My experience launching a physical product

I think it's safe to say most of us on IH are looking for two points of guidance.

What created successes and what lead to failures, more specifically,

What created revenue and what didn’t.

As VR and AR become mainstream, I think we’ll see more opportunities to create more digital, physical and hybrid products. A lot of you are working on digital products specifically to avoid certain aspects of launching tangible goods. I’ll share a few guidelines I’ve used to maximize my TIME, MONEY, and SPACE launching Blue Line Bookmarks, paper bookmarks designed to index notes when reading print books.

PHASES OF GROWTH

Even if you want to be a multimillion-dollar company; you don’t have to sell to the entire world on day one. I planned to start small. Many of you working on digital products are familiar with scaling but physical products scale differently.

Sales require inventory. Inventory requires money and space. With Blue Line Bookmarks I decided to start small. With no outside investment my ability to grow is proportional to my sunk cost and sales. I’m not looking to fill 10K orders my first year, however, this doesn’t mean you don’t plan for growth. Focus on cash flow. No matter my sales volume, by focusing on my margins and cash flow at each phase of growth I can invest my profits into the product instead of my savings.

As sales increase the physical constraints within your supply line will change. Some constraints include:

Inventory volume
Fulfillment time
Manufacturing volume
Material costs

Know your operating capacity and have an actionable plan for scaling.

LOW-COST PROTOTYPING

When you start the prototyping process be cheap. Time to flex those object permanence skills and get creative. Scrutinize every detail. When I built my last barbershop, I built a full-scale replica in a room of my house out of free moving boxes off Facebook Market. When I signed off on the cabinet construction and wrote a check for 25K, I didn’t have to worry and shifted focus.

I prioritize function and move toward form. As you curate your product there will be a give and take between this form/function relationship. Keep meticulous notes and don’t be afraid to sidebar features that violate the 80/20 rule or can be spun into another product later.

Prototype your product and your finances concurrently. As you get more concrete details on the material costs modify your break-even-analysis. You may find the product isn’t concurrent with your goals and sell it off or call it quits.

My first Blue Line Bookmarks prototypes were on the back of napkins with a pen and pencil, then on printer paper, then scanned and printed at scale, all before I ever considered graphic design. Total investment before moving to production. ~ $12.

LOCAL RESOURCES

Digital infrastructure is relatively cheap and easy to get up and running. Put a card on file or “free for 14 days” and you're on your way. Distributors, manufacturers, marketing firms, warehousing, and shipping companies often have higher gates than their digital counterparts.

Shop regional for suppliers and business partners. Utilizing a global company for production or supplies may be better for your margins, but that doesn’t mean they have to be your starting point. Not only can you leverage the social contract meeting in person but often there will be additional ways you can hedge your margins. Pick up instead of delivery, store part of your order on site, or simply the ability to check-in quickly when issues arise.

Often large companies have minimums you won’t be able to meet or simply don’t work with startup companies. If your product is in direct competition within an existing product, you're competing with their manufacturing contracts. When they run your product on their lines, you’re not only paying to have your product manufactured, but you're also paying for your competition’s product to not be manufactured.

Local suppliers can be an opportunity to establish credibility and favorable professional references.

LOGISTICS

Test your shipping process early for consistency in cost and quality.

Direct sales and in-house order fulfillment are an easy way to get started.

USPS, UPS, and FEDEX are cost effective and allow for scheduled pickups so you can ship in batches.

Test the delivery process as soon as your prototype is ready. Don’t simply rely on the carrier’s shipping calculator. Mail an order to yourself and inspect it upon arrival. Did the post meet your expectations?

Were shipping estimates accurate?
Did it arrive damaged, wet, bent, open?
Was it left in a mailbox or porch? (Consider additional shipping insurance)
Could you use less packaging materials?

You may decide to make changes based on shipping rates. I originally offered Blue Line Bookmarks in 12 packs wholesale and direct sales. I mailed one 12 pack from the post office to my house about 3 miles away. It cost $4.70. To control costs, I changed my direct sales offer to 3 packs. They fit in an envelope and are under the 12oz requirement for single stamp postage. 12 Packs are now exclusive to wholesale customers and subject to a minimum order terms.

Thank you for reading. Keep at it IH.

P.S. Name one book I should read. Share in the comments.