Incredible opportunity to own an eCommerce brand that is selling a unique, exciting, and highly demonstrable product that can turn a desk, coffee table, bar top, or essentially any counter space into a wireless charging dock. Already profitable and the potential is massive.
Watch the video below to learn a bit more about the owner and his business.
Tell us a little about yourself. It sounds like you’re an inventor yourself within the wireless charging space. What brought you to sell this product instead of your own?
I’ve been an inventor and engineer for most of my life. As a kid, I was the guy in the neighborhood that all the friends called over if someone’s Sega Genesis wouldn’t start. I’ve always had a knack for how technology works.
By the time I got to college, I was tinkering with software and hardware concepts. I convinced my landlord to give me a couple months of free rent for building an online payment portal, using Paypal, for all the students in the building. I think it was ideas like these which produced small, early-wins, that made me curious about how to come-up with more ideas.
By my second year in college, I’d gotten a new iPhone, and was obsessed with figuring out how to recharge it wirelessly.
Years of collaborating with other smart engineers in tech clubs at Georgetown and the surrounding schools helped me understand how it could be possible.
I received a patent for my wireless charging technology two years later, built a product with contract manufacturing help in China, and made b2b relationships at hotels across Istanbul and Amsterdam.
I was still very young doing a lot of these things. I’d raised money from investors for this company so I was relying on them to sort-of guide the ship, strategically, while I spent more time working on the technology.
What I learned over time is, manufacturing hardware products can be a few different businesses, in one. Some of these business pieces and their supply chains have become commoditized. As a simplified example, wall plugs are a necessary part of this product but they’re a commodity. And, that commodity isn’t driving new value or creating sales. I realized for things like this, my business doesn’t need to focus on it or be involved. I never totally grasped this with the first wireless company. There was a foolish pride in wanting to do it all.
Fast-Forward a few years and I decided, I need to partner with people who can execute on the commoditized areas of the business, and I’ll save my innovation and focus and capital for the areas where I have a unique strategic advantage.
I understand wireless technology. That’s my advantage. From that point-of-view, it doesn’t matter who originates a wireless product. I’m looking to sell something that’s effectively commoditized, where I can add some special sauce to it.
No-Show Charger has played-out in a similar way. Some of my relationships in Hong Kong were making wireless chargers where customers needed to cut a hole in their desks, to create the hidden charger effect. I wasn’t willing to destroy my furniture and assumed others felt similarly.
The manufacturers realized this was a deal-breaker for a lot of customers. They’d been trying to figure out a way to wirelessly charge ‘through’ a substrate for years. They had a prototype that worked at very low wattage. But, to charge smartphones, we’d need to output at least 10W. I spent all summer in 2019 going back-and-forth with them on whatsapp, sharing engineering notes and technology details. When we did finally get the No-Show Charger operational, in August, I was as excited as I’d been when I was awarded a patent.
At the end of the day, it’s about making things that people want to buy. And, I knew this product was lightning-in-a-bottle.
Your product is drop-shipped from a 3PL. How does the bulk ordering process work? How much inventory do you need to order in advance, at what cost, and typically how often do you need to place those bulk orders?
There’s two key pieces to bulk ordering for NSC.
The first aspect is sourcing various materials (stickers, boxes, plugs, instruction booklets). NSC’s manufacturing partner is assembling parts that arrive from different places. Therefore, each has a slightly different lead-time.
For instance, lead-time for plugs is always longer than everything else. So, plugs need to be ordered at least 30 days before assembly begins.
Once all raw materials have been delivered to the manufacturing partner, Assembly begins. This is the fastest part, and usually takes only 2 – 3 days per 500 units.
I understand how many chargers will be sold in a given month, but the challenge is determining how much inventory should be available on-hand. This is really an accounting gamble and you’ll see strategies vary with different operators. The less inventory on-hand, the more cash there is in the bank to spend on maybe advertising or customer-service. But, holding less inventory, it’s easy to cut it too close and run out of inventory, which happened to NSC several months this year.
This caused a downturn in sales in June and July because I cut it too close and didn’t have the inventory. Since then, I’ve decided to keep 2 – 3 months inventory on-hand. I think that’s a better balance to strike.
Including duties, it costs about $36.50/unit when ordering more than 200. Ordering more, say 1000 units, can reduce the overall cost per unit. I have had conversations with our suppliers about a significant reduction in costs for orders over 1000 units. I’m happy to have a conversation with potential buyers.
From Assembly to our 3PL’s loading dock is approx 38 days. It’s a bit more when you add sourcing lead-time. The ideal time to source new materials is 60 days from delivery.
What is your return on ad spend when running Facebook ads? What about when working with influencers on TikTok and beyond? What is the net profit margin after acquisition costs are factored in?
I’m a software engineer, but I’m not a marketing professional. I used Facebook and Instagram ads and achieved ~ 1.3x ROAS across all the campaigns this year. I’d say that’s probably closer to mediocre than great. Agency averages can be a lot closer to 4x and beyond. But, I’ve never made a remarketing campaign or done any campaign optimizing. I have had just one ad creative for more than 6 months.
In the first several months I wasn’t doing any conversion-based campaigns. I did general branding and awareness campaigns early because the company and product were new.
As the months went on, I was unsure about how to optimize conversion ads. I have a good friend who is an ad-optimization pro and he advised me to implement Facebook pixels within event functions on the NSC website. This would capture events triggered by users in the store and feed this event-data back to Facebook. Facebook’s AI could then, more accurately, predict users with the highest chance of converting into customers. I built these tools into the online store for Facebook, Twitter, TikTok, Snapchat, Pinterest, and Google. This will give the next owner a big leg-up.
I’ve worked with influencers on TikTok and Instagram. I’ve never paid cash for a review. I’ve always offered products in exchange for services.
Generally, what happens is people from Facebook and Instagram find NSC online and love it. They send a note and ask to do a product-review, hoping to get a product for free. If they have an audience, I’ll oblige.
Sometimes Influencers will ask for cash and products but I’ve never tried it that way. Ultimately, people love the product and are willing to trade. I’ve definitely been burned a few times. An influencer I have a deal with might claim the charger never arrived despite tracking information. Or, the person becomes unreachable. This does happen. It’s frustrating but it’s effectively $36.50 + shipping for these opportunities. Given some influencer success, it’s well worth it.
I also created a very simple agreement, in recent months, that binds the influencer to completing social video(s) or pay for the product in-full. I can share it with the new owner(s).
The ROI on these types of promotions can be extremely high. If I were to go forward with this company, a huge focus would be designing tools to measure ROI from product reviews and creating affiliate agreements with scores of Influencers. It’s much cheaper and exposes your brand to channels where a quantifiable amount of your customers are.
Today, the net profit margin is 17% — including all ads and marketing costs. The gross profit is 65%. Substituting a fraction of ad costs for Influencer content could significantly expand net profits.
What would a new owner need to know in order to continue operating the business as is? What is the key skillset for a new CEO?
The good news is, the business is setup to scale. Most of the technical innovations have been made with the future in-mind. This clears the way for a smart business operator that will only have to know a few operational things:
1 – You will need to manually add tracking info from the 3PL’s platform to Shopify. It’s easy and it often takes 5 mins. This will automatically send an email to the customer with tracking details.
2- I use ShipStation when I’m physically shipping a product from Philadelphia — and not using the 3PL. It is helpful to take a look at Shipstation, to have some backup system that allows you to print labels and manually ship packages. For instance, I’ve had customers order 10 chargers at once. In this scenario, I’ll personally ship from my Wework office and include a nice handwritten note. I’m able to do that using Shipstation’s platform.
3- You will need someone (maybe a virtual assistant) or some way to deal with customer service. People have questions before they purchase. They have questions after the product arrives. And, generally monitoring social media for misinformation, is a good idea.
As far as key skillsets — you’ve got to be able to track the dollars in and out of the business.
Influencers will want to work with NSC because of the product. There are professionals out there who can help optimize Facebook campaigns.
But, as the operator, if you focus on reducing expenses (especially where there’s no value created) the margins will grow.
As an example, most customers are currently ordering from California. The 3PL warehouse is in PA because I’m in PA. This means slightly higher costs per package delivered. After selling and paying those extra costs on 1k products or so, that turns into real money.
The past two month’s profit is growing exponentially when compared with page visits. Is this simply a result of sales optimizations? Do you see this continuing as a trend?
Sales optimization has really unlocked sales efficiency. This has made the product more profitable despite fewer people seeing it.
My goal is to attract the most qualified prospect into my orbit. And, if I can get them on the website, I want to provide a path to checkout that’s been proven to have the least friction.
That’s what sales optimizations have been all about.
Implementing the right technology has made that possible. Adding engagement tracking across the site has enabled me to share this data with Ad partners — which, in turn, helps me find the most qualified leads.
I’ve tested different page entry points, price points, unique selling propositions, videos, reviews, images, as well as varying paths to checkout to identify the quickest customer conversion path.
In the last 28 Days, a person who watches two videos on the website has a conversion rate 750% higher than someone who comes to the site, and does not watch videos before buying a charger. That’s insane!
Apart from it telling me I need to add more videos on the site, Ad partners like Facebook’s artificial intelligence is trained on this data, which is the engine for identifying the most relevant prospects.
This same technology from Twitter, TikTok, Google, Pinterest and Snapchat is implemented in the site, as well. Another indication that these optimizations are working is the 4% bounce rate. There’s a qualified customer showing up to the site. That’s why they’re not immediately leaving.
I think the trends show, sales will increasingly get more efficient over time.
If you were to continue operating this business, what would be the 3 top growth channels that you would tackle?
- Amazon is a huge channel and has yet to be explored.
- Influencer Affiliates offer unique credibility.
- Expand Paid channels to include Snapchat, Pinterest, Twitter, and TikTok
- (Hon. Mention) Residential Homes.
I’ve had home-builders and carpenters reach out wanting the product for new builds. It can be an awesome channel with more control over its implementation.