The name “JM Bullion” sounds old fashioned, trustworthy and solid. It sounds like one of those companies that brags about its founding around the industrial revolution.
You know the type. The website claims that “XYZ Company was founded by Silas and Florence Smith on their farm in 1882, and it’s been in the family ever since.”
But that’s not the case for JM Bullion. It’s not old at all. The famous online precious metals dealer was started by a couple of college-aged kids named Mike Wittmeyer and Jonathan Wanchalk in September 2011 working in their basements.
It’s a great story. You should check out if you’re interested in the gold business. But let me spoil the ending for you.
JM Bullion quickly became the world’s biggest online gold retailer, doing over $1 billion in sales in 2020. In 2021 A-Mark Inc. – a publicly-traded precious metals trading firm – bought it for $138.3 million.
At the age of 31 Mike Wittmeyer came into an 8-figure net worth. Not bad, eh?
But the journey wasn’t an easy one.
See, back in 2011 Mike and Jonathan were running a precious metals affiliate website. That means they were writing articles about gold and silver and then advertising for a bullion dealer to those readers. If a reader went to the bullion dealer and bought a product, then they would get a small commission from that sale.
It wasn’t a bad business for a couple of young guys. They didn’t have to hold inventory, ship product, or deal with customers. Mike says they were clearing $5,000 a month with just a simple website and some elbow grease.
But suddenly the company that was paying commissions for sales shut the affiliate program down. No warning, no recourse. Mike and Jonathan’s income went from $5,000 a month to $0 overnight. And there were no other affiliate programs out there for gold at the time.
They offered to sell the bullion dealer their website for $40,000 – an attractive investment which would have paid off in about 8 months. The company never even responded to the offer.
So Mike and his partner decided they would just buy bullion and sell it online themselves and JM Bullion was born.
And it was a smashing success from the start.
When the JM Bullion website went live in October 11th and Mike started sending all the traffic from the affiliate site, they got zero purchases for months except for one from a friend of Mike’s mom. To make matters even worse, a scammer stole tens of thousands of dollars from them in credit card chargeback fraud. They were even worse off than when they had nothing.
How did they set a complete failure on the course to the most successful online bullion retailer today?
Mike says he had to take an honest look in the mirror. He sat down and made a scorecard of JM Bullion vs. the 5 biggest online bullion dealers at the time.
Here was his insight:
“Here’s JM and here’s the 5 biggest companies. If I look at the various metrics: how good’s their website, how’s their product selection, how fast do they ship, customer service, and price…I said there’s no reason they’d ever buy from us.
We have worse selection. We couldn’t get a wholesale account so we were buying from the cheapest retailer and marking it up. Jonathan and I were answering the phone so we didn’t have great customer service because we weren’t available 24 hours a day for customer calls.
What I landed on was, you know, the only lever we could really pull here is we’re just going to undercut everyone on price. Because this is a commodity and it’s like buying gasoline. If there’s a store here and a store there, and this one’s a penny cheaper, you’re going to pull in here. So let’s just cut it and see what happens.
Because if we can get volume and, you know, make that work, and see the top line grow, I know we’re going to be able to figure out margin as we grow and get economies of scale. So we did that, and that did work, and we started to really see the revenue grow.”
Our honest look in the mirror
We have no ambition right now to grow a monster internet retailer. Honestly, it’s just not possible. Emily and I live in two places and spend half the year sucking our inventory up off the ocean floor. We don’t have the capacity to be shipping 100+ orders a day.
But we are inspired by businesses who take their success and share it with their customers, with everyone’s long-term benefit in mind.
In the last year, thanks to you guys, we’ve built a growing book of business selling paydirt and gold-by-the-gram. You can see it in our reviews. We can now rely on getting a certain amount of sales each month.
We thought it’s the perfect time to give the success you’ve given us back to you.
To be honest we’ve already been doing it informally. When I see customers come back and buy paydirt 3 or 4 times I usually put extra gold in the bag. It’s our way of thanking them and telling them that we recognize that they’re spending their hard-earned money at our store.
But if you’re a new customer, or someone who’s on the fence, you have no idea that we’re doing that. Who actually assumes a business is going to be any more generous than they say they will?
It’s time to just make that extra value our policy for everyone and provide our products for cheaper – and put Bering Sea Paydirt in the hands of even more people around the world.
A commodity with a story
It’s funny to read comments from people online who call Emily “greedy” for selling gold online. It’s so far from the truth. The reality is we’ve taken every penny we’ve earned so far (and then some) and invested it back in the business with long-term success in mind.
We’ve written a ton of content, made videos, and released new products. We’ve paid for contractors, rent, software, a complete website redesign, credit card fees, shipping fees, packaging costs, new product development, art design, and a shocking internet bill in Nome that would make your heart skip a beat.
Trust me, if this was an easy cash grab everyone would be doing it.
We’ve also learned a ton of lessons about selling gold and paydirt online by making every mistake in the book. We’ve been scammed by folks lying about not receiving their gold. We’ve had to reach into our pockets to pay for orders that were damaged, lost or stolen thanks to our own inexperience. And we’ve probably cut our packaging and shipping costs in half since we launched in September 2021 by shipping lighter products, packaging smarter and cheaper, and getting creative with shipping solutions.
I’m proud that Bering Sea Paydirt, unlike most other gold you buy online, actually has a story. You know where it came from. You watch Emily and her crew fight for the paystreak year-after-year, risking life and limb in the process.
Our customers have supported us because of what Emily has done over the years. Because of her blood, sweat and tears and the sacrifices she’s made living her entire adult life in the public eye, hunting gold on the cold Bering Sea.
I can tell you from witnessing it up close that it takes a real toll.
But we’ve asked our customers to pay something of a premium price for that story. We needed the margin to fund the growth of the website and get our feet under us.
Now that we are in a stronger place, we had to ask a fundamental question. Are we only in the business of selling a cool, authentic experience to fans of Emily and Bering Sea Gold, or are we also going to be competitive in a commodity business?
If we choose the latter, we’re going to have to make our prices and services in-line with what the market is offering. Instead of asking customers to pay extra for the story, we’re going to ask them to pay commodity prices, and then give the story away for free as a perk of doing business with Bering Sea Paydirt.
We’ve always had a foot in two worlds: one in the gold business and one in the entertainment business. It’s a somewhat schizophrenic professional life. Often those two businesses are competing for our time and energy in subtle ways. Most gold miners don’t have the burden of being in the entertainment business (and to be honest some tv miners don’t burden themselves with actually being in the gold business).
This off-season we made the choice to be in both. We’ve got the story and entertainment part down, now it was time to focus on the commodity business.
So we, like Mike at JM Bullion, took a look at the major online precious metals dealers and made sure that we were competitive with their gold offerings.
Faster, more secure shipping
Previously, we were shipping all orders First Class Mail with tracking and insurance for free. We thought about how much we loved Amazon Prime, and free shipping, and that customers would love it.
The difficult truth is we just can’t ship as fast as Amazon.
We’ve learned that when it comes to precious metals, customers want fast along with discreet and secure shipping. And they’re willing to pay for it. First Class Mail just isn’t the best-in-class offering by the Postal Service.
So we are now only offering USPS Priority Mail shipping on products, and charging a flat fee of $7.99 unless you spend $199 or more on the site, then shipping is free.
Why $7.99 for orders under $199? Because that’s what almost all the major bullion dealers online offer.
Tons of orders are over that threshold, anyways. So if you like to order a couple of bags of paydirt at a time, or 3-4 grams of gold, your shipping just got faster and more secure at no extra cost.
For everyone else, you’re getting a subsidized rate for faster, more secure shipping (which costs more than $7.99 from Alaska).
The nuts and bolts of pricing paydirt
Our offers have run the complete spectrum this year from almost casino-like to bullion dealer-like certainty.
It’s hard to believe that less than a year ago we were running our 200 bag special where 3 folks would get a “golden ticket” worth 1 oz of gold.
I thought that was awesome, and that people would love the chance to hit the motherlode just like real gold miners!
Turns out all we got were 3 ecstatic customers and 197 people complaining that we were “ripping them off” by not giving them enough gold.
Uh, how do you think we’re able to pay for the 1 oz bonuses? People thought we were scamming them even though our profit margins didn’t even change.
I felt like it was a complete bust of an offering, and not worth the angry emails. Totally discouraging.
Then we moved into this “minimum guarantee” like we saw some other paydirt sellers doing. We launched our Diver Dirt Paydirt bag and put a 1 gram minimum guarantee on it.
I’d put 1.1 to 1.4 grams in pretty much every bag, assuming that customers would be happy to see our promise of MORE THAN 1 gram fulfilled.
However, I think the $95 price tag turned lots of potential customers off. No matter how much we tried to stress MORE THAN 1 gram in each bag, people just assumed we would be sending a gram for $95. The uncertainty turned them away. We sold way more gold by the gram (not paydirt) where the sticker price was often at least $15 cheaper per gram.
And if I’m honest that makes sense. How are potential customers supposed to know that we would actually fulfill that promise?
I think the move now is just to say hey, you’re going to get 1 gram of gold in this bag of paydirt. Don’t expect more or less. We’re going to make that price as low as possible and the price will fluctuate based on the price of gold that day.
After all, that’s how the pros do it.
Let’s look at those price changes.
Before: 1.5 grams of gold minimum @ $150
For Eroica Paydirt, we’ve been offering a minimum of 1.5 grams for $150.
We charged a premium price for that product that gold is certified dredged on the Eroica and has a certificate of authenticity signed by Emily.
During our Black Friday sale, when we changed the offer to 2 grams of gold instead of 1.5, Eroica Paydirt was flying off the shelves. It was probably 75% of our orders that weekend when normally it’s 25% or so.
It was clear customers thought 2 grams of gold in that bag made a lot more sense than 1.5.
Now, let’s see what 2 grams of gold costs on JM Bullion.
It advertises at $156.45, but if you want to pay with a credit card it’s $162.97. By moving to 2 grams of gold instead of 1.5 we’re now cheaper than that, but I thought we could do a little better. So we went ahead and lowered the price to $142 just to make it a little better value.
Before: 1 gram of gold @ $95
So let’s take a look at the major bullion dealers, and what 1 gram costs.
Today, JM Bullion is listing its cheapest 1 gram bar at $86.26. On the surface, that’s cheaper than our $95 1 gram Diver Dirt Paydirt. But you don’t see that it’s $89.85 to pay with a credit card, plus $7.99 for shipping.
That’s a total of $97.84.
So actually, 1 gram of Diver Dirt was a bit cheaper already with free shipping and no extra credit card fee, and our 1 gram of gold-by-the-gram was a lot cheaper at $79.61.
US Gold Bureau was a bit cheaper at $87.79, and shipping is free at $99, which is the order minimum. That is a better deal than Diver Dirt in my opinion.
APMEX advertises 1 gram bars on the secondary market at $78.32, but you’d have to buy 25 of them and use a check. I don’t know who would do that instead of just buying an ounce gold bar since it’s way cheaper. Maybe other bullion dealers?
But realistically to buy one and pay with a credit card you’re forking out $83.67.
That’s definitely a better deal than Diver Dirt.
So with that information, what are we going to price our 1 gram bag of Diver Dirt Paydirt at, at today’s spot price?
$78.50. That’s almost a 20% price reduction from before, and is cheaper than all the major bullion dealers.
Look, I know it’s not apples-to-apples. Refined gold bars are a value-added product. It’s a bit different. But so is paydirt. Going forward, we’re going to keep an eye on major bullion dealer’s prices and make sure you’re not paying a sticker price that’s higher than theirs.
1 Gram Before: $79.6/Now: $74.88
2 Grams Before: $147.28/Now: $138.42
3 Grams Before: $212.35/Now: $199.67 (with free, faster shipping)
4 Grams Before: $273.24/Now: $257.22 (with free, faster shipping)
We’re just straight-up cutting our margins here. We have some really cool new certificates of authenticity coming that are printed on aluminum cards that were expensive, which is why we aren’t shaving a couple more bucks off the price.
Customers are noting that some of Emily’s signed certificates of authenticity are getting bent in transit, and I thought we should kill two birds with one stone by printing them on a tougher material and making them much cooler and more on-brand.
Maybe people would rather have a $2 discount and you’ll be reading an email next year about how we’re discontinuing certificates? I don’t know, but my gut tells me it’s still important to invest something in our story.
A natural progression of business
As we diversify our revenue into trips, advertising, and some affiliate income – we’re ready to give away some more value in our gold products in order to get Bering Sea gold in the hands of more people.
There is no better advertising than happy customers holding real gold in their hands.
So I just wanted to say thank you to you all for making 2022 a great year. We were able to make this price cut because you signed up for our email list, read our articles, watched our videos, and bought our gold and paydirt. Bering Sea Paydirt is sitting on a fundamentally stronger foundation than it was 12 months ago and we have the confidence to move forward with lower prices.
Let me know if you have any questions, comments or concerns. You can email me at Alex@BeringSeaPaydirt.com
“Our most profitable insights have come from recognising the deep reality of some businesses, not from being more contrarian than anyone else”Nick Sleep
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