kickstart your idea into a ship"able" product

An expert guide to getting funded, getting to market and getting your product to the customer

1-888-SHIPWIRE

www.shipwire.com

Kickstart Your Idea Into a Ship“able” Product

1-888-SHIPWIRE 2185 Park Blvd. | Palo Alto, CA 94306

Table of Contents

Step 1: Funding. Ways to Fund the Project and Test the

Market

Kickstarter

Small Batch / Low Production Runs

Product Presales

Step 2: Quick Turnaround Prototyping Options

3D Printing and Shapeways.com

Overseas Prototyping

Handmade Production

Step 3: Think Through your Sales Channels

Step 4: Align Your Packaging and Labeling to Your Sales

Strategy

Step 5: Five Laws of Getting Buzz and First Sales

1. You will presell

2. Get prototypes out to influencers

3. Marketing - small, targeted outreach is better than

far-flung

4. Create a small buzz (aka community)

5. Diplomacy versus carpet bombing

4

5

5

6

6

7

7

7

8

9

11

11

11

12

13

13


IntroductionToday’s global economy and fast-moving technological advances make it easier than ever for entrepreneurs to successfully launch new products into the marketplace. Concept, design, production and shipping processes have been automated and streamlined for maximum productivity. But though our new global workplace – with its many improved efficiencies and productivity – makes a new product’s entrance to manufacturing easier than ever, how can you put it all together to turn your “Big Idea” into “Reality”; on a shoestring budget?

In this paper, entrepreneurs can consider a few recent, successful product launches – using insights gleaned from their examples as a blueprint for their own business ideas. The paper includes strategies and procedures that can effectively be used to leverage the abundant resources and technologies available to entrepreneurs introducing their first products to market.

Step 1: Funding. Ways to Fund the Project and Test the MarketWith the exception of identifying a viable product concept (aka “The Idea”), the first major obstacle most entrepreneurs will encounter is funding. It’s a difficult barrier to navigate, especially for those new to business. Paying for design, prototypes, manu-facturing, supplies and then finally product inventory and marketing can rapidly con-sume what little seed money you have. Poor or inadequate funding can kill a venture before it even gets off the ground. But with a little creativity, entrepreneurs can se-cure the funding necessary to keep their dream project alive.

There are many ways to fund a new product. What works best for your concept will be determined by an array of considerations: demand for your product, scope of proj-ect, your current stage of product development, etcetera. Some methods to consider include more traditional business revenue streams such as: bank loans and financial services, limited partnerships/incorporations, and SBA (Small Business Administra-tion) loans, just to name a few. Venture Capital funding and “angels” have also start-ed to return to the financial scene and may be a viable funding avenue for many projects, particularly those in the high tech arena.

But some have been successful with non-traditional funding sources, using credit cards, family loans and a variety of unique funding schemes to keep payrolls afloat until orders take off.


Kickstarter:

One example of creative funding is the path followed by Tom Gerhardt and Dan Provost of Studio Neat. Tom and Dan are the two designers who came up with the idea for hot iPhone accessory, the Glif. Within five months of their initial concept they were deliver-ing their first shipments to eager customers. How did they acquire funding so quickly? By using Kickstarter, a popular microfunding web platform. After studying the Kick-starter concept, the pair quickly identified that the promotional video was key to their funding bid. They channeled their creativity and created a knockout promo that helped them secure financing.

One of the benefits of a platform like Kickstarter is that it allows a concept to be tested. The Kickstarter model assists designers/inventors with idea development and outlining a personal roadmap to success. “Project Creators” lay out their concept and ask the Kick-starter “marketplace” to get behind it (i.e. invest). Project Creators then create a series of “reward tiers” for potential backers. These rewards can be any of numerous offerings such as: access to prototypes, acquiring a first version of the product, etc. Advanced investment levels could consist of other perks such as exclusive access to high-end versions of their product or even non-traditional offerings like dinners with the project creator.

Early marketing campaigns and press can be designed to revolve around “buzz” generated in the Kickstarter community. The Glif creators were able to create a community of people clamoring for their product, allowing them to gauge the product’s overall chance of success before any money was spent on costly designs and prototypes. Best of all there’s minimum cost associated with Kickstarter: the only real investment being time spent on the website, along with minor marketing costs. If the idea takes off, project creators can “swing into action.” Initial rewards purchases by the funders become project seed capital.

Small Batch / Low Production Runs:

Another way of testing the waters for products is by doing a small batch run (aka low production run), using your family and friends for a limited “market test.” This is an inexpensive way to see how effective (and safe) your product will be in actual use be-fore incurring the expense of a larger product run. One entrepreneur successfully us-ing this model is Andrew Simmons, owner/creator of TomatoBuckets. TomatoBuckets are hydroponic growth “planters” designed specially for growing tomatoes in chal-lenging environments. Andrew created a website for his concept, selling prospects on his promise to custom-build each product.

But there’s more to Andrew’s sales plan than simply selling high quality, handmade products. Each TomatoBuckets’ customer receives a slightly different version of the

Tomato Bucket System


product. These subtle design changes are part of the refining process, allowing him to identify the ultimate prototype. Andrew carefully documents variations in each model sold, then tracks sales and customer feedback results to determine which versions sell best. By building each product by hand, Andrew incurs no inventory cost. After deter-mining the top one or two selling versions, he can consider taking them overseas for mass production. Only then will he have to invest in inventory. With a little ingenu-ity, Andrew has found a low cost method to effectively test different prototypes and marketing strategies, as well as identify the most popular product characteristics and price points.

Product Presales:

Offering product presales is one way to build capital before an official product release. It can also provide a good indication of consumer interest in your product and an or-ganic way to stimulate buzz. Blogging and other social networking techniques are an inexpensive means of getting word out about your presale. Perfect Third, sellers of inventive WakeMate, a wristband sleep enhancement product, was able to increase capital and garner valuable media coverage by collecting down payments on their product preorders.

They created buzz early on to give their project momentum. By accepting down pay-ments they were able to estimate the amount of inventory required for their official prod-uct launch and obtain a locked-in quantity of initial orders. The favorable word-of-mouth from their presales success helped them take the lead in a soon to be competitive market.

Now they just had to deliver a product. (More on this later in this paper.)

WakeMate

Step 2: Quick Turnaround Prototyping OptionsWhat often starts out as a stick rendering hastily scribbled on a napkin or a piece of paper can eventually evolve into a professionally manufactured million (or billion) dollar product. That quickly drawn initial prototype will go through several generations before you settle on a final prototype. There are several ways entrepreneurs can get their hands on their first product prototype. Some opt to make the first one themselves, using easy-to-acquire materials such as paper, cardboard, foam and/or a variety of other consumer grade materials. Others work with professional prototype companies that take their scribbled designs and turn them into workable prototypes.

Some entrepreneurs will employ the use of virtual designers or model making software.


The team at Studio Neat (the Glif) uses a unique production technology that allows purchasers to create inexpensive “one-off” versions of product or gift ideas.

3D Printing and Shapeways.com:

The team at Studio Neat (the Glif) used software program, Rhinoceros, to create the first 3D renderings of their product. Afterwards they procured the services of Shapeways, a “personal fabrication service,” for their first prototype. Shapeways caters to buyers who want to create prototypes or customized gifts. The company uses a unique production technology that allows purchasers to create inexpensive “one-off” versions of product or gift ideas. Customers send them a 3D rendering of their idea and the company does the rest. It’s a great way to get an inexpensive peek at what a final product will look like before sending to manufacturers. If this is the first you have heard of 3D printing, learn more about it. This amazing new technology is already making an impact on product design and fabrication.

Overseas Prototyping:

One decision many manufacturers have to grapple with is whether to produce their prototype domestically or overseas. Many achieve significant savings by producing internationally in China, Taiwan and other manufacturing hubs. With advances in production technology and the wide reach of the internet and mobile technology it is relatively easy to connect to eager overseas manufacturers to acquire professional-looking prototypes at a low cost.

However, there are limitations when working with overseas manufacturers. Language can be a barrier. If your product is innovative and involves intellectual property, do the research necessary to find a trustworthy manufacturer that won’t knock off your idea and become a competitor. Also, make sure you provide an accurate 3D prototype with clear, easy-to-follow instructions; otherwise the language barrier could result in an incorrect prototype.

Handmade Production:

Dodocase turned a retro idea into the must-have iPad accessory of 2010 – handmade book covers for the iPad. The inventors of the Dodocase used a near extinct handmade binding technique for their new product. They designed and tested the solution in their personal workshop, then shrewdly hawked it to first day buyers waiting in line at the Apple Store to purchase the “then” new iPad. Though clearly not a viable model for most, these handmade products are seeing a huge sales surge as consumer taste trends toward locally manufactured or custom products.

One obvious benefit of handmade products is a low startup cost, as you’re probably investing more manpower than money during the product delivery cycle. As sales and demand increases however, handmade products face challenges. It requires a lot of

Dodocase


planning and resources to meet the “I want it now” mentality of online shoppers. Because it is handmade, a short wait may be tolerated; but if the wait is too long, you will probably encounter frustrated customers. Entrepreneurs interested in hand producing their first “tests” should get to know Etsy.com, a marketplace for handmade and customdesigned products. Some have enough success that they can move off the Etsy marketplace into the mainstream if they choose.

Step 3: Think Through your Sales ChannelsDepending on how you tested the market and prototyped your new invention, you may or may not have locked in sufficient initial sales channels. Before you think about pack-aging and ordering large volumes of inventory, consider how you actually plan to sell your product, looking at your project more from a flexibility standpoint. We’ll get more into considerations for packaging to match your sales channels in the next step. As you forecast your sales, make sure your product is a good fit and can optimally address vari-ous sales channels.

If you plan to hire trucks and self-deliver every prod-uct then you may have less concern. However, if you choose to sell the product online or through multiple distributors, you will need to think about size, weight and packaging. If you’re selling to consumers on-line, your product had better fit size requirements for UPS, USPS, FedEx or ___ (insert your regional postal carrier name). A decision to sell wholesale means you’ll need to learn about freight, container, and truck-load shipping requirements. Meanwhile, if you invest in a container of product you’ll want to know if your product can be floor-stacked in a con-tainer or if you need to put it on pallets.

Other considerations: if you have a heavy product (close to or over 150 lbs) you should consider whether it should/can be split into different components. That way you can ship to buyers in multiple packages. The size, weight and packaging of your “sales units” are going to have a huge impact on sales, so you want to make it easy on yourself. If you are selling to consumers online, you’ll have to work within the size and weight re-quirements of the carriers (e.g. FedEx, UPS or the US Postal Service.)

Product shipping dimensional weight is a calculation done by carriers to determine if your product should be charged more based on its weight or size. General rule of thumb is that anything over 150 lbs or that can’t be moved by a human without the use of a

Some of your target sales channels might include:

Traditional in-store retail (B2C) or wholesale (B2B)

Retail online through drop-shippers

Retail online direct

Wholesale online to retailers or wholesalers

General rule of thumb is that anything over

150 lbsor that can’t be moved by a human without the use of a pallet jack has to be shipped freight


pallet jack has to be shipped freight. If you have big and heavy products but don’t want to ship freight every time then breaking your product into components is the way to go. Things get trickier if you opt for wholesale selling in larger quantities or to consign-ment retailers. There are additional factors to look at such as freight, container, and LTL (“Less-than-truck-load” shipping).

Also consider whether you can floor stack or if you need pallets. Floor stacking allows more product to be shipped per container. Think about your downstream supply chain before deciding. If you need to split your full container into multiple LTL shipments after you clear customs your freight forwarder may ask you to palletize. While Shipwire doesn’t charge receiving fees, many warehouses will due to unloading costs if you floor stack.

There are many factors to consider when designing your packaging and labeling strat-egy. This section isn’t meant to be a comprehensive checklist but rather a quick remind-er that your product design should take into account packaging and its impact on your ability to deliver your goods at a cost-effective rate.

Step 4: Align Your Packaging and Labeling to Your Sales StrategyOne thing that most new product designers (and even a few seasoned product de-signers) have missed is the importance of packaging – specifically shipping packag-ing as part of the design process. Here are a few critical mistakes we see all the time from new product sellers:

Don’t ignore packaging as you work with suppliers and manufacturers. If you are plan-ning to sell wholesale and retail, then “case packs” and “master cartons” are going to be critical to your success. How many individual units you can fit into a case pack and

1. No thought to shipping.

2. No thought to packaging.

3. No thought to making it easy to ship retail or wholesale quantities.

4. No thought to labeling for outsourcing distribution or a third-party fulfillment center.

5. No thought to leveraging shipping as a sell point, much less offer free shipping options.


how many cases will make up your master cartons will impact everything from your minimum order size to fulfillment costs. If 10 individual units are packed into a case, it makes little sense to have a minimum retail order size of 5 units; you will create a ship-ping nightmare trying to fulfill all those minimum orders.

“Inner” product display packaging or “outer” shipping packaging? Both are important – especially today when more and more companies are putting product into display packaging that can also survive shipping. This is a favorite of eco-friendly companies. The larger your items get the more important packaging can be; even tiny changes to product packaging can have a huge impact on your product’s “ship-ability,” the end consumer costs, and the likelihood of the product getting broken during transit. Here are some general rules of thumb:

1. Packaging is almost always cheaper when done closer to the manufacture date. This is especially the case if you need custom or die-cut packaging to fit your products.

2. Package products as you would sell them in order to reduce labor costs.

3. If distributors or wholesale shipments to retailers fit into your sales plan then consider whether your master cartons should be your minimum purchase size. This makes it easy to slap a label on a master carton for each distributor order.

4. Components wear down, need to be replaced, are lost in transit, stuck in customs or need different versions to be released at different times. For large multi-part products, consider how you want to individually package and group the constituent pieces to reduce shipping costs and ensure easy replacement of parts. We recommend working with your manufacturer to achieve this.

5. Talk to your warehouse provider to understand the impact to your freight and warehouse costs when deciding whether to palletize or floor- stack your products.

6. Watch out for packing multiple sku’s in one master carton or package. For example if you have two products (SKU 1, SKU 2) and each master carton includes a set number of each item, you must sell the two together. If sales quantities vary, then you will be spending a lot of money on repackaging. Additionally, if you pack your products mixed together, you will need a complex inventory and order fulfillment process. This will increase receiving and out-shipping costs if you use a fulfillment facility.

If 10 individual units are packed into a case, it makes little sense to have a minimum retail order size of 5 units


Step 5: Five Laws of Getting Buzz and First SalesYou have spent countless weeks (months) fine tuning product and packaging. Initial product feedback from friends has been positive. You’ve even received emails asking about your new product. Then the big day arrives and…silence. Remember, expecta-tions can be unrealistically high for a new launch. Consumer interest doesn’t always translate into sales.

Here are a few things you can do to ensure first day sales meet (or come close) to those lofty expectations.

1. You will presell:

As stated earlier, presales were a key component of the success of the Glif and Wake-Mate. The buzz from their presales helped spur first day sales. Don’t wait until you have inventory to start taking sales. You can crank up your marketing and sales machine months beforehand. Three important components of the process are: a solid business plan, early embrace of social networking/PR, and an operational website ready to take those first orders.

2. Get prototypes out to influencers:

One of the best ways to generate interest and buzz is by getting your product into the hands of key influencers early on. Nothing sells a product like a mention by key influenc-ers on their website or blog. The Glif was able to capitalize on this by getting their prod-uct into the hands of John Gruber, author of tech and design blog “Daring Fireball.” Other gadget sites picked up on the product and within hours, the money came pouring in.

Also as with packaging, understanding labeling will help you close business or at least give you increased flexibility. The more complex your product list or sales strategy, the more important labeling will become to your success.

Barcodes are one thing; but you still need to be able to identify the product. In today’s complex online sales world your product ID (SKU_ID) will be the “index id” that you push up to marketplaces like eBay and Amazon. It’s also the number that you’ll refer-ence in your web store, your warehouse, your outsourced warehouse or drop-shipper. Make sure your physical product (the actual item or box) has the same SKU/product_ID on it so whoever ships it doesn’t grab the wrong product! If you plan on selling whole-sale, then labeling your master cartons with a separate SKU_ID from your individual units is critical. If you forget this expect to pay time and material costs to correct your wholesale packaging and labeling. It is an expensive mistake.


3. Marketing - small, targeted outreach is better than far-flung:

Don’t throw money into a ramped up marketing plan that probably will have negligible results because you lack name recognition. Instead use low key and/or guerilla market-ing tactics. Begin working on your strategy as soon as you have your concept. Avoid overextending your resources; instead focus on making a few key friends in the media. This will help you personalize your product and determine if you’re using the correct ap-proach. If you look like you are simply “spamming” a bunch of people, everyone will ig-nore you. Even if you don’t get immediate results from the press, any feedback will help your campaign. Acknowledgement from them means you did something right and can go back to them in the future with other pitches.

Your corporate identity (logo and tag lines) should be prepared and ready long before your launch. Everything from blogs, company emails, newsletters, stationery, and busi-ness cards should be branded. All contests or giveaways you sponsor should include prizes that have your company logo emblazoned across it (T-shirts, keychains, etc.) If you have enough money an inexpensive tradeshow booth may be an option. Investi-gate this carefully; tradeshows can be money pits when used improperly. Many prod-ucts don’t merit tradeshow costs, especially in the beginning. If you happen to be an “expert” in your field, DO try to get a few speaking engagements, if you haven’t already.

Have your press release ready to go so that a few days before your product launch (or the day of) you can send it out. But don’t send it out too soon; if you do your product is old news before it’s even launched. PRWeb.com and BusinessWire.com are two of the more popular PR submittal services. Don’t forget to create a press kit. Though it may look complicated it’s not. It’s a key component of your media strategy.

Your corporate identity (logo and tag lines) should be prepared and ready long before your launch

Brief company information and executive bios.

A descriptive product concept (elevator pitch) in your own words.

Product images (high resolution file).

Company logo (high resolution file).

Headshot for the founders, complete with correct name spellings.

Customer quotes or links where media can access quotes.

Product specifications.

Your Twitter handle and Facebook, LinkedIn, MySpace URLs.

Make sure your website has a dedicated web page/section for the mainstream press and bloggers to quickly get access to the following info:


Be aware the press will check to make sure your release is not old news so make sure the date on your press release posted on your website is the same as the one you just emailed the press outlets. Avoid staggering your PR rollout for this reason. If you send your press release to a few larger papers and the story gets picked up, other outlets might not touch it even if they receive it only a few days later.

If you want to market directly to your audience, you can buy inexpensive mail and email lists based on your industry, region, target demographic(s), etc. There are several companies that do this, even sending out the mass mailings/emails for you. InfoUSA is one of the largest.

4. Create a small buzz (aka community):

We’ve seen a lot of great products recently coming off Kickstarter.com. Not only can designers test market ideas they also build a base of dedicated and inspired consum-ers. When selling your product, don’t forget to use your creation story – where the idea came from and/or the trials involved. This is a strong hook for traditional press and bloggers. Post your story on your company blog along with any positive customer feed-back and testimonials. And remember, you don’t need a finished product to create buzz. Once you are satisfied with your first prototype, consider producing copies to give to leading bloggers with followers in your target market. To help you build your online com-munity, companies like AWeber and iContact will send out your subscriber newsletters, provide newsletter templates, autoresponders, handle email list management (opt in / opt out lists, etc.) and provide other tools (who clicked through, metrics, analysis, etc).

5. Diplomacy versus carpet bombing:

Malcolm Gladwell may have put the idea of “The Tipping Point” on the map, but the concept is eternal. Don’t be the crazy dude standing on a soapbox yelling the benefits of this product or that to anyone who passes by. Instead, be the smart, tactful one that makes a list of the few influential people that you want a relationship with and then plan your approach. Make it easy for them to see, touch and enjoy your product and to find ev-erything they need about it.

Contact information stating where press inquiries should be referred (phone numbers, email, contact names, etc.)

Also consider if/how press can get a free sample of your product.

Copies of all company press release(s).

Copies of flattering media clippings from other sources (newspaper/magazine articles, blogs, websites, web videos, etc.)


These are just some of the methods entrepreneurs can utilize to successfully jumpstart their product – from concept to product release. To increase your ability to leverage the advanced power of technology and outsourcing to grow your business, Shipwire provides a turnkey warehouse, e-commerce and shipping solution aimed at meeting the needs of small business.

Visit www.shipwire.com/why-shipwire to learn more about order fulfillment.

Please contact us for more information

Contact sales through [email protected] or 1-888-SHIPWIRE

Connect with us on Twitter: @shipwire

kickstart your idea into a ship"able" product

Documents

inadequate funding

viable funding avenue

viable product concept

product inventory

venture capital funding

successful product launches

securethe funding necessary

new products