Landing sales before production run?

storybookstudiostorybookstudio Posts: 7subscriber
edited April 2007 in Business Planning
Hi fellow SUN`ers! I`ve posted quite a few times here, but I`ve never actually asked a question (I don`t think??) I`m counting on all of the seasoned business veterans of this community - please help!
Here`s my situation. I have had a product prototype developed overseas, and I am now anxious to bring it (and many other related products) to market. My first product is a type of craft kit, and most of the items included in it, have rather large minimum order requirments by the factories.
Is it unrealistic for me to think that I might be able to first land a sale (or sales) that would satisfy these order requirements? Otherwise, I am going to have to pony up about $35,000 for the first production run (and then pray for sales). In addition to that, I will have to pay quite a bit in molding fees for each of my designs, once I am in production. I have gotten around the molding fees for the prototype, by hand-cutting the items myself (decals and stamps).
I have gone to QVC to present my line, and I am now praying for the small miracle that I will get "thumbs up" email from them on April 27th. But since I realize that my chances are slim, I am also looking to set up appointments with buyers of craft chains like AC Moore and Michaels. I was also thinking ofpossibly seeking sales from smaller, independent stores,  where I might be able to take pre-orders until I reach that minimum requirment and I can start my first production run. But I`m thinking that:
a. these stores have no reason to trust me without a proven track record
b. It might take a long time to aquire that many sales.
Another thought is to try and source the manufacturing domestically for now. It might cost more per product to start, but I`m almost sure my minimum order requirements would be much lower, and would probably cut my initial investment in half (at least). I am trying to fund this myself without partners or investors, if possible.
I would sooo appreciate any thoughts or suggestions - on any of this!
 storybookstudio2007-4-2 15:25:1

Comments

  • MNGrillGuyMNGrillGuy Posts: 2subscriber
    I would like to have some idea of sales potential before dropping $35K or more.  Can you get 30-50 production samples?  Air freight it over.  Even if it costs you a bunch.  Do an Ebay listing, or Google ads or present literature to local shops that might be a good fit.  If you assume all the risk (no cost to shop until it sells) they may take your product.  Get a webpage and see how many visitors a particular marketing strategy pulls in.  How many converted to sales?  Is the cost per customer sustainable?  Do the numbers work?  Just a few thoughts. 
      
  • RumpelstiltskinRumpelstiltskin Posts: 1subscriber
    I have no specific"expertise" to offer. However, I am in a similar situation, and it all comes down to how much confidence you have in your designs/products. I would suggest going forward with the production run (if financially possible). The reason is simply based on the fact that you will "eventually" recuperate your money, i.e., in drips and drabs; simply because you`ll have something to sell - ANYWHERE & EVERYWHERE!
    Also, by having product ready-to-go, this offers you the ability to execute a more formidable marketing campaign (walk-the-walk..."I have product"). In other words, its harder to market "potential" than it is "actual". Therefore, you can "peddle" your products toward success! Besides, you`ll be that much more excited and motivated too.
    I have a great (awesome) patented invention, and I know 110% it will be a success. If I had the upfront money to produce it - I would!  This would give me an opportunity to promote it in ways that lip-service cannot. After all, its all about "THE PRODUCT" (not Just talking about it to people). The difference between having a product, and not having a product (in the eyes of the prospect), is like a G.E.D verses a P.H.D...credentials and commitment. Best wishes!
    PS. $35K is not a death sentence (it`s a car payment). As I`ve said, it will never be a loser (at worst a slow recuperation of $35K).Rumpelstiltskin2007-4-2 16:59:14
  • storybookstudiostorybookstudio Posts: 7subscriber
    Thank you so much for your responses and suggestions.I was reading an article online and came across this paragraph:
    Don`t be afraid to lose money when testing. Inventors have a dilemma when starting to sell products: If you go local with small volume production, you`ll sell your product at little or no profit and might even lose money. If you invest in a large production run, you`ll have a big investment but won`t be able to fine-tune the product to maximize sales. Almost every product needs adjustment, even products from large companies. The safest course is to go with a small production run, even if you lose money initially. That way, you`ll know you have the right product when you launch it across a big market.
    This makes perfect sense to me. I am glad that I have secured the manufacturing sources overseas for larger runs, but now I think finding domestic sources for short runs makes sense also.
    Jeff - Yes, the overseas manufactures are going to understandably charge me out the whaazoo for a short run. The molding fees are for cutting the stencils which I will have to pay for before the first production run. For prototype purposes, I have had to cut them myself. I could actually do this for a small run  - it`s just a huge pain to cut 19 sheets (of detailed graphics) per kit with an exacto knife. But, it can be done.
    nhgnikole - I will look into purchasing her book, or online membership. Sounds like an interesting concept.
    Rumpelstiltskin - You`re right - 35k isn`t a death sentence! However, if I can get things off the ground in a more conservative way, albeit slower, I think I`ll choose that route. I am confident that my product will sell, I just think the stress of having to sell 5000 units might put me (and my family) over the edge!
    MNGrillGuy - You are right  - obviously having a small quantity of the product in hand will allow me to test the waters before diving in. I can gather more information from my target market, and slowly make a case for my buyers with the additional research.
    So I think what I`m leaning towards now, is the small domestic production run here in the US. I just need to source all of the components of the kit, assemble and possibly handcut them myself (unless I can find a cheap enough source to do this for me). Then maybe I will launch my product and company at an industry tradeshow (CHA perhaps). At the very least, I will get immediate feedback on the product, and maybe even some orders.
    Thank you all so much for taking the time to respond. It`s so great to be able to come here and bounce things off of others. Sometimes I find it incredibly difficult and lonely without a partner or partners to brainstorm with. My family is extremely supportive, but they don`t have the answers I need.
     
     
     
     storybookstudio2007-4-3 9:31:38
  • crazychixcrazychix Posts: 5subscriber
    It sounds like you are in the same situation I am in with a new product, no customers yet and how much to produce on the first go around. The books I have read all say to make a prototype, go get orders and then have it produced. I don`t think that is realistic, how do you determine when your delivery date is when there is no production yet? In my case, I don`t want to have to be sitting in my dining room manufacturing my product when there are so many other things I need to be doing to get my business up  and running. My product is a apparel type product and looking for someone here in the states has become quite a challenge, I need to have it manufactured in China to save on production costs but don`t want to invest all my money in one product. I am currently talking to basically my competitors to see if they can manufacture my product for me, I know I will be paying double but I don`t want to be stuck with product that is just sitting. My hope is that I can get a small quantity made, sell some and create enough demand to qualify going over seas for production. I am currently doing some market research to see how much of demand there might be- hoping that friends and family weren`t just being nice and saying it was a great product.
  • RCTOYSRCTOYS Posts: 2subscriber
    I have been going through the same thing.  First I think you have to realize that you are young and you can recover the money over your life but it`s worth the risk.  But to help you gauge if you are taking your product in the right direction, I recommend going to the FAO Toy Auditions http://www.fao.com/custsvc/custsvc.jsp?sectionId=234</A>
    I went there last year and was then much more confident to move forward.  They do not expect that you are in full production as long as you have a great prototype.
    Second, find a tradeshow that targets the retailers you feel are your strongest customers and put up a booth.  This will help you get leads.  You probably won`t get many orders but you will, again, get a read if the product will be accepted by the retailers.  You might not get Michael`s the first year out - or you might (you never know) but at least you`d build up a strong group of specialty retailers to help justify the costs ahead. 
    This was the exact road I have taken over the past year.  My product will be hitting the shelves in September and I have already gained  sizeable retailers, national press, etc.  Now it`s time to deliver!
    Good luck. 
  • storybookstudiostorybookstudio Posts: 7subscriber
    crazychix - Yes, it sounds like we`re in the same boat! I am leaning towards a small production run here in the US, (maybe sourcing 1 or 2 things overseas) for my kit. I know what you mean about the family saying your product is great! It`s nice to have the support, but obviously it will be great to get feedback from total strangers too. ;0)
    RCTOYS - I checked at the link for the FAO audtions. I`m just not sure my product would qualify, since it`s not really a toy, but a craft item. Here is a link to my webpage that tells more about it:
    http://www.storybookstudio.net/kits.htm</A>
    Since you`ve been to one, maybe you could let me know if  you think it`s something that they would be interested in?
    Degrees -  Thank you very much for the links! I`ll email them and see if it`s feasible, although I`m thinking that my designs are a little too detailed. It`s worth checking into though.
     
  • RCTOYSRCTOYS Posts: 2subscriber
    They have craft kits at their store and are looking for unique products that are not in mass market.  It was a really fun experience, very casual - you got to speak to the buyers.  Through it, I think you will be able to see if there is a market out there, maybe they will give you things to improve on or maybe they will like it just the way it is.  Best case - you land your product in FAO.   Worst case, you have legitimate action items to make your product better.  It`s one thing to get support from family and friends - we definitely need it to push through some of these roughs spots - but it`s the nod from the industry that you really need.
    Another route you might want to try - not sure where you are located - but HobbyTown USA has their own tradeshow in July in Nebraska.  They have around 190 stores. (franchise)  It might be a worthwhile show for you as well to get the orders/gain store contacts.
  • storybookstudiostorybookstudio Posts: 7subscriber
    RCTOYS - I just registered for the FAO toy audition. It`s only about an hour from me, so I figure what the heck! It looks like fun anyway - I love FAO!
    I will have to check out Hobbytown. I`m in NJ, so I need to make sure it`s appropriate. I`m thinking of registering to exhibit for the CHA show - either summer or winter, not sure yet. Have you been?
  • RCTOYSRCTOYS Posts: 2subscriber
    YEAH!!   What date will you be going?  You will really enjoy the experience and it`s the best way to really get great feedback from the buyers.    It`s a similar experience as the QVC - but MUCH stronger.  You will be in a room with 2 tables and your back will be to the other person who is also presenting.  You will not even notice they are there.  It is very casual - they were talking to me about the product before I even unwrapped half of what I brought.  I thought I would have this pitch to give them - they just want to talk, ask questions, etc - so don`t stress about what you are going to say.  This is for newcomers so they don`t have big expectations.   Then you will get a letter a few weeks later telling you if they will continue on with your product or not.
    When I went, there was no rhyme or reason to the order - I ended up waiting until around 12:30 even though I pre-registered and was 8th in line outside.  I think they just call in the next person who has a product that fits with the buyer who is open. 
    It`s very cool how they welcome you!!  It took everything I had not to start crying
    Please let us know how it goes!
  • storybookstudiostorybookstudio Posts: 7subscriber
    I think May 10th was the date. I haven`t heard back from them yet, but I filled out the form so we`ll see. It should be fun, and I"m glad it`s casual. It will be nice to maybe get some feedback, as I did not get much from QVC.
    Thank you for letting me know what to expect! BTW, I sent the Rag Shop info on my product yesterday, and they got back to me saying they love it, and they think it`s adorable. They want pricing and details, so cross your fingers for me!!
    I will definately let you know how it goes at FAO.
     
  • RCTOYSRCTOYS Posts: 2subscriber
    That`s great news! 
    I`m not sure if I ever got a response back from FAO with a confirmation.  I know it was strange and I ended up emailing them to make sure we were set.
    It`s difficult to take the financial step (I am tired of writing checks!) but if you go in it with the thought that you can`t fail....you will figure a way to make it work.
     
  • mompreneurmompreneur Posts: 1subscriber
    I also pitched at FAO.  It was worth it to get some feedback but if you are already going to the ASTRA show, I would imagine you would meet them there so it might not be worth the extra money if you are looking at the budget.
  • storybookstudiostorybookstudio Posts: 7subscriber
    Hi Katherine!
    I think I`m going to do a little of both wholesale and retail. I will have to since my minimum is 2000 kits, and some of the items in it have a minimum of 10,000! I agree - having the completed product, ready to go is probably a much easier sell than a product that is still in the prototype phase.
    Good luck!
  • righttimerighttime Posts: 1subscriber
    I just picked up on this conversation, but maybe my comment is timely.  The earlier statement about "cutting stencils with an Xacto knife" made me think that a local sign and banner shop may be able to do this operation rapidly and fairly economically.  Most of the signs and banners you see today are locally manufactured from cut vinyl.
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