Trying to start a tea business from home can be one of the most exciting things you can do, particularly if you have a passion for tea.
But like every other business model, there are do’s and don’ts.
If you do everything right, there is a ton of opportunity to earn a full time living by running a tea business. Unfortunately, you’ll never get there anytime soon if you follow what other guides are telling you to do. That’s because they all focus on the wrong things.
So we’re only going to focus on what really moves the needle.
With that said, there is something you should know before opening up your Shopify store.
What You Need To Know Before Starting A Private Label Tea Business
One of my first clients in the ecommerce space was a tea brand called Cup & Leaf. I ran their email marketing operation and saw every opportunity they had to grow, as well as every problem that held them back.
One of those problems was the private label angle.
You see, tea has been around for literally thousands of years. And ever since then, tea has become one of the mostly widely adopted drinks in the history of mankind. This means there have also been millions of tea related businesses. Today, it’s really simple to get your hands on some tea and start selling.
This is a problem, especially for new tea businesses.
The truth behind starting a private label tea business is that it’s a very difficult business because you’re selling the exact same products as everyone else.
There is no reason to buy from your new business when I can buy the same from an existing, credible place.
This doesn’t mean you shouldn’t sell any private label tea.
It just means you have to figure out a plan of differentiation and possibly look outside of private label for some parts of your new tea business.
Tea Business Profit Margin: The Math Behind Success
Another problem behind the private label tea business is margin.
From my experience working with tea businesses, they all generally have a 50% margin when it comes to just COGS. A margin like that makes it virtually impossible to use any sort of paid ads. And if you can’t do any sort of paid ads, then you’re stuck with just owned and earned media. In addition, margins also dictate how much profit you have. So even if you figure out how to make sales, you’re still not going to be making much money.
So what do you do?
1/ Organic traffic source to eliminate marketing costs
2/ Premium priced tea product to increase margins
An amazing example of #1 is Cup & Leaf. It was a blog built from 0 to 150,000 monthly visitors in only 8 months. Today, it drives almost all of their revenue without having to pay a cent in paid advertising.
An amazing example of #2 is Your Super. They sell a “Power Matcha” mix that contains matcha, as well as multiple other superfoods. This allows them to sell it for $30 rather than the $5-$10 you would normally see in a private label tea business.
In a perfect world though, you would have both.
And after that, if you still insist on selling private label tea, you can do so. Just as a secondary product to sell once people are on your email list and you need to do now is to make as much money per subscriber as possible.
This is what will determine the success of your tea business because it opens up new marketing channels and makes you more profitable from the get-go. The math must work BEFORE you start the business if you want a chance to actually survive, especially within the context of learning how to start a tea business from home.
The Ultimate Tea Business Plan (Step-By-Step)
1/ 6 months before you officially start your tea business, you want to build an organic audience. This can be done through TikTok, Youtube, Blogging, newsletters, and more. But if you decide to do blogging though, then focus on BOFU or bottom of the funnel keywords like “Green tea vs Oolong tea”. The reason for this is you first want to focus on keywords that have buying intent so you can later just link to your Shopify store on your blog and you’ll make sales directly from blog posts. Later, you can worry about top of funnel traffic. As you do this, make sure you’re collecting email addresses with Klaviyo.
2/ As you’re building your audience, you want to find manufacturers who can create your custom, premium priced tea. The important thing is to make sure you can get a margin of at least 70%, including the cost of receiving the product. This is what will make your business viable with paid ads, which is a prime driver of growth with most ecommerce businesses.
3/ After 6 months, you will have built a small audience and figured out what product to sell. Now is the time to promote it by pre-selling your tea business idea or if you already have the product, then just selling it outright. This part should take you no more than 2 weeks from start to end. Make sure you send multiple “teaser” emails before the launch and be aggressive during the actual launch.
4/ If everything works out, you can invest in your product and start working on expansion. So continue growing your organic audience, as well as your email list. In addition, you’ll want to start exploring paid traffic like Facebook ads. It’s also a good time to start looking into TikTok or Youtube influencers. Heck, even Amazon is a viable marketing channel. Basically, your organic following gives you the flexibility to try new marketing channels.
5/ After 18 months, you will have a sizable organic audience. You will also have tested multiple paid channels. Keep doing all of that. But at the same time, now is when you optimize your owned marketing channels, which includes email marketing and SMS. You want at least 30% of your revenue to come from email. This means emailing your list 2-4 times per week, as well revamping all of your flows. You want email to be a primary marketing channel.
6/ From there, you focus on the only 3 ways to grow a business. Getting more new customers. Increasing transaction value. And increasing repeat purchases. As long as you continue building your organic audience and you stick to a steady diet of profitable ads, you should be fine. The rest comes down to increasing your prices, using bundles, maximizing conversion rates, and launching new products to existing customers.
If you really want to learn how to start a tea business from home, this is the blueprint to follow. And if you follow this blueprint, you will have a thriving tea business that few people will ever be able to copy and will likely survive through any hardship that comes your way. Heck, maybe you’ll even get on Shark Tank!
If you need any additional help when it comes to the actual specifics of marketing though, feel free to grab any of these great digital marketing books for ecommerce businesses.
How To Find Tea Leaf Suppliers In The Next 24 Hours
Finding tea leaf suppliers is not necessarily hard, but it does require patience.
Essentially what you need to do is…
1/ Go to Google
2/ Type in the right keywords
3/ Call everyone relevant
Examples of those keywords include…
“Tea leaf private label”
“Tea leaf manufacturer”
“Tea leaf wholesale”
You can also use more specific keywords like…
“Green tea private label”
“Oolong tea wholesale”
Within seconds, this will give you a ton of search options. All you have to do from there is open a tab for every single option you see, narrow down the ones that look like they offer what you’re looking for, and then contact them all. Preferably, try to get them on the phone as that will give you the best chance to make sure they really can offer what you want and at a reasonable price.
Make sure to ask the right questions, including…
1/ What are your minimums?
2/ What are your lead times?
3/ What are your costs?
These are the most important questions to get answered, besides the fact that they can fulfill the product you need, which is obviously the most important part about how to start a tea business from home.