Step-By-Step Guide to Creating and Selling a Physical Product

What would spring to mind if I told you I make a living designing and selling table tennis equipment? Would you imagine me standing on a street corner trying to convince unwilling passers-by to purchase my products? Or perhaps you’d picture me inexpertly trying to stick together bits of wood with superglue?

Screw that.

If you want to make a real, scalable business, those are the last things you should be doing. Why not? Well many reasons, but primarily:

  1. You can quickly become a bottleneck and hinder the business. You might be able to make 10 products a day, but you can’t make 10,000.
  2. Anyone can maintain the business, but the time you waste on it is time you’re not spending creating and expanding. The business owner should be focused on strategy, product conception, networking, marketing, etc.
  3. They’re boring.

In this post I will go through every step we took to build and create the Original Bat Case for Eastfield Sporting Goods Co. We (Ben Larcombe and I) have tried our best to build the brand with growth and scalability in mind. Every single step in the supply chain is set up to be completely automatic – to go from selling 10 bat cases to 10,000 all we need to do is type an extra three zeros into an email.

Now don’t get me wrong – a lot of work has gone into building and designing the case. But that’s the point. All the work is in the building and creation, not in the maintenance. Now that it’s setup the brand is on auto-pilot. That means we can focus all our efforts on marketing and coming up with new, innovative products.

 

supply chain outsourced

Product Creation

The first product we created needed to be special. We wanted something that would be unique and really stand out. For Ben (an avid table tennis player and founder of Expert Table Tennis) a bat case was the obvious choice. Before Eastfield came along it was pretty much impossible to find a bat case that didn’t look hideous.

laptop sleeveWe decided to take a new approach and model the case off the look and feel of a laptop sleeve. But we needed to go beyond that. It needed to be made from the highest quality fabrics that you’d expect in a top end product, and be robust enough to keep an expensive bat safe, even while being thrown around at a table tennis tournament.

At the time, we knew almost nothing about the manufacturing process or even what the ‘highest quality fabrics’ are. But that’s OK, we could work it out…

The first step was to get in touch with a few manufacturers that have a track record of creating good quality laptop sleeves. Finding and getting in touch with them is actually a lot easier than you would think.

We headed over to Alibaba, searched for “laptop sleeve OEM”. Alibaba is a bit like eBay but for wholesale products and we have found it to be great for getting the contact details of factories in China. OEM stands for “original equipment manufacturer”, which means that they are willing to manufacture products for other companies.

We had a look through the search results and emailed each manufacturer that we liked the look of, explaining briefly what we were planning and asking to be sent some samples.

After they arrived we were able to choose the factory that we thought was best and start working with them to create our case. The internet is amazing. Once upon a time we would have had to travel back and forth from China, traipsing from factory to factory trying (and failing) to not get ripped off. But no more, we didn’t go to China once. Almost all communication was done through Skype chat or email from the luxury of home.

As both Ben and I are pretty hopeless graphically, we hired the services of one of Ben’s university friends, Tim Shelton, to turn our ideas into something that could actually be made.

Two months later and after a lot of back and forth our first prototype arrived.

eastfield bat case prototype

The first reaction was that we were really pleased with it. It was exactly what we had asked for, the manufacturer had done their job to the letter. But as time went on and we stress tested it and thought about it some more we realised that it wasn’t good enough. There was nothing exactly wrong with it, but there was room for improvement. The Eastfield bat case had to be the best, we had to be perfectionists.

It was mainly little things: the material felt a bit porous so that if the case fell in a puddle we were worried it could soak through. The inner lining was a bit thin and flimsy – it didn’t hold the shape of the case as well as we wanted. We didn’t really like the orangey brown colour. We thought that it looked a bit cheap. It was also a bit small, fitting a bat quite snugly but with no spare room.

On top of those improvements, we wanted to add a flourish to make it feel a bit more high end and a bit more obviously designed for table tennis. After a bunch of amateurish mock-ups by us, followed by some more professional ones done by Tim, we had our changes sorted and confirmed. Notice the debossed table tennis bat on the back – our minimalist flourish.

eastfield version 2

“All these changes use expensive materials. It will make the case much more expensive.” We were told by the manufacturer.

That’s OK. We wanted the bat case to be the best

Even so it took another two prototypes before we got a product we were 100% happy with. I’m so proud of how it has turned out.

finished bat case

Up until this point, we really hadn’t spent much money at all. All the samples and prototypes had cost us in total under £100 and the only other cost had been the design work. But now came the risky part. It was time to place a large order.

We knew the order had to be large because there was a minimum order quantity at the factory and we needed to bring down the cost per case of shipping. But how large should it be? The time required to manufacture and ship all the way from China meant that there could be as much as a three-month delay between placing the order and it being booked into a warehouse ready to sell. We wanted to have enough so that we would have plenty of time to get a second order under way before selling out. 1020 cases seemed to a good number.

The final step was to purchase some unique EAN and UPC numbers for barcordes. We planned to sell the cases ourselves, but if we ever wanted to wholesale to retailers or put them up on Amazon a unique barcode was necessary.

Freight Forwarding

Getting 1020 cases from China to the UK can be a right hassle; dealing with customs, the legals of shipping and all the various tax is a real headache. Luckily there are plenty of companies, known as freight forwarders, that can manage it all for you. We simply put our forwarder in touch with the manufacturer and with our end-point fulfilment company and they sorted everything out.

If you are looking for a freight forwarder I recommend Flexport. They are funded by Google, have a really good online interface and due to the transparent price comparison service they offer, are cheap.

Having said that we don’t use them, rather we use a small freight forwarder who we have a long-standing relationship with and who also does our quality control once the stock hits the UK. Flexport is great for moving stuff around, but quality control requires a more bespoke service.

For the bat cases we are holding all our stock in the UK at one warehouse. But with one of our other businesses we sell in both the USA and the UK, spread over four different warehouses. The freight forwarding process is the same each time -> let the forwarder handle everything.

Fulfilment

There are many companies around that say they offer fulfilment services, but what exactly does that mean? Basically we wanted a company to store our stock until someone ordered something. Then we wanted them to arrange the delivery to the customer.

Narrowing down the search to high-tech operations that could automatically interface with an online store, and also had a global presence so that we had the option to expand at a later date, left us with just a few choices. We decided to go with Shipwire. A very good company with an easy to use interface.

After the quality control, our freight forwarder delivered the bat cases to the London Shipwire warehouse.

Eastfield packaging

Online Store Creation

For our website we used an out-of-the-box service called Shopify. Shopify is awesome, it takes five minutes to set up and you don’t need to know any programming or have any design skills. Simply sign up and chose a template you like and voila, your site is online.

We signed up for the cheapest option of $24 a month and 2.4%+20p of all transactions. For that they take care of all the payment processing, which is one of the most complicated parts of online business, provide support and host our site.

Shipwire has a plugin for Shopify that automates the fulfilment process. When someone purchases a bat case, Shopify check their details and processes the payment. If there are no problems it sends the order details to Shipwire. Shipwire then picks out the order and dispatches it through mail and informs Shopify of the tracking number.

We set it up, did a trial order and finally, after nine months of planning and prototyping, we were was ready to launch. Warehouse full of stock, website created and fulfilment automated.

And that’s it. Provided people keep coming to the website and buying our bat cases, they’ll keep getting delivered without us needing to do a thing. Although getting people to come and spend on our website is easier said than done… but that’s a topic for a whole other blog post.

If you want to check out the product of all our hard work, or want to get yourself the best table tennis bat case on the market, we have a great launch offer available for you: Just enter code LAUNCH10 at checkout for £10 off your order. The code expires 22 June 2015.

If I rushed through everything a bit too quickly, let me know what you’d like to hear more about by leaving a comment. I plan to write a few more posts talking about how we’re marketing the cases and going through in much more detail how Shipwire, Flexport and Shopify are all set up to work together. Make sure to sign up to my email list so as not to miss out.

 

Further Reading:

  • Rich

    Very interesting supply chain concept. The pricing seems a bit steep with respect to the competition, so what is the reason or underlying benefit for the consumer to pay more for this one? How did you set pricing with respect to the existing products available? For example, an aluminium case from Butterfly is around £28, regular Butterfly case is £12.

    • With the pricing, we had a few motivations:

      1 – To make the product feel premium and high-end. There aren’t really many examples of such products in bat cases, so we looked at the pricings for iPad sleeves (https://goo.gl/1ZA9tk). Compared to those £25 seems about right for a high-end brand. Also, we believe that compared to the plasticky, cheap butterfly case for £12, everything about this case is better – from design, to the materials used, to the protection offered.

      2 – We want to be able to sell wholesale to stores such as John Lewis or boutique table tennis shops. They will need somewhere between a 50% – 60% discount after which we still need to be able to design, manufacture, ship, store and make a bit of profit. That’s possible at £25, but wouldn’t be possible at £15.

      3 – To give us flexibility to offer promotions and discounts. For instance, we can offer a £5 discount code or affiliation deals to clubs or individuals and still be able to make a bit of money.

      We will be monitoring how sales go at that pricing. It might be that it is a bit too rich for our target market, but we have the flexibility to change our strategy if that proves true.

      • Rich

        OK, thanks for the detailed reply 🙂

  • What matters is creating value…added value always sells.. doing to that you should be creative and reduce costs, focus on essential things, intelligent use of online and cloud based tools to reduce costs.. Even if arbing is focussing on consumer goods …this concept can be used for any sales product or service. Main footnote is to rethink the whole process and optimise it …but do not forget to add value…

    http://www.white-rooms.be

  • Nikhil

    Great article, thank you so much for posting this. It’s removed a lot of ambiguity for me. One question regarding the services that Ben’s University friend, Tim Shelton, provided for you. In my mind, physical product design/prototyping seems to be an extremely expensive undertaking (£50K – £200k). What exactly was done when you say “to turn our ideas into something that could actually be made.” in the article and if you don’t mind me asking, how much did that cost?

    • Hi Nikhil,

      We paid nowhere near that amount. I don’t think Tim would like me sharing how much he charged us, but I can tell you it was very much mates rates. He was doing us a favour. We did the mock ups on paper or on paint and he professionalised them. Shipping and prototyping came to under £200.

      We did kind of shortcut it though by finding a product we liked the look of already and then getting it modified. We turned a laptop sleeve into a bat case, rather than trying to build something completely from scratch.

      • Nikhil

        Hey Sam,

        Thanks for the quick reply! No worries about not being able to share his rates, I understand.

        That makes a lot of sense. I’ll definitely keep that in mind as a potential strategy.

        Cheers!

  • Frank

    Hi, you said you don’t use Flexport. So which freight forwarding company do you use then?

    Also, can you share more details on how you generate traffic to your ecommerce store?

    • Hi Frank.

      I use a small freight forwarder here in the UK. I’m not going to say who it is as they’re too small for the traffic this is getting. If suddenly they got really popular they might up their prices!

      Traffic is driven through two methods:

      1. An affiliate scheme on the Shopify store (http://www.eastfieldco.com/pages/affiliates).
      2. A well read table tennis blog run by my business partner (http://www.experttabletennis.com/).

  • John Guimaraes

    Great story and case study… I’d love to hear how you generated traffic? How did you know this product had a demand?

    • To be honest, we didn’t know there would be a demand.

      But this was quite a unique situation where that didn’t really matter. This isn’t our first table tennis product, we already have a successful business selling table tennis bats. Bat cases are a supplementary item to that business. On top of that Ben Larcombe, my business partner, also runs a very popular table tennis blog.

      Marketing was done primarily through two routes:
      1. An affiliate scheme on the Shopify store

      2. A well-read table tennis blog run by my business partner.

      Our situation was quite unusual. I definitely recommend working out the demand before diving into a new market.

  • Did you have to set up a company before embarking on this path? Or is the income treated as royalties?

    • Hi Anca. We set up a company for it while the bat cases were on a ship. We needed to apply for an EORI number to get through customs here in the UK and it made sense to apply through a new company rather than through us individually or through another company we already owned.

      • Rich Stephens

        Hi Sam,

        How does the EORI work for shipping from China to UK? Do we need to apply for this and then once accepted send it to the supplier? Do they need to include a copy of the EORI with the shipping paperwork?

        Or is this something that customs will have access to automatically once HMRC accept the application?

  • Christiaan Bekker

    Hi, good article and truly a step-by-step guide. Thanks.
    Can you explain why you took the decision to sell the bag through a separate company and not through the one supplying the bats?
    (Possible reasons I can think of is fencing of separate assets or different ownership compositions/shareholders. Is there something else I am missing?)

    • Yeah, you are correct. The primary reason was because of different ownership.

      There was also a side benefit. Here in the UK we have a sales tax called VAT. When you set up a new company it doesn’t need to pay VAT until it hits £82,000 turnover in a 12 month period. Our bat company is currently on the fixed rate VAT scheme which means we need to pay the government 7.5% of our gross turnover.

      As the bat case company is new, we haven’t yet hit the VAT threshold. Meaning that our margin is 7.5% higher than if it had been combined into the old company.

      Another reason is that we have a longer term plan to make this new company a multi-category business. Under the Eastfield brand we want to run everything we can that is table tennis related. From retailing, to tournaments, to education, to publishing. For a few reasons that doesn’t jive with our current bat branding.

      • Christiaan Bekker

        Thanks for your reply Sam. I didn’t consider VAT, in South Africa the threshold is a bit lower than in the UK, but so is our rate (14%). It is still an interesting point I will consider when I set-up my next venture (currently looking at a similar process as what you described above).

  • Alex Tee

    Not sure if you’re still replying. I like how you all went designing and coming out with new product. As an online seller myself, I’m always wanted to go that path but was very afraid to deal with suppliers.

    May I know how did negotiate the price with the Chinese manufacturers and how did you end up with the number of 1020 bats?

    Also you mentioned that the forward does the quality control for you, as “quality control” sounds very vague, how do you know they did a good job? Did you had specific instruction for them like “open and close the bat cases for 100 times and make sure it still work afterward”?

    • Hi Alex,

      With negotiation, we took the approach that we would work out everything that we thought was negotiable and then prioritised how much we cared about each one. Then we worked our way down the list. Each time we found something they cared about more than us we would use that to leverage the items we really cared about.

      I’ll show you what we mean:

      – We started by negotiating on price. Once we got to their bottom limit we moved on to:
      – Negotiating on the materials. We wanted them to use better materials.
      – Negotiating on the materials. We wanted them to use better materials.
      – Negotiating the minimum order requirement. Once we hit their bottom limit we moved on to:
      – Negotiating the freight. We wanted our price to include FOB delivery.
      – Negotiating the packaging. We wanted them to include specific barcoding on the individual packaging.
      – Negotiating on delivery time.

      I once heard some good advice. If you have a longer list of stuff you want than the other side then you’ll win. You can give in on some points they really care about and get the real value on your points.

      We chose 1020 because it is quite a large amount but still an amount we were confident of shifting. So we were able to use that large order quantity to lower our price per unit. It is also about the threshold where you have got most of the shipping savings. You need to go much much higher to get a much better lower shipping per unit price. The 20 part is just because the units are packaged in 60s. 1020 is the closest to 1000 that divides into 60. You should make sure that you have the same amount of units in each carton, it makes the fulfilment centres’ job much easier.

      With quality control, we gave our freight-forwarder a check-list which they went through for each case. Everything from checking for scuff marks to making sure the zip opened and closed smoothly.

      It wasn’t as in depth as ‘open and close 100 times’. That would have got prohibitively expensive to do per item. We do tests like that on one or two random units per shipment.

  • Jaunji Designs

    Hi Sam, Great post with a lot of clear and precise insights which are so valuable to anyone starting out on there own.

    I have read somewhere that you do need some unique EAN and UPC numbers for barcordes and you have mentioned the same in your article. I wanted to know how do I make sure that no one else can list the same product for sale on Amazon (my brand name and design) are unique barcodes enough for that?

    Cheers!

    • I am not sure how you make sure that your EAN and UPC barcodes are unique, I’ve never had a problem before. I purchase them off: https://www.barcodestalk.co.uk/.

      If someone copies your brand and design and lists it under the same project then they are selling a ‘fake’ version. Complain to Amazon and they should remove and ban the seller.

      • Jaunji Designs

        Thank you – Sam!

  • Alexander Radaev

    Hi Sam! Great story, thanks! I am wondering how you organized you clients support and who handles this – I mean things like client calls, e-mails with complains, requests for information etc.

    • With Amazon FBA they handle 99% of the support. We sell around 600 items a month from which I may get 1 email I need to reply to.

      With Shopify we currently only provide email support which we handle. We have template answers for most queries. We don’t bother with returns, I’ll normally just refund the complainer and say they can keep the item. The Shopify business is currently small enough that it doesn’t take up much time. If it grows much we’ll start outsourcing the customer service.

  • Alex Tee

    Why did you use Shipwire instead of Amazon FBA?

    • The pricing works out similar but there is some more flexibility with Shipwire.

      Mainly:

      1. If you use Amazon FBA the items are sent in Amazon branded parcels. Here in the UK there is no option to have plain parcels. In the USA there is but it is expensive.

      2. We are focusing on wholesale orders which Amazon FBA doesn’t really allow. With Shipwire we stocked our cases in packs of 60, which means we can sell them in 60s or as singles for the same fulfilment cost.

      • Alex Tee

        Hi Sam,

        Thanks for the reply! Would you recommend their service?

        As I read reviews of Shipwire on the internet, they seem to be quite a lot people are frustrated with Shipwire. Even Quora seem flooded with complains.

        But those complains are mostly for those warehouses operating in the US though.

        • Good question. Shipwire has a lot of room for improvement.

          They can be pretty slow fulfilling orders and their base prices are also a bit expensive. It took quite a lot of negotiation and testing different packaging options to get the costs down to a level we were happy with.

          But having said all that, I am yet to find a better option. I do prefer Amazon FBA but as I said, the lack of plain/own branded packaging and wholesale restrictions count them out.

          Most other fulfilment companies are in the dark ages when it comes to technology. Shipwire can be entirely automated and I have found the Shopify plugin to be very robust,

          • Alex Tee

            Hi Sam,

            I noticed a new UK fulfillment service (more like they offer their app on Shopify). Not sure if you know about them.

            It’s called http://www.corefulfilment.com/. I tried to send them a couple email but it took forever for them to reply me and since I said I’m a “new seller” in UK. I don’t think they are that keen to do business with me.

            Would like to know what do you think of them. I thinking of giving them another try after I properly launched my business in the UK.

          • FYI: Fedex now does fulfillment. Straight up competitor to amazon.

          • Thanks! I’ll check it out

  • Joe

    How did you handle inventory. Was that automated as well?

    • No. When the stock runs out we need to manually re-order from the supplier and start the process again. It’s normally one email to the supplier and one email to the freight forwarder. Then the payments.

  • Luke Hendricks

    hey Sam, really interesting and helpful information in this article. I just have one question, how did you get you product to be noticed. You said you sell about 600 units each month, how did you gt your product out there. If i start my own supply chain, what if my product simply doesnt sell.

    • Hi Luke,

      That’s a good question. You need to do some marketing to sell your products. You are probably best getting a small number to begin with and trying to sell them, then once you have an idea on demand you can order more and build up the full supply chain.

      We do our marketing through three key routes:

      Marketing was done primarily through two routes:

      1. An affiliate scheme on the Shopify store
      2. A well-read table tennis blog run by my business partner.
      3. Organic sales from Amazon. Basically for the items we sell on Amazon, once they get a lot of reviews and start ranking highly in the best-seller rankings, Amazon starts recommending them.

  • Thank you Sam for a real valuable step by step description of the process. This subject is just too hyped up these days which makes it often sound unrealistic but you’ve opened the kimono…thx. I’ve been thinking about giving this a try for awhile now and your experience and story has made me feel more comfortable with the whole idea.
    All the best with your ongoing adventures…
    Greg
    http://www.redridgemillwork.com

  • As regards listing a new product on Amazon, is it simply a matter of adding the new product details with a unique barcode? Are there any restrictions or “closed” product categories.

  • Ajith

    Hey Sam, thanks for the wonderful & helpful post! I am in a process of figuring out a way of private labelling and selling FBA on Amazon. I am based in UK & wanting to sell on UK & US (since it’s a huge market). I am finding it hard to get information about the tax obligations in US (as a UK limited company) when sourcing a product to both US & UK Amazon warehouse from China. It would be helpful if you can shed some light on this or link any resource that you find is useful!! Thanks again for this amazing post!! Cheers!

    • Hey Ajith,

      Thanks for getting in touch!

      So there are a bunch of taxes:
      – Import duty and tax in both UK and USA.Your customs broker will sort that out for you.

      – Coorporation tax on net profit from your worldwide operation is owed by the UK company.

      – Sales tax (known as VAT in the UK) is owed once you hit a certain threshold of turnover.
      In the USA this is per state and is different in each state. And only applies for items shipped from a warehouse in that state. Chances are your stock will be in three warehouses across the USA, so that is only 3 states sales tax to worry about. Until the day when you have sold $70k of goods in one of those 3 US state you don’t need to worry about it.

      In the UK it is on total sales in the UK. When you hit the VAT threshold (currently £81k) you need to register for VAT and start paying.

      In short, the only taxes you will need to pay in the USA is the import taxes.

      PS. I’ve just written a more complete guide on starting an Amazon FBA business: http://www.arbing.co.uk/amazon-fba-business/

      • Ajith

        Thanks Sam for the answers!! And thanks for the detailed post on FBA!! Cheers!

  • Boon Kiat

    Hi Sam, You mentioned that you did some improvement with the material of the prototype that felt a bit porous and the inner lining that was a bit thin and flimsy that it didn’t hold the shape of the case as well as you wanted and that the orangey brown colour made it looked a bit cheap. I’m thinking of creating my own physical product to sell as well but I’m clueless as to the options of materials available for us to choose from, and for what purpose each of them serve, as well as the pricing. Would you be so kind as to link me to some useful sites where I could get the information from?

    • Hi Boon,

      We just did a lot of Googling and spoke a lot with the supplier. They were very helpful and sent us samples of different materials. It was pretty straightforward and just took a bit of trial and error. I’m afraid I can’t remember exactly the websites we looked at.

  • Make it unique and sell online. Products like this need branding!

  • Eldrake

    Thanks for this really useful post, I appreciated it. I would love to know some of the numbers: how many units you sell per month, what margins you get – how much all the shipping, forwarding, fulfilment etc comes to. I don’t want to ask you to give away your whole business model but if you could share any figures, I’d be grateful. Because the question is: is it worth it? Are you making £20 per month, £2000, or £20000? And what’s the profit margin? Thanks for the post.

  • Graham

    Hi Sam, I am very interested in your amazon business, if you don’t mind me asking, obviously I do not want to know numbers but, if you only had the amazon business in your life and you were only dependent of that business, could you live of the profits you make?
    Hope to hear back from you
    Graham

    • Hi Graham. Yes I could live off the profits. Multiple times over!

  • Bobby

    While deciding on a product to sell, how did you know if table tennis bat bags would sell? Well maybe you didn’t “know”, but what made you believe such a thing would sell? It seems random, like I could decide to have exhaust pipe covers made and try to sell those, but I have no idea whether they would sell or not. What made you plump for table tennis bat covers?

  • Manahil Khan

    This is great! Thank you!

  • Ani

    Thank you so much for this, Sam. As someone who’s looking into starting a business via Amazon, this is great information. I’m looking up OEM suppliers too for products that have a high per unit cost. Would you recommend personally visiting them to ensure quality?
    Appreciate this greatly.
    Ani

    • It depends really. If you’re first order costs a total of $1,000 and it would cost you $1,000 to go visit the factory. There is no point. Better to just buy the product and take the risk as to how it goes.

      But if you’re buying $50k of product and it costs $1,000 to visit. Then that make more sense.

      What I do is get a friend who is already in China to visit them. They can’t always get to the factory, but meeting a representative or going to a showroom in beijing or hong kong helps.

      • Ani

        Thanks again for the info, Sam. You’re a gent.

  • Josh Carpanini

    Great post, thank you !! Quick question – ‘Having said that we don’t use them, rather we use a small freight forwarder who we have a long-standing relationship with and who also does our quality control once the stock hits the UK. Flexport is great for moving stuff around, but quality control requires a more bespoke service.’ Who is the small freight forwarder you use please as I am looking for one ?