How to Jack Up Your Profit Margins Through Branding
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Earning more through branding and creating your own products is not as hard as you might think
So we were talking recently about finding products to sell online.
Physical products so that we become the online version of JBhifi or Harvey Norman.
We import those products and sell them online for a healthy markup.
We need 4 key ingredients to make this work.
A Product – one that will sell
A supplier – who will sell you the product at wholesale
A Fulfilment House – who will stock and send out the product to customers for you
A sales platform – an online presence with cart facilities etc
We already looked at the fist of these in a previous article
The next thing is to find the supplier – this can be done by going to Alibaba or it’s sibling Ali-Express which is for smaller transactions but typically puts you in contact with the same manufacturers.
These are sites where anyone can get in direct contact with manufacturers in China and other countries and source bulk lots of products. You can also talk to these manufacturers about white labelling products or creating products just for you so you have your own unique item.
White labelling is a great option because what you are effectively doing is building your own brand.
A rapper named Dr Dre started doing just this. If you’ve been into JBHifi you will have probably seen “Beats Headphones” or more accurately… ‘Beats by Dr Dre’ because that’s his brand.
Because he has created this brand he has a unique grip on the market. eBay is filled with generic headphones that are quite similar which sell for a few bucks… But because Beats have a brand behind them Dr Dre’s headphones sell for over $100.
Which begs the question are these headphones better than the generic ones? Are they better than other brands?
From what I’ve seen they are a bit better than the generic ones – Often the generic ones are plasticky and break easily…
So clearly he’s found a manufacturer and asked for a higher quality headphone with certain parameters. Then they make them and pop his logo on them.
Are they better than other brands? No, not at all.
The leaders in audio technology, especially with headphones, are still Sony and Sennheiser, but they don’t come in pretty colours and cool patterned designs which is the ‘Beats' Modus operandi.
A little research on Aliexpress shows the same beats headphones without the branding can be picked up for around $18 US which sell for $120 or more here… and they fly out the door for that price.
It’s totally fine for you to buy those headphones and sell them online calling them replica Dr Dre headphones and people will instantly think that they are of lesser quality… so you won’t be able to sell them for as much.
That’s the power of branding.
The truth is that often when people go to a Chinese manufacturer and ask them to tool-up and produce (in this case) special headphones. They might order an initial product run of 10,000 but manufacturers understand economy of scale…
What often happens is that they will produce the requested 10,000 then they'll produce another 20,000 for themselves (unbranded) which they will sell on sites like Alibaba.
They are the exact same headphones. It’s only the brand logo that’s missing. That’s it!
On the free market, the branded ones will often sell for more under the belief that they are of better quality, when there's no actual difference at all.
This happens all the time – not just for headphones.
So let’s reverse this.
That same manufacturer can change one thing – say all the internal workings are the same, all the specs are the same but the casing is moulded differently, and in a different colour… You can go to them and ask for these changes to be made…
You put your own logo on them, write some killer sales copy and suddenly you’ve got a product you can buy for US$18 a piece and sell all over the world for $100 or more…
You can release special limited edition versions in limited designs which sell for $200…
Remember… they're still the same headphones… just in a different colour… Crazy right?
Circling back to Dr Dre – he’s built this brand up over time. His headphones now come in a wide array of different colours and a few different versions and levels… and in 2014, he sold the entire company to Apple for US$3Billion.
I’m not saying you have to think this big…
But you can see that spending the time to create a brand and tweaking some existing product to your own specs can be wildly profitable…
Go hang out at aliexpress.com and just mull this over… Consider the possibilities.
It's going to bear fruit when it comes time to create your business; if you haven't started already
