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A Quick Guide to Ancillary Products and Alternative Revenue Streams

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by Ian Lamont, Founder, i30Media —

Ian Lamont Headshot

Ian Lamont

How can ancillary products can create new revenue for your business? Take an inside look at expert tips for creating and marketing profitable supplemental materials for your books.

Anyone who has been to the annual IBPA Publishing University knows what a special opportunity it is to network with peers, see examples of award-winning indie books, explore new marketing strategies and techniques, and learn about the latest industry trends.

As a regular IBPA Publishing University attendee, I am always attuned to discussions of alternative revenue streams. It’s so exciting to hear how indie publishers are using their specialized knowledge, branding expertise, and innovative business sense to develop and market products that go beyond the standard model of selling books. Examples I’ve heard about at IBPA Publishing University include:

  • Publishers garnering consulting engagements and public speaking opportunities based on publishing expertise or specialist knowledge highlighted in their nonfiction titles.
  • The use of crowdfunding platforms to develop book brands and connect with fans on a more meaningful level. During one IBPA Publishing University 2017 panel on direct selling, participants revealed it was possible to generate hundreds or even thousands of dollars per month by building a list of devoted readers on Patreon and similar platforms.
  • Also at IBPA Publishing University 2017, adventure writer Carla King suggested creating “duckling” books based on chapters from larger books. They might not be big, or even considered a “book” (think downloadable chapters or video content based on books) but can nevertheless appeal to niche audiences or new audiences that may not otherwise be interested in traditional books.
  • At IBPA Publishing University 2016, Tanya Hall of Greenleaf Group talked about developing ancillary products that can be sold directly on a publisher’s website, thereby diversifying revenue streams beyond Amazon.

This last idea strongly appeals to publishers of all sizes-who wouldn’t want to bypass the Amazon behemoth and develop more valuable direct connections with readers and customers through the sale of new products and services?

Leading competitors in US retail commerce. Source: eMarketer

But even if you are able to develop these other channels, it’s important to realize that Amazon can itself be a powerful platform for product development and ancillary sales. Consider the following advantages offered by Amazon:

  • Amazon’s customer base numbers are in the hundreds of millions worldwide and account for nearly half of all US. ecommerce sales (see chart).
  • Publishers can leverage Amazon programs beyond KDP and Amazon Advantage to sell products and build brands.
  • Rankings, keyword searches, product reviews, and other types of Amazon data can spark ideas for ancillary products of your own.

A Spark of an Idea from Amazon Detail Pages

I have direct experience with using Amazon as a platform for developing ancillary products. Not long after I launched the IN 30 MINUTES series of guidebooks in 2013, I noticed that the Amazon sales widget on my detail pages showed that Excel Basics In 30 Minutes and Google Drive & Docs In 30 Minutes were frequently bought together with products made by other vendors. These products weren’t even books. Rather, they were laminated “cheat sheets” and quick reference charts explaining keyboard shortcuts and other features of the software.

Intrigued, I ordered some. While the cheat sheets had utility, I saw that the quality was lacking-the information was often out of date, and the layouts could be terrible.

That’s when the lightbulb went off. Why couldn’t I sell something better, not only to take back the “frequently bought together” widget on the Amazon detail pages for my books, but also generate a new stream of revenue for my company?

After all, I already had available reusable content from the books. Moreover, thanks to my publishing business, I had the pieces in place to handle design and production. Finally, if Amazon made it possible for those other companies to get their cheat sheets into the hands of my customers, then it was possible for me to do the same.

Over the next few months, I worked with designers and editors to create cheat sheets of my own. I found a local printer, opened an Amazon Advantage account to get the cheat sheets into Amazon’s warehouses and search engine (see IBPA Independent, How to Use Amazon Advantage to Sell Books,” May/June 2018) and started selling them. I made some mistakes (including the classic blunder of initially pricing them too low), but three years later, the cheat sheets have become a nice little source of side revenue on Amazon and on my book website, in30minutes.com. I’ve also fulfilled a few direct orders for schools and retailers that number in the thousands. It all started with paying attention to some of the data that was showing up on my Amazon detail pages.

Scaling Sales of Ancillary Products Using Amazon FBA

I had an opportunity to launch another ancillary product line after Shannon Combs-Bennett, a professional genealogist who authored Genealogy Basics In 30 Minutes (a silver IBPA Benjamin Franklin Award winner) mentioned that some genealogists liked to use paper forms to track their research. I had previously seen a few such forms on websites, but Shannon mentioned some other types I was not aware of. Just like with the cheat sheets, the designs of the online forms were often lacking. In addition, the quality of the printed product was terrible if you used a home printer with standard copier paper and ink cartridges.

Was there a market for higher-quality forms, using better paper and ink and perhaps some new designs? I decided to do an experiment, offering some basic forms as a free download on in30minutes.com, and also creating a shrink-wrapped kit to sell directly to customers who wanted printed forms made with archival-quality paper. Some of the forms and charts were traditional designs, but others were completely new, based on the research needs of my target audience. Again, I turned to my design and production network to develop, print, and package the first batch of 200 kits.

To make the kit available on Amazon, I used Amazon Seller Central. This free program, open to practically anyone, allows merchants to sell new or used goods (including their own branded products) on Amazon.

At first I sold the kits using the FBM (“Fulfilled by Merchant”) option on Amazon Seller. When Amazon received an order, my company would ship it directly to the customer, using discounted USPS shipping rates purchased through Amazon. I used Amazon Advertising, a self-service advertising platform, to advertise the kit to people searching on Amazon for specific genealogy terms, or browsing other genealogy-related products.

However, to make it available to Amazon Prime customers, it was necessary to use the FBA (“Fulfilled by Amazon”) option. This involves sending boxes of whatever product you’re selling to Amazon warehouses so Amazon can ship them directly to Prime and non-Prime customers. It requires a “Pro” Amazon Seller account (currently $40 per month), but the per-item fees and shipping costs paid to Amazon are lower, and I also gained access to new types of promotional programs, including coupons and enhanced brand content. Sales jumped, especially during holiday periods.

Since the first kit was launched, I have developed new products based on what I learned, and released those on Amazon as well as on my own website. I have also scored some direct sales to specialty retailers, and this year sold $500 worth of products at a big genealogy conference using Square, an app that allows businesses to accept credit card payments while on the go. Income from these ancillary products is now on a par with my book business.

I’ve also noticed other types of ancillary products based on books popping up all over Amazon. A wine goblet with catchphrases from Game of Thrones. A kids’ chemistry lab kit based on the Magic Schoolbus series. Hunger Games-themed jewelry. The list goes on, and includes everything from coffee cups to workbooks.

Of course, indie publishers may not have the same licensing options as the rights holders of big media brands. Nevertheless, we do have our own strengths:

  • Rights to intellectual property and other publishing assets associated with the books we publish.
  • Access to low-cost platforms and programs for sales and marketing.
  • A wellspring of ideas and insights that big publishers might not have
    or may be too afraid to explore.
  • The advantage of being able to move quickly and iterate (or abandon) based on what we discover.Whether you try out your ideas on Amazon, your own website, or some other marketplace, I recommend showing prototypes or design mockups to potential customers, including trusted readers who agree to participate in product tests. Pay close attention to the feedback you get to improve the product, packaging, or marketing messages.

Other Production Costs to Consider

  • UPC barcodes: Don’t get UPC codes from sketchy vendors on the web. They may be reused or previously assigned to another company, which can cause problems with Amazon and other retailing services. In the United States, UPC codes can be purchased and assigned via the official source (GS1.org). This site also provides downloadable barcodes to place on packaging.
  • Trademarks: It’s expensive and time-consuming to develop trademarks, but they offer legal protections for books and ancillary products and can become the foundation of a consumer brand that lasts for many years. Trademarks also open the door to special programs and services on Amazon, such as detailed Amazon Store pages and fast-tracked takedown requests for pirated goods. Trademarks can also be used to claim abandoned domains and Twitter handles to support sales and marketing activities online.
  • Shipping: If you use Amazon, eBay, or your own website to sell products, you will need to find discounted shipping services to ship goods to customers, Amazon warehouses, and your own place of business. Amazon Seller provides FBA and FBM shipping services on its website, but it’s also possible to use the discounted shipping services available to IBPA members through the member benefits catalog. I sometimes use paypal.com/shipnow to buy and print one-off USPS and UPS shipping labels for direct customers and specialty retailers.

Understanding Risks and Requirements

Before you make a commitment to launching your spinoff product, you must understand the legal requirements and other restrictions associated with making or marketing certain types of merchandise. There are various issues that can trip you up, ranging from licensing costs to consumer safety requirements. Amazon also has lots of rules that sellers of branded goods have to follow, which often differ from the rules that apply to book publishers.

Sales taxes are a minefield. Check to see what sales taxes are required in the states and municipalities where you have operations (including expos and local markets), and be sure to set up your Amazon, eBay, and business websites to charge sales taxes to customers accordingly. Amazon will remit taxes on your behalf, but for sales that take place on your own website, you or your accountant will need to periodically remit taxes to the local authority. In addition, if you are manufacturing or printing products in your own state, you may be eligible for a sales tax exemption on the goods you purchase if they are to be resold in that state. Check with your accountant or local tax authorities to learn more.

When it comes to production, it’s easy to make costly mistakes. There are countless horror stories involving botched designs, problems getting shipments of imported goods past customs, and small vendors ending up with thousands of unsellable items because they misjudged the marketplace. There are also lots of sharks operating in the Amazon Seller universe, promoting expensive get-rich-quick schemes and shady marketing workarounds that can get you banned.

I recommend starting with low-cost production runs and leveraging free or low-cost sales and marketing platforms, such as the free FBM tier on Amazon Seller or special offers to your mailing list. If a product seems to resonate, consider how to expand production and sales, or even develop new products that appeal to a larger audience.

Launching an ancillary product is not the same as developing and launching a new book. However, if you find a product that connects with buyers, strong sales and positive network effects can expand the audience for your book brands while helping your business grow.

Ian Lamont is the publisher behind IN 30 MINUTES Guides (in30minutes.com) and the author of Lean Media: How to focus creativity, streamline production, and create media that audiences love. He has also served on the IBPA board as treasurer and is a member of the Executive Committee. Follow him on Twitter @ilamont.

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