Just ask JM Bullion. 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.
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. But the journey wasn’t an easy one.
It started back in 2011 when 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 which was an attractive investment that would have paid off in about 8 months. The company never even responded to the offer.
Mike and his partner decided they would just buy bullion and sell it online themselves and JM Bullion was born. When the JM Bullion website went live on 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.
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. He looked at the various metrics: how good’s their website, how’s their product selection, how fast do they ship, customer service, and price…he said there’s no reason they’d ever buy from us.
They had the worse selection. They couldn’t get a wholesale account so they were buying from the cheapest retailer and marking it up. Jonathan and Mike were answering the phone so they didn’t have great customer service because they weren’t available 24 hours a day for customer calls.
What Mike landed on was the only lever they could really pull and decided 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.
They reckoned if they could get the volume and make that work, and see the top line grow, they knew they could figure out margin as they grew and get economies of scale. So they did that, it worked, and they started to really see the revenue grow. Not bad for a couple of college kids with no experience.