While many forums focus on advertising for monetization, ads are sometimes inefficient at leveraging the enthusiast member and may, in fact, perform better for a lurker or one time visitor. To drive revenue from the strength of the community, many turn to selling merchandise and apparel, which can contribute considerably to a strong community. It can also serve as a new marketing channel especially with forums that are well connected to offline events.
But, that’s certainly not all that you can sell. Though we will talk a lot about branded merchandise, it is important to realize that other products can also do well, whether they are physical or virtual. Some of the strategies that apply to branded merchandise will also apply to other types of products and vice versa. The information shared in this section will give you a strong understanding that you can rely on as you attempt to launch products on your own community.
When it comes to selling products, the place where many community owners and managers start is branded merchandise.
This makes a lot of sense because it is a product that allows loyal users to express their appreciation for the community in a public way. Just as people love and respect various companies and brands and opt to share that love with others, some will feel the same way about your community. Branded merchandise gives them a physical tie to the brand that is represented by your forums.
Unfortunately, there’s no surefire way to estimate how much revenue your forum will bring in from merchandise. You can’t know what percentage of your active member base will actually purchase a product. It could be 5% or it could be 0.1%, depending on the interest of the audience, what’s created and the cost of the products.
With on-demand services, you can start selling in minutes. Forums usually start merchandising in this manner with services like CafePress, Zazzle, Spreadshirt or one of a host of other industry players. These companies allow you to define a set number of products, import basic artwork and customize a storefront but handle all of the actual creation, ordering and fulfillment requiring minimal time and no startup costs. For each product, the store charges a base price and you layer in a commission on top of it, which is your profit.
As these services have grown, they’ve expanded as a potential source of sales for especially well produced products and now offer dozens of different types of items. Beyond apparel, you’ll find products like buttons, key chains, bags, pet products, drinking glasses, stickers, cell phone and MP3 player cases and much more.
While a simple logo will sell some products, putting time and, perhaps, money into more unique and varied designs can significantly improve results. Creativity, humor and bold statements can make for a much more appealing selection that more members will want and want more than one of. Think about content that will be more meaningful to your community. This may include unique catch phrases or themes that have emerged.
If you can get to the point where someone in the street is asking you (in a positive way) where you got your t-shirt from, you will likely be seeing more sales, versus a shirt that looks like it was made on your home printer.
This brings us to the alternative to on-demand services. For better margins and increased product quality and selection, consider doing your own merchandise runs. While on-demand services are simple and require literally no set-up or monthly fees, the way that they operate has several drawbacks, which affect your ability to sell and the level of profits that you can garner.
The most significant is the cost of the unit. Since each item is printed individually and the on-demand service is looking to make their own profit to cover the process, the base price of a simple t-shirt can be over $20. Similarly, while on-demand services have improved significantly since the early 2000s, the technologies used are still fusing printed images with a base shirt: it’s decent, but clearly not custom merchandise.
By going direct, you incur the upfront cost of buying 25 to 100 of a given item. The upside is the tremendous advantage that you gain by lowering the cost per unit – the higher quantity that you purchase, the lower it will go. For example, a quality brand men’s t-shirt from CafePress, with printing on one side, is $23 before your commission. With a direct purchase from a screen printing shop like NDesigns, you will pay $5 to $6 per shirt on smaller volumes. Because the shirts are done in bulk, you get a true screen print giving a higher quality look and longer durability.
In addition, there’s a much wider selection in quality and style available to you: on-demand services may offer a few different varieties of an item in a similar number of colors, but, with direct runs, you can pick from dozens of base products, from cheap generics up to premium brands in every possible color. You can opt for embroidery, instead of screen printing, and even work with specialty gear like outdoor and water sports clothing from a company like Chammyz.
Looking around, you will find hundreds of promotional item companies both locally and overseas who can make everything from pens to t-shirts to mugs. Deciding on whom to go with is as much about the item as it is the vendor – t-shirts, stickers and high quality products require a strong vendor and relationship while a black and white logo on a pen may be something that will require less concern.
The difficulty with direct purchasing is in the cost, mainly the capital to get a wide selection of items, styles and sizes. This requires forecasting what will sell, which can be done to a degree based on who the audience is and what has been requested. Opening a thread on your forums and asking never hurts, but you always end up with more requests in one area than you expected and less in another. The more you can invest, the better the return for you and the better a deal you can offer your members. Whereas with CafePress you may have charged $29.95 to make around $7 per shirt, with a directly purchased shirt at $7 you can charge 20% less ($24.95) and still take home more than twice the profit ($18).
Your goal is to limit your risk while still offering a fair price, so turn limited quantities into a selling point by telling your members you only have a few of any given product in and driving up the impulse to act. If there’s significant interest, you can step things up.
Going direct requires more than just investing in inventory. Chiefly, you will be responsible for developing and maintaining a storefront with a corresponding payment solution. There are different ways to tackle this challenge. You can install an open source shopping cart like osCommerce or Magento Community alongside the forum. However, these can be overly technical and can have a high learning curve. So, you may want to consider a remotely hosted service like Big Commerce, Shopify, CoreCommerce and Volusion. While these tend to come with monthly costs, the launch time is minimized and interfaces, payment processing and even shipping integration may already be tackled.
Aside from the cart, payment and support, you will have to handle shipping. For a community with a few owners, this can be a good way to divide work between technical and non-technical partners. While it’s possible to simply drop items off at shipping stores, packing and pre-paying postage tends to bring the costs down dramatically, so consider working with UPS, FedEx, USPS or your preferred partner directly to secure volume rates and free boxes through their small business program.
Forecasting inventory and establishing a minimum break-even point is the most critical step to reducing your risk. By factoring your margin and volumes with an on-demand service, you can understand how much initial inventory you are safe in ordering. For example, if you sold 50 shirts at $29.95 on-demand and wanted to order 50 shirts to sell for $24.95 direct at a base cost of $7 each, you would have to sell just 20 shirts to cover the $350 that you laid out for the entire run, which is much safer than trying to duplicate your initial 50 sales. Of course, selling all 50 would net you $540 in profits (before merchant and store costs), versus $350 from the on-demand option.
This approach can also help cover the cost of “freebies” – or your own gear. For instance, on-demand stickers cost $3 to $5 depending on the service but even full size bumper stickers cost less than $0.75 when ordered in quantities of 1000 or more. This means that if you sell just a third of the inventory at $2, you will cover the cost and leave yourself with hundreds of stickers for events and promotions. On that note, here’s a small tip: smaller stickers sold on sheets can be under $0.15 each, which is great for inserting with orders or at events as a cheap promotional item.
In the end, taking a hybrid approach may be the safest bet. Since much of the success of a forum shop comes from user loyalty and showing off the brand, consider starting up with the on-demand model to validate interest, sizes and styles. Based on the results, you can then better forecast the amount and types of direct products to invest in, reducing the risk of holding high inventory quantities that don’t sell quickly enough. Your goal is to sell everything in as short a time as possible – weeks over months, months over years. In addition, the revenue generated from your first store can cover the costs of the initial run, shopping cart, payment providers, etc., allowing you to take safe steps from nothing to on-demand to merchandise runs up to your own full line.
While the requirements vary widely by the type of site, most niches have a fair number of low cost, brandable items which serve a real function. If you have the right mix, there is a lot of opportunity and value to be found. For example, laptop cooling stands for a computer forum or dive tank holders for a scuba community. Both serve real world needs which lead to them being used while also being site specific and tapping into the community spirit, as opposed to just selling generic gear.
The vendors and manufacturers that you can work with are very industry specific, but it really boils down to looking at who makes the stuff you think would be affordable and brandable. In many cases, they’ll work with you on custom versions. Sometimes you can get leads from stores that have their own versions. Since it is branded merchandise, people don’t tend to keep it a secret, whereas a proprietary developed item just for them is going to be harder to find a source for.
While the cost per item can be high, the direct route once again will allow a partial number of sales to cover the entire run. Furthermore, because these items are useful in their own right, sales often come from members who are less attached to the community. In addition, they can offer upsell opportunities for anyone who is buying a t-shirt.
Of course, before you run off to build your own tablet computer, it is wise to sell branded gear and really look at the response and interest to gauge where to go next. Everyone says they’ll pay for something if you make it, but most don’t and ordering 50 units of a $20 product adds up quickly.
In the mix of product sales, don’t forget to consider the publishing and hosting of various forms of paid content. This can include physical products like books and DVDs and virtual products like ebooks and educational training programs.
Building on a strong, mature web development community, SitePoint launched a successful book publishing venture and an educational course system that eventually spun off into Learnable. With enough demand, an interesting idea and/or an industry or practice that people seek expert education in, these types of programs can be successful.
It’s easy to limit your thinking to the internet, especially since we are talking about monetizing online forums. But, your merchandise does not have to be limited to online sales. For communities that host local events or participate in tradeshows, selling in person can be a great way to cover costs, raise funds and, since there’s more impulse in person, volumes tend to shoot way up.
To keep things easy when it comes to billing, try a service like Square, whose smartphone and tablet reader allows small businesses to swipe credit card payments with no upfront or monthly costs and a fairly average percentage fee.
As you cansee, with merchandise and product sales, there is a great deal of opportunity for you to bring in additional revenue while offering your members something they have probably been requesting. No matter what approach you take, there are many vendors out there and, by comparing the costs, quality of product and the interest of your members for volume, you can decide on the right path to trek down.