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Recurring Supplement Startrup / Private Label Supplement Startup / Payment Questions & Legalities

by supplement
10 replies
Hey Everyone,

Long time lurker, but created my account to post this finally.

I'm currently doing 100-200 sales/day on a male testosterone booster. (Think MaxShred type product) But now I want to take it on my own. YES, I know this is a big under taking with lots of legal questions.

I've got pretty much everything ready to go, I think.
- Delaware corporation
- Private Label supplements ready to go
- Landing pages, upsell pages, etc.
- Domestic Bank Accounts for DE corp

Now, a few questions:
I've researched my competition and see that they're
- Shipping their products from within the USA (I'm assuming drop-shipping)
- Legal issues are handled in BELIZE (according to their Terms & Conditions)
- Returns are sent to SWITZERLAND
My question is, WHY these countries, and should I follow suit?

I know another issue for others in this industry is high charge-back rates.
- I have customer service experience & agents are ready to go 12 hours/day right now.
- We're currently planning to process with Stripe, but research shows that they won't like a high chargeback rate so I need to go somewhere else ASAP.
Is there a respectable payment processor that works with merchants that have potentially higher chargeback percentages?

ANYTHING else you could recommend or pass along would be GREATLY appreciated!
#label #legalities #payment #private #questions #recurring #startrup #startup #supplement
  • Profile picture of the author Jill Carpenter
    Legal questions you are going to want to have a lawyer for.

    There are possibly 2-3 people on this forum qualified to answer those and they most likely won't do it for free.

    No clue why they have things routed the way they do, but likely there is some reason for it.

    - We're currently planning to process with Stripe, but research shows that they won't like a high chargeback rate so I need to go somewhere else ASAP.
    Do you have actual stats of what the return rate is on the product itself?
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    • Profile picture of the author Steve B
      I've gotta ask . . .

      If you're doing 100-200 sales a day, why not just ramp up what you're doing instead of taking on all the head aches, baggage and liability that goes with owning the supplement name?

      For all the questions you're asking (shipping products from within the USA, legal issues handled in Belize, returns sent to Switzerland) I will ask:

      Why can't you just keep doing what you're doing now? 200 sales/day is a large volume and if you've had no extraordinary problems why can't you just continue as you are doing?

      Steve
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      • Profile picture of the author supplement
        Originally Posted by Steve B View Post

        I've gotta ask . . .

        If you're doing 100-200 sales a day, why not just ramp up what you're doing instead of taking on all the head aches, baggage and liability that goes with owning the supplement name?

        For all the questions you're asking (shipping products from within the USA, legal issues handled in Belize, returns sent to Switzerland) I will ask:

        Why can't you just keep doing what you're doing now? 200 sales/day is a large volume and if you've had no extraordinary problems why can't you just continue as you are doing?

        Steve
        Hey Steve,

        The margins aren't the same. If I can OWN the product and collect all of the margins, I can scale this 5x. I'm maximum scaled right now for my traffic sources.
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        • Profile picture of the author GodOfCPA
          Your big problem will be actually getting a workable MID for nutra continuity and not having your accounts frozen immediately. Stripe will shut you down for anything involving nutra (not just rebills) as soon as they notice.

          Your chances of setting up a negative option billing offer without having extensive straight sale experience is almost zero in 2015, unless you want to lie to your processing company and face all the problems that come from defrauding them. There's a reason why there are only a handful of people successfully owning the nutra rebill offers these days, VISA, etc. hate them.

          Honestly, everything you mentioned in your OP is child's play compared to getting the ability to rebill credit cards with negative option. You will be a lot happier simply expanding your traffic sources and continuing to run other people's offers. It's a whole other skillset and very, very few people successfully transition from affiliate of trials to owner of trials.

          Just warning you - there is an entire industry built around scamming people like you, even CC processing companies with a good reputations often steal from newbies trying to enter this space (since there is literally no advantage for them to work with nutra rebillers). Your only chance is networking extensively via real life and FB, and praying somebody takes pity on you rather than simply scamming you.
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          • Profile picture of the author supplement
            Originally Posted by GodOfCPA View Post

            Your big problem will be actually getting a workable MID for nutra continuity and not having your accounts frozen immediately. Stripe will shut you down for anything involving nutra (not just rebills) as soon as they notice.

            Your chances of setting up a negative option billing offer without having extensive straight sale experience is almost zero in 2015, unless you want to lie to your processing company and face all the problems that come from defrauding them. There's a reason why there are only a handful of people successfully owning the nutra rebill offers these days, VISA, etc. hate them.

            Honestly, everything you mentioned in your OP is child's play compared to getting the ability to rebill credit cards with negative option. You will be a lot happier simply expanding your traffic sources and continuing to run other people's offers. It's a whole other skillset and very, very few people successfully transition from affiliate of trials to owner of trials.

            Just warning you - there is an entire industry built around scamming people like you, even CC processing companies with a good reputations often steal from newbies trying to enter this space (since there is literally no advantage for them to work with nutra rebillers). Your only chance is networking extensively via real life and FB, and praying somebody takes pity on you rather than simply scamming you.
            Thank you for your help.

            I don't want to sound like your storybook entrepreneur, but I've always been told I can't do something and I always find a way to make it happen. I think that's part of what makes an entrepreneur an entrepreneur.

            Thanks again for the tips.
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    • Profile picture of the author supplement
      Originally Posted by Jill Carpenter View Post

      Legal questions you are going to want to have a lawyer for.

      There are possibly 2-3 people on this forum qualified to answer those and they most likely won't do it for free.

      No clue why they have things routed the way they do, but likely there is some reason for it.



      Do you have actual stats of what the return rate is on the product itself?
      I'm happy to pay someone for their time to assist me in answering some questions.
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  • Profile picture of the author supplement
    Anyone out there know someone who could help me out?
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  • Profile picture of the author DIABL0
    Kevin Grimes
    Thompson Burton PLLC
    Thompson Burton

    He is the attorney for many supplement companies.

    The biggest issue with supplements are the claims made and not getting in trouble with the FTC.

    One thing you may consider is coming up with your own custom formulation that uses ingredients that are backed by human clinical trials. This can give you a product that can stand out from the rest and give you a marketing edge.

    Also, you can actually produce product for less than the cost of private label, because with private label they are producing the product and then marking it up. However, the minimum orders will be higher than with private label.
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  • Profile picture of the author art72
    Seems to me, if you can generate 200 sales a day, you can scale up. Whether it's investing in and testing other paid ads ( magazines, newspapers, offline markets, etc...) you would be better off on a 50% revenue share or one-off cpa offer, than risking 10's of thousands of dollars, legality expenses, charge-backs, refunds, customer service, etc...

    Just doesn't make sense to pay more, risk more, and make less... Buy more traffic, make more sales, let the nutra specialists deal with the rest.

    Funny, cause I just laid out an entire funnel for a health related campaign, and am planning on spending a measly $2000 on advertising directed at recruiting people to market the products... whereas, I'll only receive 5% -7% on ALL sales generated.

    Maybe, you could could consider or create a similar sub-tier affiliate program, whereby you teach others "how to generate 200 sales per day" and clone your success...

    You might only get a small slice of each sale your 'clones' create... But, if you had 100 people making 20 sales per day & made a meager 5% on ALL sales, thats 2,000 more sales per day you didn't make...paying you 5% (thus, you create another method generating sales daily... while earning another revenue stream.)

    In short, you teach others, they double your income... Sumfin to consider anyway.
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  • Profile picture of the author stock_market
    I launched my own testosterone booster a couple of months ago. It can seem like a complicated process at first, but I highly recommend it as a business. I would love to chat with you. I'll PM you.
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