading convenience for margin, although maybe I’d be singing a different tune if the products that came over had quality control issues or things like that. Going through it again, I probably would try to work direct with the factory.

So, anyway, submitted the designs on July 14th, to give you a sense of the timeline here. I went through three prototypes before I actually got a sample of preproduction sample I was happy with. So, July 14th, submitted the designs, got pricing two weeks later. The sample details finalized two weeks after that. The sample was finally made on August 20th, and the first sample arrived six weeks later, September 1st.

So, got that first sample, and it was too floppy. It wasn’t rigid enough. I wanted an organizer that was really rigid that wouldn’t flop all over the place. So, made some suggestions via video and emailed those back, got those to the factory and the sourcing agent a week later, September 8th. October 29th, about six weeks later again, I received the second sample. Made more revisions. October 29th again, gave them the next set of revisions.

The third sample shipped December 15th. I’m not quite sure why there was such a gap there. And then finally, December 25th, received a sample I was happy with after a number of iterations, and I said, “Okay, this is great, start production.”

And you think about that, the design phase for this product took five months. And this is for, you know. I’m not designing an iPod here. This is for a somewhat basic cloth organizer for the back of your seat. Granted, it was a little more nuanced than what was out there, but still, it’s a cloth organizer. Five months.

You know, this is my first time doing this, I’m sure people can go faster. But if you haven’t done this before, you know, three months minimum, I would say, if you’re lucky, to go from concept to something you’re ready to actually start producing with.

So, some lessons for me from the design phase from this whole thing was if at all possible, try to work locally to get a prototype that you feel happy with. I could’ve probably hammered out something with someone who could sew locally in, I’m guessing, a couple of weeks. I could have taken that then shipped that to the factory and say, “Hey, here’s what we’ve got. Can you please make this?” But then at least they would have seen what, you know, exactly what I wanted.

We may have had to tweak it a little bit on maybe some materials, or maybe they couldn’t manufacture at scale with some of the features and we could have that discussion, but it would have cut months, you know, three, probably maybe even four months off the process. So, I wish I would have worked a locally, even at a little more expense.

Working on multiple products in series, one of the mistakes I made with this was I wasn’t thinking about this in terms of a cohesive brand, like something I wanted to build out. This is a one off product. There’s so much time, especially with the back and forth here, that if I had had two or three or four products I was iterating on at the same time, the incremental time to say, “Hey, change this, this, this and this,” would have been minimal, and I still would have had all that time where they would have made the product the shipping times.

I could have worked on, you know, probably four or five products in series at, you know, a 20% increase in workload. So, that’s something I wish I would have done.

Make sure you use the product. Maybe this sounds really obvious, but the fact that this was a product I wanted and needed and I was able to put it to use for a week in between, in the iterations in between the prototypes I was using, helped me learn a lot about how it was working, how it was, you know, the shortcomings I had. That was really helpful.

Video, I found to help a lot, especially trying to say, you know, put this here, do this differently, you know, put this stay here. You can write stuff out, but man, nothing is like…pictures beat words, and the video beats pictures. So, I use video a lot to give feedback.

And then finally, be really crazy in on how detailed you get with your specs. I found that if you don’t spec something out, the factory is gonna interpret it and it will most likely not be what you wanted. So, I tried to go from everything from zippers to cloth, to the length of everything. I tried to spec out…I just went over the top with the details that I gave them.

So, I actually had done…I left this part out, but I had done a trip to China beforehand to pick out some different fabrics to feel, and pick out buckles, things like that. And that was a nice trip, a convenient trip. It probably wasn’t necessary, but did help with being able to dial those accessories to the materials, exactly how I wanted to. So, that’s the design phase.

So, December 25th, once I got that sample I was happy with, I ordered my initial test run of 200. And I’ll say this too, there were still a few small tweaks I would’ve potentially made on that organizer. It was not perfect, but it was 95% of the way there, and I did not wanna, you know, push this out another two months.

So, granted, it will depend on your product, but usually, you’ve got to be real careful about shipping stuff, especially if you’re gonna produce in large mass, isn’t perfect. Mine was not perfect, it was 95% of the way there, and I could have made the decision, okay, this is way better than anything on the market. It’s almost there, and I need to move forward. So, have a judgment call there.

But anyway, December 25th, ordered an initial test run, and because I’m probably way more risk averse than I should be, I ordered an initial test run of 200 to see how it would sell on Amazon first before I ordered a ton. January 10th, the production run finished. Feb 10th, it shipped by boat from China. There were some issues with, I don’t know if it was Chinese New Year or logistical issues, but it took a month to get from the factory to actually on the boat.

A month later, March 10th, it arrives on my doorstep in Bozeman, and a week later, I had it in FBA, so March 20th.

So, I mean, you think about that, December 25th, that is three months from when I started the production run to when it was in FBA for sale. So, when you think about from when I submitted the designs, I mean, you’re pushing eight months there, which is a crazy a long lead time. Again, I’ll say it again, like totally was not prepared for how long it would take from concept to actually having it available.

So, some of the economics on this, for the run of 200 you’re gonna run through them, the cost per unit was $16 per unit. Again, I mean, this is low production run, a really high quality organizer. So, I know some people will probably think, $16 per unit, that sounds madness for something like this. But that’s a couple of reasons that bakes into it. And of course, I had that sourcing agent, which also has a margin in there.

So, the cost was 16 bucks, four dollars sea freight plus customs, especially on the smaller run, a dollar in down to FBA, $12 in FBA fees in terms of, you know, your FBA fees shipping and also your commission, all that stuff. So, total cost per unit was $33. At a price point of $40, which is where I was targeting it, that was, you know, seven dollars profit per unit, $18 margin. So, not great economics. And that’s a high price point for this thing. So, I’ll get to the economics on the production runs in a minute, but that’s where we were sitting.

So, lessons from my first production run, order more than you need, even if you’re risk adverse. You know, the production run on this was not that much money. I mean it was, you know, $16 a pop, you know, we’re getting 3,000 bucks. Granted, I mean, obviously everyone’s financial situation is different, but I should have ordered a little bit more, especially had I known how long it would take to again, resupply after I ran out of those 200.

Another thing I wish I would have done is I wish I would have ordered multiple colors to test the demand for different colors out of the gates. As I’ll talk about later, in my bigger production run I ended up ordering a couple of different colors, and I had no idea which ones would be most popular so I just had to guess.

I wish I would have ordered even in small quantities, you know, 10 of brown, or 10 of grey, see how quickly those sold out, even if they cost double per unit, just to be able to accurately gauge how popular all the colors would be relatively, which I didn’t do and I regretted later on.

So, little P&L through my first run, it was about $3,500 in sales to sell through that first production run. At the end of day, when you think about the cost of the actual products to get them over, the advertising on Amazon, some of the ones that I gave away to people, you know, to try to get some attention, reviews for the product, all these other issues, I ended up, to launch this product, to prove the concept and get it out there, I was in the hole about 1,400 bucks.

So, they sold actually fairly well. I get really good reviews on them. On Amazon right now, they’ve got, you know, I think 60, 65-ish reviews, and well-reviewed for a niche organizer that I haven’t done a crazy amount promoting pretty well.

So, I ran out relatively quickly. Here’s the second problem, I didn’t anticipate my lead times enough. So, I run out of stock. I think I started selling them, you know, March-ish, ran out of stock, you know, probably within a month or so, a couple of months, got busy with life and was not on top of getting that second production run ordered. Huge mistake, of course.

So, in terms of the production run time lime, June 1st, sending the wire transfer, August 1st, the production run was completed. This was 1,000 units this time. They left China a couple of weeks later, August 21st, arrived in Bozeman, September 21st, and October 1st, they’re available at FBA. So, four months lead time from once I started the production run to actually having them available at FBA.

Some economics on these, so with a run of 1,000, if you remember the run of 200 I was making seven dollars profit, selling them for $40 with all my costs. With a run of 1,000 actually, you know, I more than doubled my profit, was making, you know, $17 and change, selling them for 40 bucks. And the margin was about 43%.

So, the way that broke down was instead of having a cost of $16, I was able to get that cost down to $12, doing the larger run. Sea freights and customs fees went, you know, were less than half because you’re shipping in bulk. Of course, that’s gonna come way down. FBA balanced about the same. The FBA unit fees went way down. They went from $12 to $8, and the reason was, this is crazy, but it’s the way they were packaged.

I didn’t think through over-sized FBA measurements when I originally started selling them. The way that they were wrapped up, the way they were sold, they weren’t rolled up. They were just sold flat, and one of the sides, I can’t remember at the moment, but it was over 17 or 18 inches. There’s a threshold where you get on to over-sized units, and I was over that by half an inch, and so my fulfillment fees were four extra dollars per pop.

So, if you’re thinking about designs for Amazon, think through and make sure you understand where those oversize requirements are, and design your product around it. Fortunately, I was able to just with the way I changed the packaging and, you know, shipping the product, rolling it up versus selling it flat, was able to get around that, but was a huge, you know, it was a huge difference in price. So, anyway, bottom line, my top cost per unit was $22 and change, versus $33, which helped a ton.

So, some big lessons for me on the Amazon front, one, don’t run out of stock. I mean, you just kill your momentum. So much of Amazon is, you know, building up that sales momentum and keeping it up there, which I, you know, killed the first rule of don’t do that.

Plan for your variations from the get go. One mistake I made was I created my product without any children variance. Maybe this has gotten easier since I’ve done it, I had to go through and I couldn’t add child variance to my existing product. I pretty much had to create a brand new existing product with those child variants in it.

So, if you have variations from the beginning, make sure you create your master product with all the child variants, or even if you think you’re gonna add child variants in the future, create it with the capabilities and the function to be able to have those variations from the get go.

And then finally, don’t wait too long to check on your PPC data if you running sponsored ads. I went in there, let them run for a while, and didn’t get in early enough to add a lot of negative modifiers, negative keywords, things like that, and ended up losing, you know, my return on ad spend was not great from the beginning, because I didn’t optimize it. Probably pretty obvious lesson to people, but one mistake that I made.

So, that’s, you know, a high level of the whole process of design concept to running through a production run. A few other mistakes I made at a high level, conceptually, for the whole project, I didn’t focus on this at all. I did this as a side project, something that I thought would be fun to do and maybe make a little money. And I’m really glad I did it, but I did not set it up for success.

If you’re gonna do something like this, you know, spend the time, invest the energy, and, you know, the effort to push through it, and make it part of the cohesive brand strategy. You can make single products from Amazon work well, but I think it would have worked a lot had I had maybe a line of half a dozen really high quality organizers built for very specific vehicles that I could, you know, market more specifically, and like I mentioned before, roll out a whole product line versus just one.

The other mistake I made was it was a really niche product, extremely niche product, and it wasn’t very expensive, right? So, the number of people that want incredibly well-built organizers for off road vehicles that have net pockets is pretty small. And I didn’t price it accordingly. Even if I had priced it accordingly, I’m not sure people would pay it.

So, I think about some niche products I buy, and especially for small markets, they’re probably two to three times more money than you would think, but the reason I pay for them is because they’re for hobbies that I have that I’m really passionate about, and I’m much less price sensitive for. I don’t think that was the case for this, so I think I overestimated the…I didn’t do a whole lot of market research from the get go.

I was scratching my own itch, but I was scratching an incredibly custom itch, which, you know, ended up I think limiting the potential there.

A few things I did get right, diving in and getting started. You know, next time I do this, I’ll be three times faster. And focused on something, you know, of really high quality and something proprietary. I think most people know by now if you’re selling me two products on Amazon, this could be tough, and if you’re focused on quality, that tends to be a much better differentiator than price.

So, that’s the whole arc of the project, some of the hard lessons I learned. You know, going forward, I’ve, you know, still selling through the very last part of that production run. It’s been a good product, still on the fence if I’m actually going to, you know, re-up and do another production run here, in terms of just if it’s worth the hassle. It probably may not be. But it’s nice to, because it allows me to hop on here and give you some, actually give you the real behind the scenes, all the cost numbers and everything.

If someone wants to try to take me on in this niche, have at it. It is not a honeypot, you are more than welcome to. But it’s nice because I can share some of the details.

So, we’ll probably let these run out and keep a handful, but not gonna be the next evolution of the business. So, I hope this was helpful. I’ll link up to the product on Amazon in the show notes here, so if you wanna check it out and see what it actually looks like. Hopefully, some of these lessons are helpful to you, especially if you’ve never gone out and designed your own product from scratch before.

That’s gonna do it for this week, but a few important things to know about, especially if you’re a store owner before you go. First, if you’re looking to hire for your eCommerce business, make sure to check out the eCommerceFuel job boards. We’ll get your job in front of thousands of qualified job seekers to find you the perfect candidate. And if you’re looking for work, you should check out the dozens of hand-picked opportunities, along with lots of other roles that pop up every week at ecommercefuel.com/jobs.

And if you’re an established store owner, you absolutely should be a member of our private community for seven-figure-plus store owners. You get access to a discussion forum with over 1,000 vetted experienced ecommerce entrepreneurs, invitations to our in-person, member-only events, and access to our private review directory with over 5,000 software and service provider reviews. If that sounds interesting, you can learn more and apply for membership at ecommercefuel.com/forum. That’s F-O-R-U-M.

And big, big “Thank you” to the two sponsors who make the show possible. First, to Klaviyo, who makes email marketing automation incredibly easy and powerful. If you’re not using them for your store, you’re leaving money on the table. You can get started for free at ecommercefuel.com/klaviyo.

And then secondly, to Liquid Web, the absolute best place to host your WooCommerce store anywhere online. If you want a rock-solid store that can scale with you when you need it to, check them out at ecommercefuel.com/liquidweb. Thanks so much for listening, and looking forward to seeing you again next Friday.

Want to connect with and learn from other proven ecommerce entrepreneurs? Join us in the eCommerceFuel private community. It’s our tight-knit, vetted group for store owners with at least a quarter of a million dollars in annual sales. You can learn more and apply for membership at ecommercefuel.com.

Thanks so much for listening, and I’m looking forward to seeing you again next time.

 

What Was Mentioned

 

Flickr: Brittni Wood

Post tagged in: Podcast

0 Comments

Speak Your Mind

Your email address will not be published. Required fields are marked *