I thought his biggest mistake was thinking that he can sell millions of these keychains with ease. Since the only people capable of buying those volumes are the big retail chains and not those small mom-n-pop stores, he should have gauged the potential response from these retail chains prior to importing the key chains.

I would think that it would be obvious to the laymen that such a product would appeal only to the small novelty shops, so there is a ceiling to how much you can scale this business.