How a toy hamster went viral and made two dropshippers $1 million - Business Insider

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11/27/2020 9:19:00 PM

Two brothers spotted a toy hamster in China and figured out how to make it a viral hit in the US, sparking over $1 million in sales. Here's the inside story of how it happened.

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"My mom thought they'd make a hilarious stocking stuffer," she told Business Insider.The 6-inch tall plush hamster is able to "listen" to what you say, and repeat it back in a high-pitched hamster voice. "We actually use it all the time to prank my dad," she joked.

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Carbone likely wasn't the only one to open a talking toy hamster that Christmas either. The item is now considered a viral product. Enter "talking toy hamster" into the search bar on Amazon andyou'll get pages of chatty hamstersin various fur colors, some with festive hats or little scarves. 

Little did Carbone know, the talking toy hamster had likely made it into her stocking because of a group of e-commerce entrepreneurs known as dropshippers who took the relatively obscure toy sold in China, and popularized it around the globe.Dropshippers make money by advertising cheap impulse buys to shoppers on social media. Typically the products come from wholesale sites in China like Alibaba, and the dropshipper acts as a middleman, connecting the shopper to the supplier without holding any inventory. Their goal is to be the first to introduce shiny new retail products to the western market, in the hopes that it will go viral.

In the case of Carbone's talking hamster, she might have the Tan brothers, a dropshipping duo based in Singapore, to thank."I wouldn't say we were the first to sell the hamster — it's hard to define who was the first," Evan Tan told Business Insider in an interview. " But I would say we were one of the earlier pioneers." 

Steve and Evan Tan began selling the talking toy hamster product in July 2017. They kept their online Shopify store  open for around six months and moved more than $1 million worth of the popular item. Why China is a hotbed for first-to-market products

The talking hamster isn't cutting edge toy technology. In fact, Evan remembers seeing it sold at flea markets and by street vendors in China when he was a kid. But even though the toy hamster was commonplace to the brothers, it was still relatively unknown to the rest of the world.

China is often the first to see new retail products because so many manufacturers and suppliers are based there. Because of that, it's a gold mine for dropshippers."A lot of areas in the US don't get products as quickly as Asia, especially the new products coming out in China," Evan said. "It may seem common for us, but in the US they haven't seen anything like it because it was just invented maybe two months ago."

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While the Tan brothers said it's not necessary to live in Asia to be a successful dropshipper because the internet has made suppliers more accessible, it has afforded them some key advantages. "With the time zone we can discuss with our suppliers better, we know the language, and we aren't going to get scammed," Evan said.

Evan and Steve are both fluent in Mandarin and English, which means they can deal directly with suppliers in China, and they can also translate a product's appeal to an English-speaking audience. Still, they employ a procurement team on the ground in China that handles relationships with suppliers on their behalf.

"The easiest way is to hire a local," Steve said.They aren't just a two-man show — their company, Super Tan Bros, employs around 400 people in multiple countries. Their team helps them identify potential viral products, secure deals with suppliers, and create videos and ads designed to grab the attention of shoppers in English-speaking countries.

The DNA of a viral productWhat made the talking hamster product ripe for global virality? For starters, it's funny! Like the whoopee cushions of yore, it's a product with a gag built in. Although the hamster isn't the most innovative product on the market, Steve said that its selling point is that "it brings laughter and happiness to people."

Consumers also buy it with plans to capture reactions or pranks on video. These videos are likely to end up on social media, which means the seller would essentially be guaranteed free advertising for the product."I think the trend really caught on when people were sharing their experiences with the hamster toy," Evan said.

The price was also important. The hamster is priced at a sweet spot of between $20 to $30, which the Tan brothers consider perfect for impulse buying. "When people see it they will buy it," Steve said. "They don't have second thoughts. They don't have to consult their husband or wife."

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Impulse buys are core to the business model of dropshipping, where sellers are looking to quickly capitalize on the popularity of a product. Evan said to do this you want the products to have a "wow" factor that can be easily conveyed in ad copy or a video. Watching a video of someone prank their dad with the toy hamster might make you think "that would make a great stocking stuffer for

mydad," and if the price point is low enough, you'll be entering in your credit card number and shipping info before you know it.To find potential products, Steve and Evan's team conduct product research to see what is trending locally in China. One of their biggest resources is China's version of TikTok, Douyin.

"China's TikTok is quite different from international TikTok because it has e-commerce built into the app itself," Steve said. On Douyin, the app almost functions like Home Shopping Network, with influencers selling products on live stream videos, a rising trend called

social commerce. These shopping videos provide Steve and Evan with valuable information."We have a team of people just scavenging everything on TikTok every single day," Steve said. "And we use software as well to see what product has been trendy, and what kind of products have sold well."

How a product circulates the globeOnce Steve and Evan have identified a product they think will translate well to an English-speaking market, they have to act quickly. First, they create short video ads, often from existing user generated content, and translate product information to English. Then, they buy ads for their products, typically on Facebook and Instagram. They start off by targeting English-speaking countries including the US, the UK, Canada, Australia, and New Zealand. After that, they target the European Union and then identify specific countries within the EU where the product is gaining traction.

"It's all about being quick into the market and who is able to run more ad spend in the shortest period of time," Evan said. Because of the way that Facebook's algorithm prioritizes ads, listing your ad first is essential to getting traction for your product. Dropshippers compete to discover products and list their ads before the next person finds it, and often resort to cheap digs like reporting someone else's ad as inappropriate or offensive so it gets taken down and the seller gets locked out of their Facebook account.

"It's a brutal world out there," Evan said.Once a product is discovered, the market saturates almost immediately, as more dropshippers jump on the trend. Eventually, Amazon sellers will pick up the product for whatever bread crumbs are left in the market.

"Everyone will come along until it comes to a point where it's hard to make money off the product anymore," Evan said. "Then we just shift on to the next product."As e-commerce has become more popular and more efficient, the time span in which a product is viable has shrunk considerably.

"The shelf life of a product is very, very short," Steve said. "Nowadays if you can run [a product] consistently for one month, it's considered super good."If they're lucky and the timing right and the product is a hit, the returns can be big. Suddenly, an ad might be getting 30, 40, or 50 million views. For a really viral product, Steve said, you could expect to sell 5,000 to 10,000 units per day.

"The scaling is sometimes quite explosive," Steve said. Because dropshippers are able to target their products to a global audience all at once, if something takes off, the growth potential is huge. "You could see someone doing $1,000 or $2,000 a day, and if he found a winning product, he could do $50,000 or $100,000 in a single day."

It's like striking gold. And like a gold rush, the promise of $100K overnight is alluring, but can also be elusive. Sometimes, a product just isn't as trendy in a foreign market. Sometimes the timing isn't right. But when it is, a talking toy hamster's high-pitched voice can be heard around the world.

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