How One Man Turned $200 into $10 Million
Research has always been fun for me, even before Google. When I was writing my first book, _Customer Loyalty: How to Earn It, How To Keep It, _Google didn’t exist.
I would go to the Austin Library and look for stories in Inc Magazine, Success Magazine and the like. I would photocopy these articles feeding the machine with quarters, dimes and nickels. I didn’t see it as a chore. I was just thankful I had access to these stories.
So much has changed over the years, with a good number of entrepreneurs choosing to have online shops. Naturally, I began to wonder how these businesses are envisioned and executed.
Over the last few months, I have been researching about these incredible young people who thought of new ways to enter the business world without having a physical store. I will be highlighting these amazing stories as I teach you how to Earn Customer Loyalty in a Digital World.
The Magic of Customer Value and How to create it in the Digital World
It can be absolutely terrifying to start a new business. What’s even more distressing is the thought of the capital it takes to start shop! However, Salesman Trevor Chapman thought there was something more to life than working 12-hour days at his Solar Panel Installation Company. He wanted to enjoy life without having to spend it in the office.
After research, he decided to start an e-commerce business. And so, with $200, he launchedLDSman.com, an online store offering a strange assortment of items sourced from China. He offered things like Kevlar pants, charcoal toothpaste, inflatable lounge chairs, fidget spinners and much more.
According to Chapman, he spent a few hours a night on the project. He bought a domain name for $2.99 a year and set up a Shopify account via a $14 trial. The most expensive thing, according to Chapman, was when he started spending $100 a day on a Facebook advertising budget. LDSman.comwent live on Nov. 11, 2016.
“When selling door-to-door, the product has to be intriguing enough for people to invite you into their homes,” Chapman says. “Same thing online — to pull someone away from their friend feed, you’ve got to be offering something interesting.”
In about three months, he was spending just an hour and a half each week on his site. He hit $1million in sales in 92 days!
How did he do it?
Chapman sourced from Chinese manufacturers on Alibaba and AliExpress, where he found products for $4.99 that he could resell for $59.99. Now, to avoid the cost and risk of taking on inventory, he set up arrangements with suppliers -over the popular Chinese messaging service WeChat- to have his orders shipped directly from their warehouses in China to the customer in the U.S. — this is what is known as drop shipping.
“That’s the best way to test a product to see whether or not it’s actually going to sell,” he says.
Not smooth sailing
On day one, Chapman lost money. He quickly figured out that he was selling the wrong products.
“My initial thing was that I was going to sell Mormon artwork online. That was probably up for 10 hours,” he says. “I realized that what I was peddling online was not compelling enough to drive traffic.”
He had to refocus. Out went Mormon art and in came inflatable lounge chairs. He made money on his second day, as well as the following days. Two weeks in, he made his $10,000 in one day.
However, about two months in, the woes of drop shipping caught up with him. The vendor in China he paid $80,000 to supply and ship inflatable lounges swapped out the approved product for a cheaper alternative. When customers started complaining, LDSman replaced about 1,500 bags. Even so, Chapman says he’s bounced back from the experience to reach a 48 percent total pretax profit margin.
The $10 Million deal
In early 2018, barely two years after starting his business, Chapman agreed to sell LDSman and his logistics company in a deal worth over $10 million with outside investors. The agreement also included selling Academy of Arbitrage, the educational site Chapman founded to walk others through getting started in e-commerce.
Chapman is currently 38 years old and spending more time with his family as he had envisioned.
- Customers are attracted to items that bring value to their lives
- One does not need a lot of money to start an online business
- It is important to have an intriguing product in order to make money
- Chapman created a need by providing items people didn’t know they wanted
- In order for people to know your product exists, one must always advertise it
- As with any business, e-commerce carries a risk
- One must always be prepared to refund customers if quality of products is not met