How Datsusara MMA Martial Arts Gear Makes Money
This was one of the first really cool case studies I read over at the Four Hour Work Week Blog, and what follows are the main points I took away from that and my own more recent look at their business.
I love this case study because it is really inspiring for those of you who see big ass problems with existing products you use, as part of say a hobby or a sport (which is pretty much everyone!) and want nothing more than to start a business in a niche you’re super passionate about.
So what does Datsusara actually do?
Well, they manufacture hemp-based clothing and bags for martial arts enthusiasts.
It’s a great little niche and a fantastic example of niching down; sports gear to martial arts gear to hemp based MMA gear.
Look at that 3 part chain again. See how easy it is to go from general way-too-broad an idea to something insanely unique and compelling to a certain target market. Try that chain out on some general markets you’re passionate about.
Taking this niching down approach has allowed Datsusara to become the market leader, albeit in a smallish market.
When they spoke with Tim Ferriss in 2011 they were doing $5-10k a month in sales, which probably was netting them say $2-4k a month in profit if we assume a profit margin of 30% ish – this is quite realistic when you have to manufacture, market, ship etc.
The big lessons they took away from their experience were; do what you love, target your free offerings much more selectively than you think (in exchange for professional endorsements), Alibaba is not bad for finding a suitable manufacturer, Facebook fan pages engage and spread word insanely well without costing the Earth, and well, yeah making your own products from scratch is not too hard when you understand the market and what they want.
But the big question you have to be asking yourself from this case study is…
What existing products do you use across your hobbies, interests, work life etc that aren’t quite up to scratch or up to your liking?
Where’s the gap? And can you fill it with something cooler, different, etc?
If you look at how Datsusara has grown it’s product offerings you’ll see that whilst expanding it has remained very focused; high quality, tough as nails, bags and accessories for MMA enthusiasts.
A couple key things to their success (in my opinion) include the design elements of both the products and the website – I’m not even a big MMA guy, and even I love their deeply dark look and Japanese styling – as well as the premium branding and associated pricing.
Anyone who’s read the Four Hour Work Week Book, might be wondering whether Datsusara is hitting Tim’s cost-sale numbers. I think Tim said something like “You want to be manufacturing at say $10 a unit and selling for $80-$100, because this sort of 10x mark up leaves you with enough room to make decent profits” – that’s a mega paraphrasing.
Chris Odell from Datsusara said in the comments section of the related 4HWW blog post;
“Oh and as for profit statements I’ll admit it’s far under the gross but for now it’s enough that we keep expanding and I can pay my expenses living in nice parts of California (the later being the bulk of costs)”.
Everything about this business screams golden example and mirrors many of Ferriss’s tenets for a successful ecommerce passive income business, socheck out their site and most of all use the ideation techniques we talked about above.
One more thing I’ll mention is that the Datsusara website over at dsgear.com is built on Shopify, which you should learn more about when you have the chance.
My experience with Shopify has been phenomenal and I think you could replicate the quality of Datsusara’s site without hiring a designer. Simply buy a Shopify theme you love the look of straight out of the box, and get started.
Shopify is literally like child’s play – no technical experience needed.
PS As always I like to judge ideas on how passive they are, because that’s what this site is all about after all. And when looking at Datsusara, including things like their distribution agreements with partners in dozens of countries, a part of me feels this whole ‘develop your own product and sell it’ avenue can be way too much ongoing work.
But I guess like the whole risk-return dichotomy, so is it with income; the harder you work, the more you earn (most of the time anyway). I just prefer big upfront work, for long-term ongoing passive income.