I found an interesting article today while I was trying to find the end of the internet. It’s about headphones, earbuds, and manufacturing.
It relates to a few things in China. Skullcandy is making a killing. Yes they are. They are slaying it. Did you ever wonder how they do it? It’s easy, in fact we could do it next week if we had the start up capital. I may make it sound easy, it’s not, but with the cash to start, things get easier.
When you move to China you gain a new perspective on things. Most of the time it has something to do with manufacturing or products. Things that you would never think of. Like Skullcandy, one of the biggest headphone companies. You ever wonder how a new headphone comes about. Easy, they roll to China, go to a bunch of factories, pick the new designs they like, throw a logo on it and done. Yes, I am over simplfiing it. But most of the time I bet this is what happens. To R&D a new headphone or eletronics costs too much. So let the factory come up with designs, pay for the right to use them for 5 years and your done. I believe that the higher end might be designed by Skullcandy themselves. You get big enough, have enough money you can start to throw some at your own designs. But hey, I might be wrong.
This happens in a whole lot of industries. Skateboards, snowboards, phones, etc. Lot’s of factories have to come up with OEM designs. That’s what Western customers want. They don’t want to have to design the product, they want to roll in, pick something and then go to foot massage. Can’t blame them can we?
Check this. You have 10,000$ you want to burn. You contact a trading company or you hommie in China, or a sourcing agent. They find you factories and designs for headphones or whatever product you want. You design a logo, pick a design, send the artwork and 3000$. 30% down. Depends on the contracts. Two months later you have your product. You have 2,000 headphones in 5 colors. 10,000 headphones total. You bought them for a dollar. You mark them up to 19.99$. Your still a two man show or something small. You built your own website, marketing, and Facebook page.
All you have to sell is 500 of them to break even.
This it the hard part.
China can make you anything, but China can’t help you sell it.
You can read the article that spurred this little gem HERE.