M2-4: Product Development & Sourcing
Yours, Kinda Yours & Others
When we talk about product development and sourcing you have three choices: yours, kinda yours and others. What you decide will impact your profitability and your success selling on different sales platforms like Amazon.
Product Development and Sourcing Options
1. Dream Up & Develop Your Own Product
There's a lot to consider when you are thinking of developing your own product.
Bad News: takes more time and money to create. Also your money is tied up in inventory due to minimum requirements for your raw materials and manufacturing.
Good News: more profits & own your brand
You also need to decide on whether to manufacture your product in the U.S. or overseas. There’s definitely pros and cons like freight costs, quality, not getting what you ordered, lead times, money tied up in inventory due to higher than usual minimums, etc.
2. White Label Someone Else’s & Calling It Yours
Bad News: typically less profits.
Good News: takes less time, less money, faster turnaround time, typically you can have a leaner inventory and you can brand it.
3. Resell Other’s Products
Bad News: lowest profit margin, high competition and you don’t own the brand.
Good News: shortest turnaround time, you can have a leaner inventory with a possible drop ship option.
Things to Think About
It’s important to keep your costs AND lead times in check. The shorter your lead time the less inventory you need to keep on hand, freeing up cash for marketing and other business essentials. Whatever you do, try not to run out of product - especially if your lead time is long. It can ruin your reputation, you’ll have less sales and it will slow down your business growth.