The best businesses create something once and are able to sell that product or service an infinite number of times. This is why software and gaming companies make such great businesses — create something once, distribute it online, and sell it a million times to people all over the world. This idea of creating something once and selling it many times is what attracted me to fast-moving consumer products. Products like Red Bull or Big Mac or Coca-Cola, were all created a long time ago as single, standalone products. It’s amazing to think that, since the creation of each product, billions of units of each product have been sold and the products will continue to be sold each day, all over the world. When you don’t have to worry about the product, you can focus all of your time and resources on marketing in an attempt to boost sales. Having to constantly create or reinvent or reimagine products, makes it hard to gain any sort of traction. I would rather sell the same Ralph Lauren Polo shirts for the next 20 years rather than worrying about coming up with a new t-shirt design every month. One of the main reasons it is so hard to sell the same product over an extended period of time is because consumers respond to scarcity. If you tell consumers that a t-shirt design will only be available for a month or there were only 100 made, the t-shirts will fly out the door. If they knew that they could come back at any point in the next few years and buy the same shirt at the same price, they would be less motivated to make a purchase. It is possible to operate on the other end of the spectrum and charge a premium by creating bespoke items for each and every customer. While premium is generally tied to the number of hours needed for creation and the skills required for execution, it didn’t strike me as a worthwhile use of my time.
I was looking for a product that gave me the maximum difference between what I paid and what I was able to charge. The percentage return didn’t concern me. What’s better, buying a product for $1 and selling it for $20, a return of 2000%, or buying something for $20 and selling it for $80, a return of only 400%? Assuming all other factors are the same, it is always better to choose the product that is going to provide the best dollar return. As spending increases, the relative percentage returns will fall, but the dollar returns will be far greater. As a small business owner, it is tempting to focus on the percentage returns. If you invest $10,000 and walk away with $100,000 at the end of the year, that’s a 1000% return. When you stand to make less than 5% by leaving your money in the bank, it makes small business seem incredibly lucrative. As a business grows, the percentage returns will invariably fall. If you invest $1m, you might walk away with $2m after one year, a 100% return. If you invest $10m, you might walk away with $15m in a year, a 50% return. At a certain point, your returns might be a few percentage points above what you would otherwise get at a bank, but those percentage points could represent millions of dollars in profit.
What I didn’t realise at the time was that weight loss tea was a complete anomaly. There are no other ingestible products that ticked as many boxes. It’s cheap to buy, easy to ship, easy to store, has great margins, and can be shipped internationally with ease. I couldn’t replicate my success because, at the time, I had no idea why people were buying my tea. It’s important to know why a product succeeds or fails. When you experience instant success you often don’t have to think about why something worked. When you fail you spend all of your time trying to deconstruct what happened. So many of the founders I looked up to, who operated in the same space as me, have spent years and in some cases millions of dollars trying to replicate their early wins in business. It is clear now, when I look at some of their more recent business endeavours that they had no idea what they are doing. Their early success was nothing more than a fluke. They happened to start selling weight loss tea or waist trainers or bikinis and made a lot of money and never had to adjust. We are meant to revere these people because they got lucky. When a goal keeper in football faces a penalty kick and happens to jump in the right direction to make a save, we regard that as a poor penalty and a good save. If the goal keeper jumps the wrong way, it’s a good penalty and a poor attempt at a save.
I couldn’t come up with any ideas, so I decided to go over to Japan for a few days seeking inspiration. I made contact with several tea suppliers in Tokyo and booked my tickets to fly out later that week. While I really didn’t want to compromise and release another tea product, I knew that I had to do something. Another tea product was better than nothing. At the end of the day, you can do all the analysis you want, but if no-one is willing to work with you or you don’t have the money to execute something correctly, your reality tends to dictate your path.
I arrived in Tokyo on a Friday morning and settled into my small AirBnB apartment in Ginza. I was flying out on Sunday evening, so I had lined up back-to-back meetings with suppliers that day. I had a quick shower, got dressed, and made my way out onto the street. Within 30 minutes, I became hopelessly lost. I ended up walking around in circles for several hours trying in vain to find the offices of the suppliers. I didn’t have access to mobile data, so I was relying on instructions I had hurriedly scribbled on a note pad before venturing out for the day. I stopped countless people to ask for help, but for whatever reason no one was able to give me directions. After getting caught in a sudden downpour, I decided to call off the search. I felt exhausted and defeated. I made my way back to the apartment at 4pm to email the suppliers and apologise for missing the meetings. I had one more meeting scheduled for 5pm. I was tempted to call it off, but I decided to venture out one more time. I dried myself off and changed my clothes and then spent the next 20 minutes writing out detailed directions. Fortunately, the offices were also in Ginza.
I walked out of the apartment for the final time that evening and carefully counted my steps as I made my way towards the supplier’s offices. It was a short 15-minute walk. I arrived just before 5pm and went straight up to their officers on the fifth floor. After receiving a warm welcome, my host took me into their tasting room to try their most popular blends. It was a scene I was now becoming familiar with. The taste of the tea was far better than anything I had tried in China. Every blend was smooth, and easy to drink with absolutely no bitterness. After the tasting, I was led into a small room where we discussed pricing. While it was much better than the tea I was receiving from China, it was also about 3-4 times the price. Not wanting to leave empty handed, I asked if they had any unusual tea varieties that weren’t widely distributed in the West. My host excused himself and left the room. He re-entered a few minutes later with two cups, one containing matcha and another containing a liquid that I couldn’t immediately identify. It smelt like chocolate, but it wasn’t like anything I had seen before. He explained that matcha was becoming increasingly popular in the West, which I already knew, and cacao-husk tea was also starting to gain traction. I was intrigued. The cacao husk tea was unlike anything I had ever tasted. It was like a low calorie hot chocolate. I knew it would sell well alongside my Chinese detox tea. Almost without thinking, I came up with the marketing angle — a chocolate tea that helps to curb sugar cravings and should be consumed when you are craving something sweet. It was complimentary to the tea, there was no-one else selling it, and I was able to order a lower quantity to test it out on the market. I wasted no time and placed an order for 1000 units.
Back at my hotel later that evening, I paid the invoice and designed the stickers for the front and back of the pouch. I stayed with the Sophie design on the front of the pouch, which was the perfect solution at the time. I was desperate to add other products to the site, so I paid extra to have the tea sent over by air. The lead time for production was only two weeks, which meant I would have the tea in only three weeks’ time.
Over the next year, I learned an important lesson about packaging design. While I was relatively happy with the template Sophie design I had come up with, it didn’t achieve the complimentary feel I wanted. I noticed that people often don’t consume products from the same manufacturer if there is a uniform packaging design. For instance, women don’t typically walk into Sephora and purchase all of their products from a single brand/company. Instead, they purchase a La Mer moisturiser, an Estee Lauder toner, a Clinique night cream, a Mac foundation, and an SK-II face mask. These brands are often owned by the same underlying company, but consumers don’t know that. Consumers like to think that certain companies have specialties and make certain products better than other companies. I noticed in particular that Benefit Cosmetics did a great job at coming up with different packaging and branding for each product the company released. The POREfessional packaging looks nothing like the They’re Real volumizing mascara which looks nothing like the Happy Hour soft blur foundation. The different branding, naming, and packaging makes it seem like the products are made by different companies, when in fact everything is made by Benefit Cosmetics. This strategy made a lot more sense to me. I knew that if I wanted to purchase skin care products, I would never buy five products from Clinique. Instead, I would seek out different brands and buy five items from five different companies. Why would my consumers be any different? They don’t want to receive five different Sophie items. Instead, they want to receive five different products from five different brands who specialise in each product.
Since it was relatively easy to change my chocolate tea packaging, I decided to test out my theory. For my third order of the chocolate tea, I changed the brand name to “This is Chocolate Tea” and created a simple sticker for the front of the pouch. Not only did it photograph better, but it clearly differentiated the products and made it seem like consumers were getting more value for money when the products were bundled together. There was also another reason I wanted to focus on creating different product names and different packaging for each product. Before the name change, every product had “OMGTEA” in the name. I was selling OMGTEA Original Detox Tea and OMGTEA Chocolate Tea. After the change, I was selling Sophie’s Original and This is Chocolate Tea. The change meant that OMGTEA could function more like an online store that sold tea-related products, and less like a stand-alone online brand.