The ShamWow business model

There was an article in BusinessInsider recently about the ShamWow guy (Vince Offer) and his “comeback”. The article describes his rise to fame as the guy who pushes the ShamWow product, the Slap Chop, and the Schticky, and then his subsequent fall because of a run-in with an alleged hooker.

If you can look past the tabloid-headline shock of the article, or the “let’s-see-what-he-can-do” introspection at the end of the article, you’ll find some interesting gold buried in this article… specifically about the ShamWow business model. All these quotes are taken from the article…

THE PRODUCT

I’ve got bad news for you: Vince Offer didn’t invent the ShamWow or the Slap Chop, but he’s also not just shilling for some corporate giant either. Rather, he takes a regular product, makes some improvements to its brand, and then brings a certain style to the presentation…

[quote]Like most infomercial producers, Vince didn’t invent the products he’s known for pitching. He found them by scouring flea markets, trademarked better names, and made funnier ads.[/quote]

THE PRESENTATION

Vince Offer started pushing his products at flea markets, honing his sales craft. Later, he moved to an infomercial format and then later to the well-known (and much loved and parodied) commercial format…

[quote]By 2002, broke, Vince was selling the ShamWow and Slap Chop at flea markets… He bought time from 2 a.m. to 4 a.m. on Comedy Central. It made money, he said, and something clicked. With direct TV marketing, he didn’t have to please the gatekeepers of taste to make a sale.[/quote]

[quote]Because Vince owns his products, he can “push the envelope” more than other pitchmen, delivering “schticky” jokes and sexual innuendos with “cocky confidence,” said Kevin Harrington, chairman of infomercial clearing house As Seen On TV, Inc.

While most demonstrators focus on function, “what he tries to come up with are demos that will make you laugh,” said Harrington.[/quote]

Here are his three big commercials.


(I love the arrest reference at about 1:05!)

BRINGING THE PRODUCT TO MARKET

Vince isn’t just pushing some big corporation’s products and then letting that corporation fill the order. He owns the products. That means he’s also doing all the other legwork involved in creating the product and bringing it to market. As the article tells us…

[quote]Infomercial producers have to find a reliable factory, get them a mold or drawings, and hire a fulfillment facility, a telemarketer to take orders and a media buyer to purchase air time. Then there’s packaging, shipping, returns, customer service, an Internet storefront and more.[/quote]

PROFIT POTENTIAL

Vince doesn’t invent his own products. He takes existing products and rebrands them and adds his unique pitch. He’s honed his pitch for years on the flea market circuit and in infomercials. Not surprisingly, that legwrk has paid off…

[quote]He refused to answer questions about how much money he raked in, but the chamois cloths can be bought wholesale in bundles of three for $.50. Vince sold them in packs of eight for $19.95, plus shipping and handling.[/quote]

Even with overhead…

[quote]A product that sells for $20 usually costs $2 to $3 wholesale. After overhead costs, the hope is to squeeze out a $4 to $5 profit.[/quote]

And then there are other distribution channels…

[quote]A producer can also sell a commercial to a distributor, who then can sell the product to a retailer such as Wal-Mart. The per item profits for the producer are smaller, typically up to a $1 commission, but the volume can be massive. In some rare cases, royalties can add up to the millions.[/quote]

THE BUSINESS MODEL

The business model is simple: Find a useful product and add some flavor — better branding and a more effective presentation.

Even though I describe it as simple, it isn’t easy. You need the right product, the right brand, the right presentation, and then the willingness to do the hard work of putting together the distribution. That’s why there aren’t more Vinces selling more Slap Chops.

However, those things are all out there. Good products are being invented all the time. Smart marketers can develop compelling brands. Sales skills can be honed. Distribution channels exist and just need to be contracted.

Don’t expect me to be pushing a clever household product on a 3AM infomercial any time soon but the business model is sound and very compelling.

Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and he's a real estate investor and a copywriter for real estate investors.

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