Flyby: Selling $1M of Hangover Pills In 10 Months

The Story of Flyby

Hello! Who are you and what business did you start?

Hey guys! I’m Eddie and I’m the founder of Flyby. We’re a health & wellness startup focused on building supplements that’ll allow people to be the best versions of him or herself.

Our flagship product is Flyby Recovery, a pill formulated to help you bounce back after a night of drinking. It utilizes our proprietary DHM extract which has a UCLA-backed study published in the Journal of Neuroscience (link here for you science folks).

We’ve also recently launched our second product, Flyby Fuel, a liquid electrolyte concentrate (with no sugar, artificial ingredients or additives) that helps replenish electrolytes without the unnecessary BS found in a lot of sports drinks today. It’s great for drinking, exercising and has been a big hit amongst the keto community for avoiding the “keto flu”.

We launched in March 2017 and in approximately 10 months, hit $1M in sales. We are now doing close to $200K/mo in sales, in some of the top retail stores (Urban Outfitters, Anthropologie, American Eagle) and are on track to do $2.5M this year. And since the release of our new formulation, we’ve consistently generated over 40 percent in repeat purchase revenue.

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What's your backstory and how did you come up with the idea?

In my opinion, traveling is one of the best ways to spark your imagination.

In March of 2015, while I was still a senior at NYU, I traveled to to Japan. Japanese people are the embodiment of work hard, play hard. Heavy drinking is an ingrained aspect of society and business culture there, spawning a $178 million hangover cure industry.

Image result for tokyo hangover drinks

For my first night out in Tokyo, my friends showed up with a bunch of tiny bottles that resembled Five-Hour Energy. They told me these remedies have been used for centuries to avoid a rough next morning.

Like most of my Asian counterparts, I lack the necessary enzymes that break down acetaldehyde (an extremely toxic byproduct of alcohol). This condition causes excruciating hangovers, so I was immediately sold and took whatever they handed me.

Despite drinking till sunrise, I woke up feeling amazing. I had no idea what was inside that drink, but I was intrigued and needed to find out.

After coming back to the states (and running out of my personal stash), I started diving deep into white papers and patents. The magical ingredient I had been taking was a compound called DHM, found in the Japanese raisin tree (Hovenia Dulcis). And before I knew it, I found myself discussing alcohol science over the phone with a leading researcher on DHM. Hearing him speak more about this ingredient made me realize how effective it was. Game changer.

The Japanese market alone for alcohol recovery products is ~$200M, with an alcohol market of $33B. The market in the US is 7X the size of Japan’s, but no one had introduced an effective solution. Most remedies were still centered around old wives’ tales (hair of the dog, bacon egg & cheese in the morning). Hangovers destroy $170B worth of productivity each year in the US alone.

The numbers were quite staggering but I needed to test my hypothesis about the demand for this product first. So I designed a quick landing page via a preset Shopify theme where I simply uploaded a mock up photo and used an email sign up landing page feature that came with the theme.

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I ended up spending $100 on FB ads and targeted people with purchasing behaviors related to “Alcohol and Spirits”. My CPC ended up being about $0.3 and I sent roughly 300-400 visitors to my website, with more than 30 people signing up (~10% conversion rate. Since I was actually able to get quite a few signups via cold leads, this gave me the confidence that a market was there and people were interested.

Describe the process of designing, prototyping, and manufacturing the product.

Starting Flyby right out of college, I had little exposure to manufacturing, supply chain, and operations in the supplement industry, let alone running my own business. So there was definitely a little bit of a learning curve.

I started off doing due diligence on the regulatory landscape for supplements (via the FDA’s website) and came across what the FDA calls current Good Manufacturing Practice (cGMP) regulations. This requires that manufacturers evaluate their products through testing identity, purity, strength, and composition so consumers know exactly what they’re inside.

I did a Google search and a week later, I had compiled a list of 50 US-based manufacturers that were cGMP certified. I narrowed it down to 5 manufacturers based on where they sourced their ingredients from and their manufacturing capabilities. Efficacy and clean ingredients are our top priority, as we’re creating an ingestible product. A lot of supplements out there are full of cheap ingredients sourced from China (so they can achieve an inflated margin), artificial fillers, binders, and preservatives. We wanted to stay as far away from that as we could.

After contacting the manufacturers, most of them requested a $2,000-3,000 R&D fee to create the samples, but that was cash I didn’t have. So to show them that I was the real deal, I had to convince them that I had these huge distribution channels ready to go, locked in key marketing partners to promote the product, basically doing anything and everything to ensure them that this product would be a huge success.

Most of them didn’t buy it, but the few who did, ended up producing around 100 samples for free (I just had to pay shipping), based on our product specifications I had compiled through my research with our in-house Ph.D. A few weeks later, I had received the samples and and the next month is where things start to get pretty blurry for me.

I was on a mission to do as much “product-testing” as possible in order to validate that the product really worked. I thought I had drank a lot in college, but that month put those 4 years to shame. I was constantly inviting friends out for drinks and following up the next day with a survey detailing their experience with the samples.

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They loved it and Flyby seemed to be really working. Right after, I immediately placed our first real order and hired a consultant to help us navigate FDA regulations when it came to consuming and marketing the product. I ended up using all my savings after college (~$15K) for the initial order

and lived at home for almost a year before things started really taking off.

Describe the process of launching the online store/business.

Now that I had just put in the manufacturing order, there was an 8-10 week lead time where I needed to create a website and product branding in order to legitimize the product.

I started off using Shopify Experts to find designers and developers for Flyby. But being bootstrapped, I found that it was incredibly difficult to find a high-quality agency with my budget. Luckily, I was already pretty familiar with Photoshop/Illustrator, and Shopify makes it extremely easy to customize your theme, so I created the initial website myself and hired a freelance developer to make small customizations.

All in, it cost $500 to get the website finished, which I paid out of pocket. This would help save on startup costs because I knew I could always hire someone to refresh the branding/website down the line (which we ended up doing a year after launching).

For our launch, we posted Flyby on Product Hunt. That’s when things really started to take off. We got 262 upvotes overnight, landed a spot in the Product Hunt daily newsletter and our inbox was exploding with emails from bloggers, excited consumers and even potential investors.

This is when we hit our first major inflection point. That single post attracted tens of thousands of visitors to our website. This lasted about a month and then the traffic from Product Hunt started dying down.

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But through this post, we were connected to an early adopter who was close friends with a big influencer (@weworewhat 1.9M followers).

We ended up sending @weworewhat a box full of samples with a personalized note. This landed us a free IG story mention which not only gave us social proof but also secured our first interview with a major press outlet (a reporter reached out to us after seeing the IG story).

According to Robert Cialdini, who studied the principle of social proof in-depth in his book, Influence: The Psychology of Persuasion, “we view a behavior as more correct in a given situation to the degree that we see others performing it”.

So for example, if you’re uncertain about purchasing this one product but then you see that “insert famous celebrity name who you really like” posts something it, this would transfer the positive attributes they see in these “celebrities” to the product. This would give the product that verification and push you to purchase if you’re on the fence. There are many forms of social proof you can use too (e.g. customer reviews, large followings on social media, press etc).

That article ended up getting syndicated across major outlets and we ended up driving over 100,000 visitors to our site and generating $200,000 in revenue within 60 days of launching.

Since launch, what has worked to attract and retain customers?

Facebook/IG/Google ads

When I started on these platforms, I would spend around $15-30/day, A/B testing different audiences, age groups and days of the week using various photos/videos/phrases/creative. I would run them for about a week or two and then narrow it down based on performance.

We also use FB/IG Dynamic ads to retarget people who’ve visited our website. This feature is great because we can narrow down the audience based on the actions they’ve taken on our website.

For example, we’ll serve a FB ad promoting a free trial pack or discount code to prospective customers who’ve added a product to their cart but never purchased. Whereas we’ll target loyal customers with a high-engagement video ad because they’re more inclined to purchase.

Overall, retargeting ads are much cheaper to convert than cold traffic conversions since the purchase intent is already there.

But this is all basic information that’s already out there so I’ll get into the juicy part. We found two things that were really compelling and worked for us after testing:

1. It’s all about the “source” of your ads

We found out that the source that’s displaying the ad is the most important, not the actual content. We can say how great our product is from our brand page, but it appears like an ad. Obviously, we’re going to say how great our product is.

So we started testing out paying third-party Facebook pages that already had millions of followers to write posts and run ads for us but in a very neutral way. We would then pay them, almost like an affiliate deal. Some asked for a flat fee while others required a small initial fee along with a % of every sale generated. The latter was definitely the most effective option as it allowed us to minimize any upfront risk in case the campaign didn’t perform well.

This acquisition strategy did 5-6X better in conversion and gave us a much lower customer acquisition cost (CAC), than if we said the same thing from our page. Because our product is skeptical by nature, and if we advertise it, it’s even more skeptical. The more we neutralize it and work with third-party trusted sources, the more social proof it gives our product.

2. Steer people to your press articles

The second thing was directing people to our website, versus steering them to our press articles.

The latter performed much better, which seems counterintuitive because instead of directing people to the point of purchase, we’re sending them to an article and then hoping they’ll go to our website (which adds an extra layer in the funnel). But what we found out is that people need to trust this, and you need to lower the barrier of skepticism.

And so when they go to this article and see that Mashable tested this product and it has some real science behind, they then go to our website and are more likely to purchase.

Email Marketing

Email marketing has been huge for us. We currently have around 70,000 subscribers and this makes up ~20% of our monthly revenue depending on the month. As a small business, I’d strongly recommend building your email list because it’s free and the customers on your list will most likely be highly engaged.

We send out emails that provide value such as blog posts that explain how to use our product effectively, tips on how to feel better after a night out, basically things that’ll allow them to interact and learn more about your brand.

We don’t overdo it when it comes to providing discounts via email (even though those emails perform the best) because if you do this too frequently, customers may stop purchasing your products at full price and just wait for the promo campaign.

Historically our sales spikes always came from big press articles. Now we’re our own biggest referrer. Launching a product to 70,000+ people that already know and like your product is much easier than starting from scratch.

Implementing “exit intent” campaigns via Spin-a-sale was the driving force in our email growth. This app converts ~12% of our website visitors into mailing list subscribers whereas, with a traditional email sign-up pop-up, we were only converting ~4%. Trust me, this stuff works.


flyby

Free samples

We offer free samples of our product on our website and this is great for capturing those visitors who are still skeptical and aren’t sure they want to shell out $20 for our product.

Our website conversion rate is ~5% but the conversion rate for our samples are ~15%. We then send a series of follow up emails to customers who have purchased the samples but haven’t repurchased for 2 weeks.

In the end, ~40% of our customers who purchase the samples end up buying a full sized item with an AOV of $25. So while we’re losing money upfront (~$4), we end up making money overall.

Word of mouth

One of our biggest acquisition channels is through word of mouth.

Our survey showed that a third of our customers decided to try Flyby because of a friend or family member. For consumer brands, no artificial acquisition channel can beat strong word of mouth. Word of mouth also compounds with every successive customer, and we’re seeing bigger wins every month.

We try and bolster this by providing an exceptional customer experience from start to finish. Even though we use Zendesk to answer customer emails, I still will read and reply to over 50% of our customer emails.

We also send loyalty packages to our top customers that’ll include freebies, swag and a personalized note...Little things like this go a long way and provide that “human touch” to our brand.

Amazon

If your product is not on Amazon already, you need to get it on there ASAP. 55% of customers start their product searches on Amazon. And with Amazon’s FBA (Fulfillment by Amazon) program, all you have to do is ship them your inventory and they’ll fulfill all your orders and handle customer service. Those two things alone should be convincing enough.

Our website used to drive 90% of our revenue but it’s now split 50/50 with Amazon. We grew from doing a $3k/mo on Amazon to over $100K/mo in less than a year, and we’re hitting new strides every month.

As long as you have an optimized listing (high-quality photos, the right SEO keywords, great reviews) and the demand is there, the orders will roll in. Consumers trust Amazon. They believe Amazon will always get products to them as quickly as possible and because of this, our Amazon conversion rates are 10X higher than our website.

(Unit Session Percentage is Amazon’s term for Conversion Rate)

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Partnerships

We’ll do a lot of partnerships with like-minded brands (alcohol-delivery companies, supplement companies etc) and run giveaways or cross-promos via social media or newsletters. We also recently started including our samples in monthly subscription boxes specifically curated for supplements, cocktail recipes or wines.

These are not only cost-effective ways to get exposure to your products but also highly targeted too. Since the prospective customer is already purchasing a related product, they’re more likely to have an interest in yours.

How are you doing today and what does the future look like?

As of today, we’re profitable and our product margins are 60% before ad-spend. We’ve been able to reduce our manufacturing costs by increasing the amount of inventory we purchase.

I’m sure you’ve heard it over and over again, but understanding your customer base is SO important. Whether it’s a 5, 20 or 30-minute phone conversation, hop on a call with your most loyal customers and really understand who they are.

FB/IG ads have reached a point where our return on ad spend (ROAS) is ~3X and our CPA is less than our LTV. We’re currently working on scaling up our ad spend while being able to maintain the same ROAS.

For online sales, we’re doing about $190K/mo (this includes Amazon and our website). The other 5% is composed of retail sales via our biggest wholesale accounts (Urban Outfitters, Anthropologie, American Eagle).

One of our main goals this year is to put Flyby into bars, nightclubs, liquor stores, supermarkets, and convenience stores and build up our retail presence. We’re currently in talks with distributors to help expand our retail footprint and reach those impulsive purchasers.

We just released our electrolyte concentrate, Flyby Fuel and so far the launch blew us away (this was good) but there was also some bad things that came with this (which I’ll get into later). We also have 2 more products in the pipeline for next year as we create a more comprehensive line of products that’ll help solve broader issues not just related to drinking.

Through starting the business, have you learned anything particularly helpful or advantageous?

I’m sure you’ve heard it over and over again, but understanding your customer base is SO important. Whether it’s a 5, 20 or 30-minute phone conversation, hop on a call with your most loyal customers and really understand who they are.

When you talk to them, I think you learn two things, clearly who they are, like what is their demographic. And then the second is, why are they buying this? Aside from the functional benefit which we already knew (people go out to drink and buy Flyby because they want to wake up at the top of their game), it helps us understand what resonates with them emotionally, why they bought it in the first place, and why they came back.

We learned something very interesting through this. Demographic wise, we thought our main customer base would be college students, fraternities and sororities in the U.S so a lot of our messaging revolved around that age group. But a lot of our customers turned out to be in their late twenties to forties. They were buying our product and only having a few glasses of wine instead of binge drinking.

They have to wake up, take care of their kids, prepare for work, that important presentation, or go for a run. Time is very valuable for them and they’re not buying this product to party harder but instead to be more productive the next day. So after realizing that, we pivoted into really focusing on that angle in order to target the right audience.

So back to Flyby Fuel’s launch. While the launch was extremely successful, we completely misjudged how much stock to order (this was very, very bad). We ended up running through 6 months worth of inventory in 1.5 months. We were buried in customer support emails and this is when we decide to outsource to Zendesk and start using Inventory Planner to help run a tighter ship operationally.

This was a huge learning experience. We’ve always strived to offer great customer service, so having many impatient and angry customers is tough. We’re building systems so that mess never happens again.

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What platform/tools do you use for your business?

Invoicing (Bill.com) – Nearly all our bills are paid through Bill.com. They have an awesome service where you can approve invoices and they will print and mail paper checks to vendors for you

Financing (Kickpay.com) – This is a tool that gives us cash advances on large inventory orders. They cover the upfront costs of large purchases based on your sales history and we pay them back as products are sold, plus a nominal fee. It’s a great way to help your business’s cash flow when you don’t have easy access to capital

Website (Shopify.com) – Simple, all-in-one solution and easy app integrations

Fulfillment (Shipstation.com) – Shipping API that helps our warehouse integrate with major shipping carriers

Ambassador Program (Friendbuy.com) – Referral app that easily integrates into your order confirmation page, emails and website. Allows you to track a lot of specific data

Email Marketing (Mailchimp.com) – Love this email marketing platform!

Inventory Management (Inventory-planner.com) – Plugs into your Shopify account and tracks your sales history to project when you’ll need to reorder base on lead times and sales velocity

What have been the most influential books, podcasts, or other resources?

I would recommend Zero to One by Peter Thiel to any entrepreneur who’s starting out. I could not put this book down and have re-read it several times.

Advice for other entrepreneurs who want to get started or are just starting out?

Stop reading everything and looking for that secret formula. There’s a lot of useful information out there, so learn the basics and get started NOW because there are probably 10 other people who are thinking of the same idea as you.

You honestly learn by doing and having some failures along the way. So just go out there and build something!

Are you looking to hire for certain positions right now?

We’re looking for social media managers that can help create unique content for our IG/FB/Twitter pages. Experience with photography and videos are a plus!

But if you feel like you can help us out in some other way, feel free to email us at [email protected] too : )

Where can we go to learn more?

Amazon Store: amazon.com/flyby

Website: www.flyby.co

Instagram: @flyby

Facebook: @flybyteam

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Comments


Joshua Howarth
25 days ago

Killer work Eddie! As somebody who just moved to Japan, I too was surprised about all the hangover prevention drinks available - namely "ukon no chikara". I was considering if it was possible to export it, but you took it to the whole next level right out of college making a whole new US-based supplement. Awesome!

On another note, you mention the Spin-a-sale app has given you fantastic email signup growth. For anybody looking for a non-Shopify version, wheelysales.com provides a very similar Wheel of Fortune style exit popup also with ~12% conversions. But instead it works on WooCommerce/BigCommerce/Squarespace/any other platform. (Full disclosure: I'm the creator of Wheely Sales).

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