Optimized Ecommerce EP 068 – Our E-Commerce Product FAILURE: Ape Tape Case Study
This week on the Optimized Ecommerce Podcast, Tanner Larsson talks about powerful ways to sell your products online on Amazon FBA, Shopify, or any other online store. Listen as Tanner shares discoveries and lessons from the Ape Tape Case Study and the new product development process. Don’t forget to subscribe and leave a
Welcome to Episode 068 of Optimized Ecommerce – Our E-Commerce Product FAILURE: Ape Tape Case Study. I’m your host, Tanner Larsson, CEO of BGS.
BGS means Build Grow Scale! It is a community that we founded where eCommerce entrepreneurs and physical product sellers come to learn how to take their businesses to the next level.
Here’s just a taste of what we talked about today:
We talked about how we discovered the Kinesio Tape.
The following are the steps we did to find the Kinesio Tape:
- Run an independent research
- Looked at Amazon
- Gravitated to sports & outdoor category
- CrossFit games + Amazon bestseller list = idea
- Merchant words keyword search
- Amazon category search
- Inc Magazine’s fastest growing companies search
Then, we discussed how we sourced ApeTape.
Check out the list below:
- Checked out Alibaba.com
- Search: kinesiology tape
- Searched the top 3 companies (Longest Gold Member)
- Set up Skype calls with each of them
- Asked about the company
- Quality Control process
- Manufacturing capacity
- Product customization
- Packaging options
- Ordered samples from 2 of the 3
- Compared them against competitor product
We also discussed a few other fun topics, including:
- Competitive advantages of Ape Tape.
- The Why behind Ape Tape’s branding.
- Ape Tape Trademark and Trademark Fiasco.
But you’ll have to watch or listen to the episode to hear about those!
How To Stay Connected With Tanner Larsson
Want to stay connected with Tanner? Please check out their social profiles below.
- Website: BuildGrowScale.com
- Facebook Profile: Business.Facebook.com/BuildGrowScale
- Twitter Handle: Twitter.com/BuildGrowScale
- YouTube Channel: Youtube.com/user/windowsuccess
Also, Tanner mentioned the following items on the show. You can find that on:
Ecommerce Evolved by Tanner Larsson
Tanner Larsson 0:06
That necklace you’re looking at has put about $800,000 in my pocket over in pure profit in the last couple of years. And what you’re holding in your hand, it’s about 30 cents. If you guys read my book, you also know that I almost didn’t produce that product. That was the one that I was too scared to ask about the mold cost. And you know what the mold cost was? How many of you guys have ever been in injection molding or heard anything about mold costs? The numbers are hundreds of thousands or tens of thousands Right? You know how much my mold cost was for this necklace? 150 bucks. But I was so terrified. When they said, I’ll get you a quote on the mold. I was like, I’m done. Find a new product I did not even ask. Months later, after someone at an event asked me how much the mold was, I’m like, I don’t know, I better go find out. We advanced the product.
Tanner Larsson 0:55
So it doesn’t matter what the product is or what the category is. Is that a high quality product? Actually it is. It’s a rhodium plating, so it’s high end costume jewelry. Same stuff you find at Macy’s and JC Penney and all those that are actually manufactured with the same company that manufactures all of JC Penney’s costume jewelry. So we could have done a sterling silver option, but we found the market wouldn’t bear the sterling silver option at that high of a volume. I wanted to sell volume, not just a few. Also in front of you is Ape Tape, kinesiology tape. Kenny, did you get your extra bag? Yeah. Of all the goodies? Okay, cool. So, this is an actual product. It’s one thing for me to teach you something. It’s another thing to actually tangibly hold it in your hands. Right? So if you guys are paying attention, if you look at it, we actually spelled kinesiology wrong on the packaging. And nobody noticed, right there at the top, on the tag. Okay, so this is an entire case study on how we went about product selection, how we found this product, how we settled on kinesiology tape. And of all of you in the room, the only person who’s really going to benefit hugely out of this will be Kenny, because he’s in this space. But the rest of you will learn a lot about how we look at product research and how we do this kind of stuff. Some of you guys may have seen as I put a recording of this in the academy for people, but we’ll probably get me expanded on a bunch more topics as we go through. So why did we choose Ape Tape? We’re going to cover how we sourced it? How we built in our competitive advantages? Why we branded it the way we did? Our rollout strategy, and then we’ll do some q&a if we have time before lunch. So why did we choose Ape Tape? Well, I follow my own rules most of the time. And we were not looking for this product specifically, we were actually looking for a product that fits certain requirements that we were after, just like I was talking to you guys about. Our initial requirements were that it needed to be niche specific with a large audience base. We need to be able to easily reach and dive deep into that audience, by and large, that means Facebook to start right? Ideally, we need it to be a passionate audience, we needed to find somebody who is really into whatever it is they’re into, so that they are more likely to buy, passionate buyers are always the best buyers. Is lightweight and small, easy to ship. Not complicated, not prone to breakage. Can it be a private label that made our own and are competing with only our own brand, not anybody else. The market already wants and uses the product, and has multiple competitors doing over seven figures. So everybody else runs away from competition, I run towards it. We are looking for brands that are already making lots of money, because that proves the market and has to have retail potential. That was for this particular product. We had a whole bunch of crazy stuff we were doing this. You may not care if yours has retail potential. That’s totally fine. So how do we find kinesio tape? We did some independent research the same exact process that I told you we started looking around. Okay, I looked at Amazon, naturally myself, and when I say we I was talking about myself, Ryan Coisson and Daniel Audunsson. They were my partners on the Ecom Masters promotion we did. We had a bunch of Amazon products and other things that we were testing and doing together and we decided we wanted to launch a brand together. And that’s how this came about. We gravitated towards sports and the outdoors. Ryan’s a big rock climber. I love sports outdoors, too. I’m always into different things like hiking, backpacking, hunting and shooting, all that kind of stuff. So we gravitate that we started looking all over the place, but we kept kind of going back there because I can only look at so many kitchen products or home accessory products before I go like whatever. So we gravitated over there, it wasn’t intentional it just happened. Now, how we found it was, we’re making fun of the CrossFit Games. We were in Reno, and CrossFit Games were happening. And we were at a sports bar, and they were on TV. And CrossFit is a cult, right, which is totally cool. But it’s like they’re drinking their kill cliffs, and they’re all taped up. And then they’re sitting in the bleachers not doing anything. We were just joking around. And then Daniel mentioned, hey, isn’t that tape we’re looking in? And I go, oh, yeah, it is.
Tanner Larsson 5:35
This tape is on TV. CrossFit is a crazy, passionate niche. Bunch of crazies running around. Loving it like, I do CrossFit, let me tell you about it. And these people spend money. And they’re like, Cool, let’s do some research. So it was an idea worth researching. Again, it was unintentional. But we hadn’t started looking and we wouldn’t have ever found it. So we did the merchant words, keyword search, Amazon category search. Again, the same thing I just taught you guys how to do. And then we also looked at the Inc magazine’s fastest growing companies and we did some Google searches and found some data that was interesting. So on Amazon, this was at the time I took the screenshot. There were four main competitors. KT tape, tennis athletes tape. I can’t remember her name, then rock tape was the big brand leader. Kinesio tape Gold is what you’d see in Walgreens or CVS pharmacies and stuff like that. And then masters of muscle is an FBA product. It’s a private label guy. So we were looking, what we found was interesting, there were products, the price points were good. It was interesting. Merchant words. We checked kt tape, we checked Rocktape. We checked the generic, and there are tons of search results. Interestingly enough, Rocktape is the leader in the kinesiology tape market. But kt tape has triple the searches, quadruple the searches almost. So all this stuff are showing true like, oh, man, we should keep digging, we should keep digging, this looks good. So then the CrossFit Games, this is how we saw this, all these athletes are wearing kinesiology tape, a lot of it is Rock tape, but other brands, then we saw the runners wearing this, and swimmers are wearing it. And golfers are wearing it. And all these different people are wearing it. John has worn it, he’s worn it when he was doing his backyard landscaping. So they’re all wearing this tape. It’s like, okay, interesting. And then we checked Amazon, and realized that, wow 114 in sports and outdoors 137 in sports and outdoors, these suckers are moving. If you’re in the top couple 100 on Amazon, your volume is insane. So we’re like, man, maybe we should look at this more as an actual opportunity. Then as we’re googling all this stuff, we came across the Inc list. And we saw that Rocktape had hit the Inc. Number 448. But what was important to us was their three year growth of 1,000% 2013 revenue 5.3 million 2010 revenue 454,000, is that a pretty good growth curve? What does that indicate? Good market. Right? Okay, so there was Rocktape. And then we saw KT tape. Same kind of thing, right? 1200% growth 9.1 million. And also we look at their founding date, 2008 and 2009, starting at about the same time. So these companies, sell the same products started about the same time, both experiencing amazing growth, and they’re no variation, the product other than their packaging and the label. Pretty interesting, we got excited about it. So how we sourced it? Alibaba.com, I didn’t know I didn’t have any way to find it at that time. And now we have guys that can do sourcing for us through Black Label and stuff like that, but at the time, I didn’t have it. We searched kinesiology tape the same way everybody else finds products. The top three companies, there’s a ton of them. So we eliminated it down by Goldmember. How long had they been a gold member just to eliminate some of the results so we could just try to find somebody quicker. We set up Skype calls with each of them. We asked about the company. We asked about their specialty, not about kinesiology tape. We asked about their specialty, their quality control process. We talked about their manufacturing capacity. Product customization. This is when we started talking about the tape. Packaging options what were the different variations they did, but we lead in with what does the company do? Because we found several manufacturers that could make kinesiology tape, but their specialty was industrial tape. Okay, well, kinesiology tape is kind of in the medical tape category. There are some health things. There are some certifications we wanted to make sure they had and an industrial tape probably didn’t have that. But we wouldn’t known that if we had not asked. So we ordered samples from two of the three, the one we didn’t order was the industrial tape and we compared them against competitor’s products. What do we do? We went to the store, we went to Amazon, we bought our competitor’s products. Okay, so we order our competitor’s products, and we just compare them, what worked? What didn’t? What samples were better? Did we like them?
Tanner Larsson 10:36
So this is it, all we did was we checked by Gold. So that Gold’s there’s a little checkbox at the top, you can click, that’s all you have to do. Now, is it the greatest way to do it? No. But there were so many results that we had to narrow it down somehow. Otherwise, we would never have waited through the data. Okay, so it’s just what we did. So the competitive advantages, again, there’s already a bunch of people selling kinesiology tape, how are we going to be different, because I’m not going to do something if we can’t be different if we can’t have some competitive advantages. Now. This is 100% all me. So I want to take all the credit for this because it truly was, I’m so excited about it. And I’m so bummed that I don’t get to sell this product anymore. But this was amazing. Because we have and Kenny’s gonna crush it when he starts selling his tape because he can do the same thing. But the reality is, the guys could not figure out what we could do to differentiate besides color. They couldn’t figure it out. I sat there thinking about it. And I actually came up with some really simple and awesome things that worked out very well. So I definitely wanna pat myself on the back. And that’s why I did that. So let me show you. It can’t be a mutual product, it has to stand out from the rest. And we created competitive advantages. That didn’t cost us hardly anything. Number one, I doubled the length of the tape roll. We went from, everybody has a 14 foot four-inch roll of tape, everybody. So I said, let’s double it. Let’s make 24, ten extra feet. Okay, why? Because that’s a lot more. And one of the things we found in the reviews was people wish the rolls were longer. And then the only way to get longer rolls was to buy the bulk rolls. And the prices were different. Well, initially, it was like, Oh, he double, it’s gonna double the cost, it cost me 30 cents more a roll, 30 cents more roll to double the length. Pretty good competitive advantage right there. Now we have a reason to mark our price up, even more, we can charge more legitimately, even only a couple of dollars more. But it’s still a better deal than buying the other brand. That’s just one advantage. We offered multiple width options, two-inch and four-inch, almost all the kinesiology tape companies, we’re only offering two-inch rolls. And the thing is, when you tape a shoulder or a knee, it’s easier to use a wider roll of tape. Because then you can just cut slits in the tape. You don’t have to use as many pieces and it’s just a better wrap. How do I find that out? I read the reviews. I watched kinesiology tape videos and saw what athletes were doing and how they were talking about what the trainers were saying. So we added a four-inch roll. Now did other people have a four-inch roll? Yeah, Rocktape had four-inch rolls, and they were ridiculous like 60 or 70 bucks. Our four-inch roll with the double length wound up costing us only $1 something more. So we didn’t have to go ridiculous to have our profit margin stay really good. So we had those two options. All our tape is waterproof, instead of just optional, where you had to pay more for it. Rock tape, KT Tape, they charged you more to get the waterproof tape. And what we found out was that the non waterproof tape also didn’t work with sweat. So basically the tape doesn’t work half the time. So as long as you don’t sweat, the tape was awesome. While you’re doing physical activity, we said let’s just make it waterproof. And we had a different tape that was not only waterproof, or an adhesive that was also resistant to the chemicals and sweat. So that wouldn’t break down as quickly, we just made sure that the standard didn’t cost us any more. It was an option. What type of adhesive do you want? Do you have a waterproof one or one that resists sweat? We have both. Can we use that? Sure. Wouldn’t known if we didn’t ask. Premium branding, all these other pieces make us look good. We might as well package together and be that top-level brand. So now basically we’re talking about almost a 30 cents unit cost increase. We stand out visually through our premium branding and our colors and selections things like that. Technically, we stand out and functionally we stand out. Competitive Advantage didn’t cost really anything. And now we already send way out from our competition. So, then the branding, we wanted to have that premium branding. So what I wanted, I wanted premium design, I wanted a strong gender neutral design with a catchy name that the market would identify with. A strong logo that will appeal visually to the market. Retail quality packaging because one of our considerations is that we want to be able to go into retail, right?
Tanner Larsson 15:34
Had to have a cohesive design that makes the product pop. So we wound up with Ape tape crossfitters, primal, ape, Primal CrossFit, perfect fit. We went through all these different eight variations. And what do we do? We went on CrossFit fan pages and posted pictures of Ape’s and had them vote on which ones they liked. Oh, that’s cool. That one is like me, that one’s cool. Then that one gets well. The girls who voted were the ones that we weighted the heaviest. So we found out that this was the most appealing Ape for the Ape Tape. And then we added the tape to the shoulder. So now the Ape and the tape are together. Ape tape picture of an ape with tape inside of the tape roll, it all worked out. If you look at the packaging it prevents injuries, delays fatigue, and eliminates pain. Two inches wide, right in the front, 10 extra feet. Call it out right off the bat. Okay, again, kinesiology is spelled wrong. We show our other colors, our packaging is premium, you can look through the top and see what color it is. So we didn’t have to have a different box for every color, which is a mistake a lot of people do if they actually print the color or the variation on the box. So you can’t have standardized packaging. So your packaging cost quadruples, or goes way up based on however many variations you have. And then the other thing we added was a last-minute ad because I hadn’t put the graph paper on the adhesive backing. So now you can actually measure because most of the others don’t, did I get the same length piece? Do I need a certain size, a certain width? The biggest issue wasn’t so much the length as it was cutting the width because, for certain types of taping jobs, the complaint was they couldn’t get it consistent, because you need
Tanner Larsson 17:27
for certain types of things, you want a thin piece versus a wider piece and whatever. That didn’t cost anything extra either. But it was a nice little touch for the people, the big reviews, the feedback we got was bad, it’s so easy to use this stuff. And it sticks right. So we have our four inch roll. And these three are our first three variations and colors. black, blue, and orange. You think I just chose those random. Nope, I did research. I found out what the best selling colors of Rock, KT, and the other competitors were and said, out of all these, these are the best three we should start with and eliminate our issues on variations we went with the one color variation for the four inch tape. And then a deal to call these photos actually. After he forgave me for saying no to his oil, he still does our photos. So because we were planning on growing this brand into a large company and taking it into retail and doing all kinds of the crazy stuff we applied for trademarks and did the whole trademark process a lot of people will never go this route you don’t have to go this route. But a lot of us do.
Tanner Larsson 18:37
So we wanted to have a trademark so we applied for one. Trademarks must be classified by a specific use and they’re organizing the categories based on that use. So in our case, Ape Tape falls into the sports tape for injuries category and the trademark will only apply to protection for that category. And directly related to competitive products that are in that same category so the medical tape category was where we wound up getting stuck. But it’s not all sunshine and roses I alluded to it already. Shit happens and the US is sue crazy. So what happened? Just because you get a trademark does not mean that you are protected. Even if the US Patent and Trademark Office issues you a trademark and you do everything by the book, you can still have issues. We were awarded a trademark for Ape Tape in the medical tape category. The trademark was uncontested and approved, went live and went through all the processes. We have the paperwork and everything’s good. No conflict of interest by anybody. Several months later, I was served with legal papers from an IP attorney threatening legal action claiming that we have violated another company’s trademark. They were also issued a trademark for ape tape in the paper carton and electrical tape categories. National Can-do tape is the name of the company, they can go to hell. And so anyway, National Can-do tape decided that you can’t have ape tape in a sports medical category because we have tape in a paper carton and electrical tape category. Both companies were issued trademarks by the US Patent Office, the trademark office because the USPTO felt there were no conflicting issues. These were things that were addressed. Is there a conflict issue? No. So there is no issue. But that doesn’t prove a guarantee that you’re protected or that somebody can’t sue you. You can sue for whatever you want. Right? So we had no legal protection on this. So the other company decided that they would file suit if we did not stop selling, or using the product trademark. So our IP attorney, we went through the whole process, we spent tons of money on this stuff. They explained to us that their IP attorney actually explained to us the same thing that, hey, you’re both right. So the only people who are going to win in this situation are the lawyers because we’re going to battle and they’re going to say, well, you’re using our trademark, well, you’re using ours. No, you’re not. No, you’re not. Basically, we both are in the right. So all we’re going to do is keep arguing until one of us says I don’t want to argue anymore. And then the money runs out. So what we decided was, at this point, we hadn’t gotten super far into the selling of it, we only sold a few 1000 rolls. And at that time, I was already going through some issues with my previous business partner, and I didn’t want to form a new company that was potentially gonna be a big and long lasting company with a business partner I didn’t want to be in business with. Ryan and Daniel felt the same way about that same person. And so we decided that, hey, let’s kill multiple birds with one stone. Let’s just let it go. Let’s cut our losses and focus double down on our other businesses that are already making money. And let this slide. So it sucked, still the most amazing, probably the most excited about was still this. Now what we could have done was we could have gone back to the drawing board for another brand, started it all back up again. But what happened was that season of our life, it just didn’t make sense. And then life got in the way other things happen. We just start to focus on other companies, and it just sat there.
Tanner Larsson 22:27
So kinesiology tape is still a great brand and still a great market. The reason I’m telling you this story is, number one, most people won’t tell you stuff like this, they’ll just say, oh, man, look at how awesome we are and how great they are. Well, guess what? The real world hits me too. But the process that we went through to get to this point, is how we find our winning products. And it is still the same way it works for anybody else. Now, is anybody else gonna have this, we’ve never seen this issue in almost anybody else’s business, you’ve seen a couple of trademark things. But it was more that they knew there was going to be a potential conflict. But they went forward anyway, in case they didn’t enforce it. Because the thing about a trademark is, if you don’t enforce it, every time, you can’t enforce it anytime, you can’t pick and choose when you want to enforce a trademark. And that could have been why we had this issue. So now the silver lining here is that their trademark attorney was not very intelligent. And when we agreed to stop using the trademark, they never took ownership of the trademark. So they can’t even use it themselves. But we can’t use it. They also never requested the domain name. So we sold it back to them for $5,000, three months later. And they didn’t even realize they bought it from us. But they could have demanded it from us as part of the settlement. They didn’t know what they’re doing. So we don’t own it anymore. We don’t do anything with it. But we still have the product, so I can’t sell it to you, but I can give it to you. So anyway, that’s kind of the way these things work. And again, don’t let this put a damper on your own endeavors. Okay. Because this type of thing would have shot a lot of people in the foot, they would have been done, they would have been depressed, they would have been over it, they will just quit. Shit happens, whether it’s this to this level or a product that you start selling doesn’t work out or you have unhappy customers or whatever it is, things are gonna pop up in your business. So do not focus on the fact that this didn’t work for us. Because everything worked and it sold great. The only thing that didn’t work is our stupid legal system. And it wasn’t worth fighting. I could have dumped 200, 300 grand into a legal battle. But I rather just have that money in my pocket and not have the stress of a legal battle. Because if anybody’s ever gone through that kind of stuff, that’s not fun. Lawyers in court and all that kind of stuff that can drag out for years. Who needs that stress in their life? You can always go make more money. There’s plenty of products out there. Any questions on this stuff?
What was your IP research process?
Tanner Larsson 25:09
So, good question and I don’t know, I hired a company, our IP attorney that we used. They have a whole team that does that. And the easy thing is to go do a patent search or an IP search on the USPTO website. Those suck if you ever tried that it’s a pain in the ass. It’s much easier to hire. Patent searches are a different story. Trademark searches are much cheaper. But we paid them to do that. And we knew about the Can-do tape. We knew it already, there was no crossover. And when there’s a conflict, when you submit a trademark, that the USPTO sees a conflict, before they go through the approval process. They’ll flag it and say, Hey, have you considered this, you can still push for it. But have you looked at this? None of that came back. So I would recommend you let a company who is actually good at doing that and wants to spend that time to do that. Because it’s a long drawn out process to try to wade through that crappy website. And there are software tools that they all use that are better.
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