How I Started A $4,200/Month Competitive Puzzle Store Working 1 Hour A Day
Hello! Who are you and what business did you start?
My name is Oliver Jenks, 21 years of age. Managing Director of speedcube.co.nz, an ecommerce store selling speciality Rubik’s cube type “speedcube” puzzles.
Designed to be light, stable and easy to turn, the brands of puzzles we import and resell are primarily intended to be used for the popularizing competitive sport of ‘speedcubing’.
This sport is centered around solving different puzzle variants as fast as possible in official competitions governed by the World Cube Association (WCA). Our products have also resounded with people who simply enjoy fidgeting and playing with puzzles, even if they don’t know how to solve them or don’t wish to compete.
This business currently represents a substantial portion of my income and allows me a degree of financial flexibility whilst I complete my bachelor's degree. On average I spend around an hour a day working on the business. With an annual 5 figure profit and over 3,000 loyal customers, It is a damn good side hustle.
What's your backstory and how did you come up with the idea?
After I graduated high school in Melbourne, Australia in 2015, I didn’t really have any idea what I wanted to do with my life. I had been pulled into a million different directions, Physics, Music, Air traffic control, to name but a few.
If you don’t continuously work on the little things, it’ll come across as messy and present an unprofessional image to your customers.
I was well into solving puzzles at this point, and had attended my first speedcubing competitions, but hadn’t really considered it to be anything more than a hobby at this point.
Fast-Forward to 2016, whence I commenced full time work to start saving some money and moved back to New Zealand. It wasn’t an overly glamorous job, working in a furniture distribution warehouse. But I believe it gained me valuable skills in large-scale inventory management, working together with people to accomplish tasks and perhaps providing a holistic view of how all the different elements of a business function together.
Around this time I made the discovery that there was no dedicated online store for this niche market in New Zealand. Finding this gap in the market was very exciting, as from my time living in Australia, I was familiar with speedcube.com.au, the primary speedcubing store in Australia, having purchased from them myself several times. I knew they were large enough to have a Brick and Mortar store, so there was obviously money to be made in the industry.
At the time I just wanted to find a way to make a little side income to finance my travel costs so I could attend speedcubing competitions over the world. Since the inception of the company in mid-2016, It has financially enabled me to travel to Bolivia, Peru, Colombia, Venezuela, Dominican Republic, Argentina, UAE, Malaysia and Cuba as well as Australia many times. I think it’s safe to say I surpassed my wildest dreams when I started the business.
Take us through the process of designing, prototyping, and manufacturing your first product.
In terms of product design, very few of our product offerings are designed by us. Most are ready-made by Chinese manufacturers. It may come as a surprise to those unfamiliar with such products, but there is a great level of detail that goes into the top-of-the-range speedcubes. The top of the line speedcubes on the market today feature hand-sanded plastic for minimal friction and dozens of painstakingly affixed rare-earth magnets for stability.
Some people have a hard time taking the leap. Do your research, but at some point accept that you have to stop thinking and just start doing.
As basically all of our products are imported from China, a very large part of our business cost structure revolves around shipping logistics and getting the products at the lowest possible landest cost. Due to the rapidly changing nature of our products and the relative fast pace of this industry, Air Freight is really the only option for us. Air freight was one of the key reasons I partnered with a much larger store, was because I would be able to take advantage of the extremely competitive rate they had negotiated with DHL.
There is still the occasional challenge presented by the language barrier when dealing with our suppliers in China, but it hasn’t lead to any major issues yet. If you’re just getting into importing from China, I would say that perseverance and patience are key. Don’t put all of your eggs into the first basket you find. Start small to verify quality and reliability, then focus on building long term relationships with good suppliers. It will prove worth it.
We sell many variations of the classic 3x3x3 cube, such as the 4x4x4-7x7x7 and non-cubic variants like the Pyraminx (a pyramid-shaped variant) or the Megaminx which is a 12 sided dodecahedron variant
Our range also includes many different accessories/peripheral goods such as cube lubricant, cube bags and timers.
One key lesson that I believe is absolutely essential to starting any kind of venture, when starting any industry is to know the products back to front. Being a speedcuber with in-depth knowledge about what makes a good speedcube helped me with making choices with which brands to stock in my store, what new products I need to stock asap etc, whilst allowing me to reduce redundant product offerings, which would perhaps prove challenging to sell.
Retrospectively, I believe products like speedcubes are a great place to start. With very little costly R&D needed, your main focus can be on finding good brands/suppliers of your product of interest and delivering value to customers. You’ll still build key skills in ecommerce/sales, but you’ll be able to do it on a lower budget compared to creating and developing a product by yourself.
Describe the process of launching the business.
A friend that I had actually met at a speedcubing competition had started a few drop-ship-type ecommerce stores of his own with some success and was able to help me set up my first ever website.
After a few weeks at my new job, I had amassed enough money to invest in my stock order. My ecommerce/website guru speedcuber-friend knew of a Speedcube wholesaler in China to get me started.
I remember accumulating the first $1000 in my bank account for the initial stock investment. The supplier had sent through the payment details. Until now I had spent less than $100 in total on setting up the website and domain. but this was a do or die moment.
Having PayPal open, about to send nearly every dollar I had at the time to this random person in China who I had never met. As soon as I pressed send, I remember feeling overly giddy and nervous. I had now taken the leap of faith into the unknown. I definitely jumped right in the deep end about here, having no idea how the process of importing commercial quantities of goods worked. It was definitely a learning experience.
It's amazing how stressful I found the discouraging process of importing and paying import duties/tax for the first time. Perseverance again proved worth it and since then, I have imported over $100,000 worth of stock and the process gets easier every time.
When I officially pushed the ‘Launch’ button in July 2016, it took 4 weeks for my first website order to arrive. I can’t state how excited I was when the notification came through on my phone.
In August I had 3 website orders. In November I had 30.
After about 8 months of full-time work, every cent I could save from my wages, which totalled about $10,000 had been invested in stock for the business. Sales were starting to take off.
With my limited understanding of methods of financing businesses at the time, my only notion was to avoid paying any kind of interest, so self-funding was the only option I could see.
The concept of paying interest is a kind of personal finance principle I have for myself. After the business was garnering significant cash flows, I got my first proper credit card to start racking up some reward points. I had been warned of the dangers of credit cards growing up, so I was always meticulously careful to avoid spending money I didn’t have in my account. I strongly feel that personal finance management is an important ability for any sole-trader type entrepreneur, given that the incentive is always there to spend excess money from your business.
Since launch, what has worked to attract and retain customers?
To start driving traffic to my website, I held pop-up stores at speedcubing competitions and weekend market events all over New Zealand. I think by being more than just another website trying to customers' attention online, attracting traffic has never been an issue for this business.
One thing I have noticed about many small business owners is that they don’t dress well to represent their brand! Your personal image is going to affect people's perception of your brand. First impressions matter. My personal philosophy here is that you must look and be approachable!
Don’t be afraid to use your personal connections. Maybe your friend has graphic design skills or photography skills. You need to leverage these personal networks, especially during the startup phase.
You have to learn to engage with your customers without being overly pushy. This is a principle I also implemented into my online marketing activities. I take a fairly minimalistic approach to marketing, meaning I try to avoid things like frequent intrusive email marketing campaigns like the plague and in general just try to avoid that endless ‘shove product down their throats’ approach which tends to rub off the wrong way to customers.
I have fiddled around with Facebook and Google’s respective ad programs relatively with limited success. Being fairly happy with where the business is currently at with SEO, I haven’t experimented with it as of late. The biggest thing on my mind right now is probably the future in online marketplace sales channels like amazon, when/if they commence operations in New Zealand and what strategies I could take here etcetera.
After 4 months of operating cubes4kiwis.co.nz, I started to get very serious about taking the business to another level. A competitor had launched a few months ago and I wanted to pull off something big to take the lead. It was at this point I made perhaps the biggest and best strategic decision in my life so far. My store was consistently getting around one online order per day at this point.
I will endeavor to explain this as summarize this as succinctly as possible.
I decided to send out an email to speedcube.com.au, the primary speedcubing store in Australia, pitching an idea for our two respective businesses to work together. After traveling back to Melbourne to meet the owners in person, the idea for speedcube.co.nz was born.
The three advantages to me switching brands to speedcube.co.nz were as follows:
- They were able to supply me with their stock at cheaper prices than my previous supplier.
- Their brand name was well established in both the Australian and New Zealand markets
- They were able to offer very competitive shipping costs from China to New Zealand.
- The business structure we ended up adopting was that of a loose franchise-type agreement, which allowed me basically the same freedom I had with Cubes4kiwis, provided that I protected the brand image.
After switching to speedcube.co.nz my traffic and sales doubled almost immediately. After a year they had more than quadrupled.
How are you doing today and what does the future look like?
The gross margin sits about a 25% mark. Overall the cost of products is rising, as the hardware improves and the manufacturing complexity of the products increases. Monthly traffic to the site is in the 3K-4K range, with 56% of our sales from direct visitors, 43% from search traffic and the rest from our mailing list and instagram. Currently we haven’t really partnered with other players, although this is perhaps something to consider in the future. Given the relatively young age of this industry, I spend a lot of time thinking about ‘what if’ scenarios and keep close tabs on how it develops.
Our monthly on month growth has averaged 9% every month over the last 12 months, down slightly from a 12% monthly growth average from the previous 12 month period.since starting so it is starting to tail off, as the market here in New Zealand matures.
Here is a breakdown of the key store metrics for the month of July 2019;
And a break down for the last 365 days, compared to the previous 365 period;
Our customers tend to be fairly loyal and often go through a fairly standardized purchasing pattern. They often start with a 3x3x3 cube, then come back and purchase more variants and upgrade to the top-of-line expensive models with more advanced features like magnetization.
Our approach is to maintain good relationships with customers, meaning a fairly liberal returns policy, as well as going the extra mile where you can.
Getting started is the hard part. Don’t give up before things have a chance to take off.
A recent case of ours was where a customer had bought a 3x3 cube for her son’s birthday. Three weeks after receiving it, their son had loaned it to a friend, who had then returned it with a piece missing. The mother reached out to us, wondering if there was anything we could do. This was an opportunity to invest in a customer. Without asking any more questions I sent her a replacement.
Sure its a loss up front, but further down the line, you’ll find that you tend to recoup these costs, when the happy customer makes another purchase or recommends you to their friend.
For now, our online sales are basically 95% of our total sales. We still sell at pop-up stores infrequently at these speedcubing competitions, but our primary focus is online.
As far as a brick and mortar store goes, I don’t see it growing to that stage in New Zealand, given our relatively small population of just under 5 million. But maybe in a few years, if the growth continues, it could have a place in a kind of specialty games store. But right now, it's a nice comfy cash cow that can be run from my house. Much less hassle!
Through starting the business, have you learned anything particularly helpful or advantageous?
One of the biggest errors I made, was in July 2017. Right in the middle of the fidget spinner/fidget cube craze. I saw this fad as an opportunity to make some quick dollars. I ordered a couple hundred of the damn things, which turned out to be from a counterfeit supplier, which apparently violated a patent. Within a few weeks of listing them, I was served with notice that I was selling counterfeits and they were undertaking legal action against me. I was on the island nation of the Dominican Republic at the time and there was very little I could from overseas, so it was a very very big headache. With the help of my partners in Australia, we managed to settle without going to court, I agreed to pay up lump sum and immediately cease selling the counterfeits. Lesson learned: Always ensure that your products don’t violate any patents. Luckily in my case I managed to escape without significant financial impairment, but it could have gone much worse.
The best decision I have made (thus far) is I believe the partnership with Speedcube.com.au as detailed above.
In terms of good habits, I believe I am fairly self-motivated without sounding overly presumption, which helps me stay on top of all the little things, rather than let them pile up. Things like stock-taking, replying to customer support emails, ordering new stock etcetera. If you don’t continuously work on the little things, it’ll come across as messy and present an unprofessional image to your customers.
What platform/tools do you use for your business?
Shopify has to be one of my favorite platforms I’ve ever used. It's just so easy to learn how to use, whilst having scalability when you need it.
The make or break feature for me is Shopify’s direct interface with our courier, so upon fulfilling the order, the confirmation email with an automatically generated tracking link is sent to our customer. The third-party apps I use are: Order printer (creates invoice templates), MailChimp, Paypal, and most recently, LoyaltyLion which is an easy to set up CRM application.
Our primary social media would probably be Instagram, as I personally am a big fan of the platform. Less intrusive and a great way to engage with customers.
With the highly global nature of our supply chain, we are perhaps, faced with a strategic risk due to poor exchange rates. Currently, I pay my agent in Australia in AUD, which incurs a PayPal currency conversion fee from NZD to AUD. My agent then sends USD to China via bank transfer, which again incurs a fee. At times this complicated arrangement can work out really nicely for the margins, if the NZD/AUD rate and AUD/USD rate are both good. Definitely looking forward to seeing how Cryptocurrency and other ‘global currencies’ affect this aspect of international business.
What have been the most influential books, podcasts, or other resources?
I’m not a huge reader and a lot of my information comes from my personal experiences working for other businesses and from business mentors that I have encountered on my journeys. It has been surprising how many successful business connections I have made from the unique world speedcubing. You’ve got to meet people who’ve found success and learn from them.
An unusual resource I have found myself following is the Entrepreneur subreddit. There is literally so much useful and interesting information to be found on that subreddit alone.
Advice for other entrepreneurs who want to get started or are just starting out?
Start young!
Too many people make excuses for not starting immediately. There is never a perfect time.
Don’t be afraid to use your personal connections. Maybe your friend has graphic design skills or photography skills. You need to leverage these personal networks.
Be patient!
Getting started is the hard part. Don’t give up before things have a chance to take off.
Be on top of your personal finances. The last thing you want is to hinder the finances of your own business due to poor financial decisions in your personal life.
Some people have a hard time taking the leap. Do your research, but at some point accept that you have to stop thinking and just start doing.
Where can we go to learn more?
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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