By Fredrik Grönkvist
Mike is a veteran (LinkedIn), and that’s why you don’t want to miss this piece. Keep reading, and learn how Mike built his five figure bar accessory online businesses on Amazon and eBay – from the ground up.
Michael, tell us a bit about yourself and how you first started your business
I always wanted to do my own business, but first took a job on Wall Street after college. Immediately I was finding ways to make money online and started to sell anything I could find on eBay and my own websites.
Fascinated that I could wake up to sales in my account, I studied internet marketing via forums.
Found a niche in the bar products industry, and moved up the warehousing from a Manhattan walk up apartment to a full service fulfillment company (fraternities, friend’s basements, and UPS stores in between).
Building up sales enough to quit the day job in 2007, I was happy to do this full time. As I was buying products from China, I took my first trip at the end of 2007 to see trade shows and factories.
After an intense jaw dropping experience, I decided to spend more time in China and am still here to this day.
How come you decided to start importing bar products?
Wish I could say I had a better formula, but really was selling anything I could find. Picked various product lines I personally liked and saw which one did well.
There wasn’t much competition on eBay and was able to really get into the rankings. Made a full site for the bar products line and grew out the supply chain.
How did you go about to find suppliers for the products?
Started with US wholesalers, via Google searches and manually contacting them. Getting pricing lists and samples. Some would drop ship, others forced us to take inventory.
As we grew, we went full inventory and started searching on Global Sources and other B2B sites.
Was like a shot in the dark, up late in NYC, chatting on Skype with factory sales reps, sending photos back and forth, getting samples.
Starting with small quantities – some products we still would buy from American wholesalers and others direct from China, India, and Thailand.
It was a school of hard knocks for sure – just getting in there, testing the waters with small orders, getting good ones, throwing out the bad, and growing with it.
Do you recommend visiting a Trade Fair in Hong Kong or Mainland China – or can everything be managed from overseas?
Well, I had been buying from China without ever going – so sure, I was using the online directories.
But coming to the trade shows was like night and day. It was basically as if the online directories had people inside of them!
You could still search through the catalogs and websites- but leading up to the trade show, I would ask the factories if they were going to the shows. I would note down where their booth would be and meet them in person.
Even with all this amazing online technology, it is nothing like meeting someone face to face.
Maybe that will change once VR is further developed – and can go into a virtual conference – but for now – nothing beats meeting people in real life.
It makes the transactions seem real.
Did you buy from a large network of suppliers, or just a few?
The tricky part about bar products is there are so many different styles of products and materials. There are plastics, and then there are metals.
I was trying to find the source, and I quickly learned that most factories were actually trading companies.
The factories were dispersed in Zhejiang province and I went to them.
What I learned is it was down to who had the mold. Factories would buy from each other to complete their product line – but to really get the right product from the right factory you had to buy from a network of factories.
To add to the complexity – the metal bar products (tins, strainers, ice buckets) came from India. China is actually stronger in injection mold, plastic – not in things like metal and wood.
Also found a couple factories in Thailand that had quite a bit of products.
And… how much time did it take to build up?
Started the site at the end of 2004 – within a few months we were making 10,000 USD a month, and took about a year to get about 20,000 – 30,000 USD a month (depending on season).
What kind of sales channels did you use?
We were using a multitude of channels – first getting cash flow from eBay sales, then using Google Adwords to our website to get website sales.
Organic search was awesome but really think it was about a year (I was leaning it on my own) before we got organic traffic.
The best memory I have is my first Adwords campaign I set up, the 2nd click brought in a 75 US dollar sale! Was almost all nickel bids too.
Amazon we started later in the game, maybe in 2006 we started listing there, but the majority of our sales came from eBay, our website via Adwords and Organic traffic.
Did you exclusively sell on Amazon and eBay, or did you have other sales channels too?
Mostly Amazon and eBay. We did get some retail mom and pop shops who found us online. We also used some manufacturer sales reps in a campaign we did in 2006 to grow offline sales.
I hinted earlier, we had trouble finding a dropship source for bar products – so we became the dropship source.
We launched a drop ship program also in 2006 and built up a network of over 50 drop shippers and using a white label system in our back end.
Did you ever have to deal with scams or quality issues?
Shipped about 300 US dollars of shirts to Africa. We went a bit too crazy on automating the systems and didn’t have proper checks in place.
Also a close call we had an order for a couple thousand dollars shipping to the Caribbean with a US credit card.
Well, it shipped, but it was a real order.
He had to fax us his credit card statement for the bank to give us the funds, so things went along happily ever after.
One of the scariest situations was a lemon squeezer order.
One piece to a woman in the Midwest, she said when she used it the spring broke and gauged her palm open.
She was threatening us. I asked our other team members what we should do – and decided to immediately issue her a full refund (8 USD).
Wondering what would happen next, she thanked us so much for the free product, gave us 5 stars on eBay and the problem was solved.
That one had me researching product liability on google for a couple hours. Phew!
Luckily, those are, the bigger issues we had – of course a bunch of savvy online buyers asking for the free product saying some quality issues.
You’ve been based in Shenzhen for close to a decade. Do you think it’s become easier to deal with Chinese suppliers since you first arrived?
Being here definitely helps, but doesn’t make the issues completely go away.
Took me a few years of knowing what to look for. I also have a firm grasp on where the factories are, and I now even can find people who live in the area and can stop by for me.
When the factory knows you are in the area, they seem to pay a lot more attention to your orders. That saying – out of sight, out of mind – comes to play.
But then again, factories in China have advanced quite a bit in the 10 years I have been here and know what Western buyers want – so that is also a factor.
Are they harder to deal with? Or the opposite?
Much easier to deal with. You can get to know them, chat with them while they are awake (no time zone issues) talking to them about their family, their personal life and experiences.
They don’t get to know most of their buyers this closely so it definitely sets you apart.
Thanks Michael. Please tell us more about your current ventures.
I started blogging when I quit Wall Street in 2007 – for some reason I was afraid to blog while working in corporate – thinking something with compliance would come to bite me and get me fired.
So the blog started for my friends and family to be able to follow my travels and business updates – mikesblog.com now – still going strong!
What I realized, I am passionate about the online marketing, about connecting people, and international business – so in 2013 I started GlobalFromAsia.com as a blog and podcast to help business owners set up their international businesses via Asia.
And just recently I became partner at EnterChina.co – an online community of entrepreneurs who are working to take their product ideas and launch them to the market.
Are there any conferences or events coming up this year where people can find you?
Sure, had a great crossbordersummit.com this past April and will do that yearly in Shenzhen. Working on day trips in China from Hong Kong and continuing to bridge the divide of business between China and the world.
Fredrik Grönkvist is the co-founder of ScandinAsian Enterprise in Shanghai. Since 2010, he and his team have helped hundreds of companies worldwide, primarily in the EU and US, to develop and manufacture products in China. He is also the main contributor on www.chinaimportal.com, a leading knowledge base for small- to medium-sized enterprises importing from Asia. For further questions, you can contact him on www.chinaimportal.com/contact-us/.