From an idea to product in 9 easy steps

At Fringe Sport, we launch dozens of products every year- from barbells to bumper plates and squat racks, and we have an excellent rate of success on those product launches. Very rarely do we launch something that’s an abject failure. Usually, in worse case, something sells a little bit slower than we had initially thought. In the best cases, a lot of products sell way faster than we had thought. I wanted to walk you through how you can do this same process as well.

To set the stage, I’m not much of an inventor. I think of myself far more as a business person or entrepreneur, so I’m not very worried about a lot of the aspects of coming up with something new that’s never been created before, something that’s patentable, or licensing out my ideas. I’m very worried about the commercialization of whatever I come up with before I’m worried about the product design or protecting it.

With this in mind, I take a very sales and marketing approach to product development. Let’s dig into that.

My first step is to come up with an idea. Rather than thinking about what can I make money on, I try to think about something that the world needs. What is something that I would buy? What do I really want? For example, even though I own a sporting goods company, I’ve lately been thinking about opening up a travel branch of the company. I travel a lot and there are so many products that I would like to have when I travel but no one makes them. I believe that I could actually commercialize a small travel product company around what my needs are in travel.

Once I come up with an idea, the second thing I do is I move into determining if it is commercially viable. I have hundreds or thousands of ideas for products, but many of them would not be viable in the commercial market. As I mentioned before, a lot of times I come up with things that I would want. I’ve come to understand that I’m one data point, as they say. Or you could also say I’m kind of a weird guy in a few ways. A lot of times, something that I want is not necessarily something that a broad swath of people are going to want.

Additionally, I look directly at what I presume the product cost is going to be. Because I have had direct contacts with many factories for over a decade, I can usually ballpark a product cost in my mind these days just from experience. If you don’t have these factory connections, you can fake it on alibaba as I’ll detail below. A note- do not forget shipping and duty costs when determining your product costing.

I then decide what should the sales price could be. One thing to note is that I’m a huge believer in pricing to market. In other words, if something costs you $1, you might sell that for $1.50 or $10. The fact that it cost you $1 has nothing to do with how much you end up selling it. Obviously, for this idea, if you can achieve decent sales volumes, you’re going to want to buy something for a dollar and sell it for 10, if at all possible. If you can get that business, good for you!

I then look at the anticipated volume. As I mentioned before, if you can buy something for a dollar and sell it for 10, that’s awesome, but if you can only do it once, that’s quite a bit less awesome. If you can buy something for a dollar and sell it for two or three and repeat that 10,000 times, that starts to get a lot more interesting.

I also look at marketing cost. A lot of products that are developed these days I see have basically a marketing cost built into them. Whenever the entrepreneur designs the product, they have an idea for how they’re going to market it, and they even build the marketing cost into their CoGS for their calculations. For example, a lot of people do this for products, both information and physical products, that they sell through Facebook ads. They know that for each product, they’re going to need to spend x dollars in Facebook ads, so they just build that into the costs.

Related, another popular channel these days is Amazon. This also brings us back to marketing cost. For my product, sporting goods, Amazon takes a 15% cut of the revenue from that product. If I’m designing a product and I know that it’s going to be sold on Amazon, I need to know that Amazon’s going to take 15% of whatever I charge the customer on that product.

One other thing to keep in mind in terms of commercial viability is to think about the tooling costs. Are you going to have to pay the factory to develop a heavy tool for that product?

My third step would be to find a manufacturer. In past years, I’ve been fairly pessimistic on using Alibaba to find a manufacturer, but I’ve heard so many success stories in the past five years of people finding manufacturers in Alibaba that I’m revising my advice. I suggest that Alibaba.com’s the first place that you go to look for a manufacturer. If you’re looking for a manufacturer of a product, what I do is I search for a product that has a similar manufacturing process to the product that I’m looking to design.

For example, I have an idea for a bit of jewelry right now that’s knocking on my head, so if I wanted to find a manufacturer to work on my custom jewelry for me, I would go to Alibaba and I would search for manufacturers that were making similar jewelry. Let’s say I have an idea for a gold bead. I would search for factories that have experience casting jewelry beads, and then I would approach them and get some price quotes and see what their existing products are. Then, work on how they would work towards customizing a product and if there would be any additional charges, what the minimum order quantities would be, what they would do for tooling costing, and then what rough final costing would look like.

A few other ways to find manufacturers are going to trade shows or looking at customs documents through a service like Panjiva.com.

Once I find a manufacturer, I move on to product design. The reason that I find a manufacture before I work on the product design is that since my number one concern is commercial viability of my products, I want to know what the manufacturer can actually make. I don’t want to come up with a product that has a part that the manufacturer can’t make or is expensive to source.

Historically, I’ve often worked with the factory on product designs, but as time goes on, I’m moving further and further away from that and moving to using our own designers, which I find through Upwork or just through being in the industry for years. You can certainly work with factory designers when you’re small.

Part of the problem of working with factory designers as you grow larger is that if you develop a proprietary design with one factory, it’s going to be very difficult for you to take it to another factory unless you just take a product to the other factory and have them reverse-engineer it. If you come up with the product designs yourself, you can then source those out to multiple factories.

Once you’ve worked with the factory or your designer from Upwork whose work you’ve then given to the factory, you can then move on to step five, placing your order. When you place orders with factories, especially factories in China, they will very commonly ask for 30 to 50% down.

A lot of entrepreneurs are really sketchy on putting this money down, and certainly you should always be careful when you wire funds internationally. If things go sideways, those funds are gone. However, in most cases, I’ve seen things work out well with wiring advance monies to China. In fact, I’ve spent more than $10 million in cost of goods sold in China over the years, and I have literally only lost $300.

Once you place your order, we’re going to move on to step six. You’re going to work with the factory on making sure they’re getting your order correct, making sure that it’s moving to production in a timely manner, and then once it gets produced, you’re going to move on to inspection. You should be communicating with the factory a lot over email, Skype. If you can, download WeChat, which is kind of like Facebook for China, and most factory owners have WeChat. They might also like to talk on WhatsApp or another messaging platform.

While I worry about having too many message platforms as it is, I do try to communicate with my factories in a way that’s convenient to them. They’re already talking to me in English anyways and, in many cases, staying up late to communicate with me, so I do want to make it as convenient for them as possible.

Once your goods are actually produced, I strongly, strongly recommend that you get them inspected. Inspection costs about $300 a day in China. The inspector works for you and can check basically anything that you ask him to check. I would contact an inspection company and have a third-party inspector go to the factory. There are a lot of inspection companies out there. If you want a personal recommendation, I’ve had very good success with Renaud from Sofeast, and he’s at Sofeast.com.

Once your goods have been produced and hopefully inspected, you’ll move on to step seven, shipping. Sometimes you can deal with the factory and they’ll set shipping up for you. In most cases, I would suggest that you establish a relationship with a freight forwarder who can also work as a customs broker for you. They can help you to move the product over to the US or wherever your target market is in a cost-effective way and also deal with customs and duties that will be applied to that product.

Step eight, once you’ve got the product shipped over, you’ll have to warehouse it and sell it. This is the fun part. We had talked previously about marketing through Facebook and Amazon. Honestly, my number one preference is marketing through email at this point. I would very strongly encourage anyone who’s going through the sales process to develop an email list and email that list regularly. For FringeSport, we email our list at minimum five times per week, but we try to do it with content that is engaging that the people who are receiving the emails would actually enjoy.

Step nine is a pretty key step that a lot of people forget about. Once you’ve sold some product, you need to collect customer feedback and reorder. This is huge. In today’s world, you can usually have a one-to-one connection with your customers, rather than the previous world, where you’d have to go through distribution and you may never see any of your customers.

Here, if you sell through Amazon or you sell on your own website, you literally have your customer’s email address, or at least, in Amazon’s case, an email address through which you can reach your customer. You should absolutely be reaching out to the customer to ask them for reviews but also to ask them what they think about the product. What could change? What would make it better? Then, filter that information and, as is feasible, feed that back to the factory, improve, and go again.

This is just scratching the surface of how to develop, design, launch, and market a product, but I really hope it’s been helpful for you! Any questions?