They discuss how “little broke John Doe” had $50.00 and now does $500k a year or more on Amazon. They all fudge the numbers even I have fudged the numbers a bit until I got big enough I did not care any more.
But what they do not tell you is the real cost in money and time to launch something that actually begins to make money online.
So I wanted to take a couple of case studies and look at the actual costs and results so you can get an honest look at the highs and lows and see if this is really what your prepared for or if at your current financial and experience level you should focus on growing your cash by wholesaling or doing RA/OA (retail or online arbitrage)
Time to market 4 months
Cost for first shipment 12k
Marketing Budget 5,000
Current Monthly Sales $899.00 or 60 units.
Second Shipment 12,000
Total Marketing Budget 10,000
Total investment 34k, expected break even date 38 months.
Time to market 3 months
Cost for first shipment 9000.00
marketing budget 2400.00
Current Monthly Sales. 3748.00 or 150 units
second shipment 12000
total marketing budget 2400.00
Total investment 21k, expected break even date 6 months
Time to market 5 months
Cost for first shipment 3200
marketing budget 0
Current Monthly Sales 899.40 or 60 units
second shipment 6500
total marketing budget 400.00
Total Investment 9700.00, expected break even date 8 months
As you can see from these case studies of the 3 most recent PL product I launched just these basic number show what it costs and how fast I expect to get back to break even.
Product 1 took 4 month to get to market, is in an extremely competitive market and if I do nothing is one I will probably kill and may not break even on or if I do it will be a long time.
Product 2 took 3 months to develop and get to market and another 6 month will break even. This is a great product that I am continuing to develop and could see even faster momentum.
Product 3 was a control product took 5 months to get to market and will take another 8 months at the current rate to break even. It happens to be another great product as it gained traction without any marketing budget. (will save that for another post)
So these are my experiences launching products and these are not my only 3 just the most recent. Is it a great way to go yes, does it take longer to cash positive than RA/OA/ or other methods yes in my experience in most cases it does.
But long term you get lower volumes at higher margins and own the brand. There are benefits to this model, and I run mine in conjunction with other online eCommerce business models as they all have strengths and weaknesses.
Make sure your mentor, expert, or coach is honest about the real costs of launching private label products. Understand the time and effort it takes and the capital required. And be realistic about the time these products will take to pay your investment back and start actually making real money. If they cannot show you details on products like these they actually have launched then maybe you should keep looking around?
To check out more of my blog or some free video’s discussing eCommerce, eBay, Amazon, and private label products check out the web site but to see about my eCommerce inner Circle mastermind check out this video GDW INC. MASTERMIND.