Building a business requires a lot of moving parts. From cultivating relationships with peers and customers to branding and marketing, there are many factors that go into being successful. But if you’re not constantly developing and rolling out new products, you’re likely to get stagnant in your customers’ minds, creating opportunities for your competitors.
New products mean new demographics and new opportunities. But beyond that, your customers know that you’re interested in a long-term journey instead of a quick buck.
When it comes to developing new products, you have three options, in my experience. First you can sell an existing product from a manufacturer. That will likely be the easiest way to get a specific item on your site.
The second option is private labeling, whereby you apply your brand and logo to a product that has been manufactured, tested, and is ready to go. Think generic items at a grocery store.
The third option is the most complex and time consuming. It is to develop your own product. This allows you to really produce an item that fits your customers’ needs. It can give them a unique experience, and it can allow you to control your margins and price points within the constraints of the marketplace.
Manufacturing: Getting started
If you were thinking about developing your own product line, start, instead, with selling someone else’s product that you could eventually develop yourself. This would likely be the lowest barrier to entry. You’ll get a feel for what the volume could be, and it will help you make decisions about the features your customers desire.
When you’re ready to manufacture your own product, it’s best to start with a price point and work backwards. Decide, also, if you want to be the sole retailer, or if you want to wholesale the item to others.
If you go the wholesale direction, factor in the standard markups for the retailers when determining the your selling price to them.
Once you have an estimate for a retail price and a strategy for wholesale versus retail, you can determine if you can produce the product profitably.
Products seem to always take longer to develop than one would expect. It’s important to have deadlines through the various development phases. If this is your first time to develop a product, you’re likely not going to fully understand how long it will take. A good rule of thumb, in my experience: Whatever your estimated timeline, double it.
There are typically factors that are out of your control when developing a new product and putting it into production. Thus, avoid announcing a deadline to your shoppers unless you are absolutely guaranteed that you will hit it. Customers cannot become upset about a product they do not know about or that has no launch date.
Once manufacturing begins, it’s easy to get overzealous and release many new products. But remember that the number of products you launch is dependent on their price point, seasonality, and unique engineering.
For example, a $10,000 watch is not an item that your customers will purchase every month. In contrast, our products at Beardbrand mainly sell from $10 to $50 — a much easier purchase.
So, if your business is in a lower-price-point market, you’re likely going to want more frequent product launches. If you have more capital-intensive and higher-priced products, you can get away with less frequent releases, such as quarterly or annually.
Finding the right manufacturer
One of the biggest challenges is finding manufacturers that align with your business processes. A lot of manufactures work mainly with longstanding customers. These manufacturers often have high minimal order quantities — MOQs —that can cause your business to be stretched thin, with more inventory than you need.
Taking the time to find the proper manufacturing partners is going to be among your biggest obstacles, in my experience. Attending relevant trade shows will likely be a very cost-effective means to finding what you need.
Finally, keep in mind that developing and manufacturing new products will pull you away you from your daily practices and your standard business model.
You have to commit to manufacturing, and understand that it’s a completely different way of doing business than standard retail. The time and energy to test and prototype custom products could be saved by simply retailing what already exists.
In short, due diligence on the front end will help determine if you’re ready to become a manufacturer.