May 8, 2014
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If you sell products online you’ve probably had your share of aggravation when it comes to lost or damaged packages. Who eats the cost when shipping goes awry? You do, of course. You certainly can’t tell your customers it’s their problem, the loss of customer good will simply isn’t worth it. So how can you take the pain out of lost and damaged shipments? Here’s some suggestions:
1. Shipping Insurance: DIY or Buy
There are lots of services out there that offer shipping insurance, some of them are even quite affordable. My issue with paying for shipping insurance (most of the time) is that it’s a guaranteed money loser. Let’s look at the math:
Imagine your average shipment has a $30 retail value and a $10 cost to you, for easy math let’s say you ship around 1,000 packages per month. If you paid for insurance on each shipment you might add roughly another $1 in cost to each shipment (which you can of course pass on to customers). If your average package loss rate is 2% then you will lose maybe 20 packages per month. The cost to you to replace those packages is $200.00. If you paid for insurance you’d have spent $1,000 to cover the cost of replacing $200 in goods.
This doesn’t mean you should expect to eat the $200 in lost goods. Guarding against shipping loss is part of the cost of shipping and you should pass this expense on in your shipping fees. If you just added $1.00 to your shipping charges for every single shipment you’d have that $1000.00 at the end of the month in reserves to pay for the $200 in lost/damaged packages plus some money left over.
When deciding whether to build in your own shipping insurance fund that you handle in-house or paying for outside insurance be sure to do the math and determine what it will cost you to pay for insurance, what your average replacement cost is and what your average package loss/damage rate is. You may find it’s cheaper and even more profitable to go DIY than to pay for outside insurance.
There’s also nothing preventing you from applying insurance to shipments on a case-by-case basis. If your average shipment has a $30 retail value, but a few times per month you get a shipment with a $300 retail value, you might want to just ship those packages using outside insurance.
2. Signature Confirmation
Signature confirmation can be almost as good as insurance but cheaper (depending on the value of your shipment). If you have a product that can’t easily be broken or damaged, shipping high value packages with signature confirmation required is a great way to guard against packages being lost or stolen.
We’ve all heard the stories of a mail carrier leaving a shipment on a customer’s doorstep and the package being stolen minutes later. It’s a problem particularly in urban areas. When you ship with signature confirmation required, this eliminates the shipper’s option to leave your shipments unattended. It also makes it nearly impossible for a customer to claim they didn’t get the package.
3. Premium Shipping Services
For high value shipments, sometimes it pays to go with a premium shipper like FedEx. For heavy shipments they are often less expensive than USPS. You can insure parcels with premium couriers like FedEx and UPS on an individual package basis and if your package IS lost or stolen, filing a claim with these services is usually much easier than dealing with USPS. It’s worth noting that premium shippers usually have a much lower rate of package loss or damage. In all the years of working with FedEx, they’ve delayed/misplaced a total of TWO shipments. Both shipments were eventually found and delivered a couple of weeks late.
We use USPS daily since they are more affordable for light weight packages, but they lose anywhere from 2-5% of our shipments. I build this into my shipping costs, so it still makes sense to use USPS for light parcels. I ship my heavy and high value parcels with FedEx since they are more cost effective for shipments over 2 pounds and they’re much more trustworthy for high value packages.
May 6, 2014
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Back in March I talked about the fact that I launched a second online store selling apparel that isn’t really my taste. I got a mix of reactions from “you go girl” to “how can you live with yourself.” With my bills paid, that’s how I live with myself, in case you were wondering. To be clear here, I’m selling products featuring designs I find boring, not putting melamine in baby formula. I’m pretty sure this ranks on the crimes against humanity scale pretty far below even littering.
My second online store continues to be very profitable with almost no work on my part. All I’ve done is list a ton of products available for sale and optimized them for keyword searches. I have spent zero time, effort or money on marketing, and my second shop has been consistently selling thousands of dollars worth of product every month. If you’re curious as to WHY this has been the case, let me explain:
1. The Long Tail = Big Sales
When you’re designing for a specific brand aesthetic you are naturally going to have a more narrowly focused catalog. This means your products are only going to appeal to a small subset of potential customers. If you have 20 amazing designs for sale that are all a perfect fit for the vision of your brand, that’s great, but it also means you only have 20 tickets to the lottery that is online sales.
On the other hand, if you aren’t concerned with a specific brand aesthetic and you just want to sell a ton of product you can design products that appeal to everyone. Instead of having 20 cohesive awesome designs that appeal to a narrow subset, you can have have 2,000 designs that are all going to appeal to someone. If you sell 20% of your online catalog in any given month, the catalog with 20 designs is going to get 4 orders per month. The catalog with 2,000 designs is going to get 400 orders per month. Even if the smaller catalog had a much better conversion rate than the larger catalog, that conversion rate would have to be gargantuan compared to the larger catalog’s conversion rate to compete in terms of profitability.
2. Embracing the concept of designing purely for profit opens up a lot of options
With my first online store, I was creating a brand (and this is still the case, my first online store is still around and also still profitable). The difference between the two is that when it comes to my first online store, I was really concerned with the brand aesthetic. I think about what products or designs do and don’t fit with the vision for the brand image and that dictates what I do with that brand.
This limitation means I can’t experiment with any and every trend that comes along without damaging my brand. What’s worse, if the tight cohesive brand I built and felt so proud of isn’t on trend this season, then my wholesale business dries up and I’m stuck relying on our hard core fans for the bulk of our sales. These issues were limiting our income.
With the new online store, I do not care about the brand. I don’t care what the collection looks like, I don’t have one specific target market. All I care about is sales volume. This means I’m free to jump on any trend. I’m free to throw everything at the wall and see what sticks. This all translates to a huge boost in income. My second online store is like a science lab and I can test anything and everything there and see what works.
3. Analytics, analytics, analytics!
When you’re not worried about building a brand that reflects your personal taste, you can really dive into metric data that helps you figure out what to sell. Tools like Adwords and Etsyology.net are great research tools. You can see what’s selling, you can see what keywords people search. You can even go onto the websites of big box retailers and sort their products by best sellers and see what kinds of products are selling for them.
You can compile this kind of information and make a to-do list for yourself. If you notice that unicorns are hot right now, you don’t need to care that you don’t like unicorns. If you’re working strictly from analytic data you can put unicorn designs on your to-do list. If typography isn’t your personal taste but you notice typographic designs are selling well you can start in on that kind of design and make money from it.
I realize a lot of what I’ve said here smacks against what you have probably been told about being a creative professional. We’ve been told for so long that authenticity and putting yourself into your work is paramount to success. That all sounds very romantic, but it’s simply not the only path to profit and sometimes it’s what keeps you from making as much money as possible.
I’m on track to more than double my sales this year and I have no regrets. This approach is certainly embraced by larger companies or you wouldn’t have well-known conservative Rupert Murdoch (head of Fox), at the helm of a business that owns both Fox News and FX Networks and Fox Searchlight. If Murdoch can soak up right wing bucks with Fox News and, let’s face it, plenty of urban dwelling, left leaning, hipster dollars on properties like It’s Always Sunny in Philadelphia and films like 500 Days of Summer, then there’s no reason smaller businesses can’t take this same approach to making money. Like Wu Tang Financial advises, you need to diversify.
If you’re making all the money you could ever want to make on a brand that reflects your personal taste, good for you. If you’re not, don’t be afraid to launch a second brand that captures a customer base you’re currently missing out on.
May 5, 2014
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Today I’m chatting with Georgie Hartigan of Beneath Rejection, a clothing line based in Sydney, Australia.
Tell us a little about what you do, how you got started and what your growth has been like since you started your business.
My name is Georgie Hartigan and I own an independent clothing line, Beneath Rejection. In 2012 I finally built up the courage to launch my humble label. Three years later, and Beneath Rejection has grown faster than I ever imagined.
I literally started BR as a pipe dream, a side project I guess you could say. It was something I was just doing because I loved fashion and design and I knew how hard it was going to be to compete in the over-saturated apparel industry, but I was determined that this was something I would make happen.
When launching, I knew that I wanted to create a brand that could deliver a really personal experience to the buyer, and to do that I decided right off the bat that I would only ever sell through our own website and completely avoid retail. It was a gamble, but it’s paid off. I knew that there would be people out there like me that wanted more from their shopping experience than just walking into a shop and handing over their cash, and since then the challenge has been putting those people in front of my website.
Choosing to go down that path has definitely been hard, but it’s created the Beneath Rejection family – people who are passionate about the brand and do most of the marketing for me by spreading the word to their friends and family. That’s how Beneath Rejection has been able to grow so quickly. It’s humbling to know that people are wearing my shirts across the globe, and I’m so grateful for that.
You have some cut and sew items for sale like button downs and jackets, what was the process like for having these items made? Did you work with a manufacturer and, if so, how did you find the right manufacturing partner?
My vision for the label has shifted to creating clothing that people can wear everyday, and that meant branching out and getting into the cut and sew area. Before I went down the path, I did a lot of research and spoke to other brand owners about their experiences with overseas manufacturing.
I am a perfectionist when it comes to the label and give everything extreme attention to detail, so I decided that I couldn’t take the chance of compromising the quality of my products. I actually flew over to Vietnam, designs in tow and found a tailor I had used before. We sourced the fabrics and I oversaw the whole process, checking each item myself for quality. As for the jackets, that was simply a matter of ordering vintage denim jackets from a collector I came across last year and having the panels hand sewn by a friend of mine.
How do you go about getting your product in front of retail customers? Do you mostly sell online or at live events? What are some direct-to-consumer marketing tactics that did or didn’t work for you?
Since day one, Beneath Rejection has been sold exclusively through it’s own website. Selling online is hard – the market is literally flooded, and just like in retail, the small brands are competing with the advertising budgets of the super brands. If you’re patient and invest the time and energy into getting people in front of your site, online can really work in your favour.
In terms of marketing, I’ve found the most successful tool to be word of mouth and social media hype. Creating share competitions on Facebook and Instagram has proved really successful allowing the loyal Beneath Rejection customers to share with their friends, hugely increasing the market base. And the best part is none of that costs a cent.
What would you say is the most valuable thing you’ve learned since you started your business?
The lessons keep coming everyday I’m in this business, but there are definitely some things I’ve learnt that are invaluable.
+ Change your mentality from looking at other labels as competition. Work together to promote your industry and help establish a larger market for everyone
+ Be nice. And be honest. It sounds simple, but people buy from people they like.
+ Focus on building genuine relationships with your customers. After all, what makes the indie industry so great is that customers can engage with your label on a personal level and you would be nowhere without these people.
Tell us about a difficult period or big mistake you made with your business. What went wrong and how did you recover?
When I first launched, I had so many things planned for the future of the business. I launched into it all with those big ambitions and ended up going seriously over budget. Within the first 3 months of launching I was in debt and thinking I’d have to throw it all in before Beneath Rejection had even had a chance to grow. I wasn’t getting the sales I had anticipated, and found myself struggling to keep optimistic and driven.
I decided that I wasn’t going to quit, I was going to take my mistakes and turn them into lessons and move forward. I realized quickly that although it’s great to have plans for your brand and a big-picture view, it’s important to take things slowly and not to spend outside your budget. If you can’t afford certain elements like custom hang tags and packaging, add it to your future plans and build up slowly. I started putting all the money I made straight back into the business, and took my time adding elements as I could afford them.
If you had to start over from scratch with a new business today what would you do differently?
If I launched another start up, I would have a closer eye on my budget by spending more time creating a marketing plan specifically suited to my target market. In the past three years I’ve spent a lot on unnecessary money on advertising and publicity that has been dramatically less effective than free social media campaigns. It’s about knowing your customer well enough to know where they go and where they are and ensuring that you put your brand in those places and in front of them.
April 30, 2014
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Today I’m chatting with Emilie Sennebogen of Love Your Mama, a bath and body company based in Atlanta, Georgia.
1. Tell us a little about what you do, how you got started and what your growth has been like since you started your Love Your Mama.
We make all-natural soap, body products and soy candles. (The name Mama is a fun twist on Mother Nature/Mother Earth). I quit my job as a producer in the film industry at the end of 2008 after having Mama on the side in some form since 2002. I’m not one of those people who made soap to unwind and gave it to friends and they loved it so I decided to make it a business. I always treated it like a business. But I had a lucrative job and it just took me a while to get it to where I was ready to give that up and really give Mama go.
I always felt like Mama was a retail business for several reasons: 1. Our all-natural products have a shorter shelf-life than many store brands which most retailers aren’t used to. 2. Educating the customer about natural products is our main mission and I wanted that customer connection and experience and 3. I had a retail background from high school and college and quite simply, I wanted to have a retail business.
I wasn’t ready to hit Main Street right away in 2009. So I opened my first retail store/workshop in an out-of-the way location (read: cheap rent) and have grown very organically from there. We currently sell at our retail store (where we make everything), at festivals, online and wholesale – we’re in over 60 stores in the US right now. Other than some 0% interest balance transfers when I’ve needed to make an investment in equipment, I’ve bootstrapped the business up until now, so we’ve grown at a slow and steady 20-30% per year for the last 5 years. Until this year, that is; we’re about to open another retail store in a busy location later this year and we’re moving our current out-of-the-way store to a bigger storefront in a smaller Main Street area of town. Plus, our wholesale business has had a considerable boost since our most recent trade show in January, so I anticipate well over 100% growth in the next 12 months. Exciting and more than a little scary!
2. You seem to do it all, manufacturing, online retail, teaching, festivals, wholesale and even a brick and mortar shop. How did all that evolve and how do you keep up with so many moving parts? Are all of those revenue streams equally important to you or are there one or two that are the biggest part of your business? Has your best revenue source changed over time?
There are a lot of moving parts to my business and it’s really tricky to keep up with all of them. I wear a lot of hats and I’m running around with my hair on fire most of the time. It certainly keeps things interesting! I also have three employees with very specific job descriptions, so that’s definitely a huge key to managing all of the pieces.
Here’s how my early decision making process went: The manufacturing was always the most important part to me. I knew I wanted Mama, first and foremost, to be a handmade body product business. When I decided to go full-time with Mama in 2009, I had to think about what sales channels I wanted to use to get my products in the hands of customers. I was already doing festivals — Atlanta has a lot of them, and that was the low hanging fruit, so to speak — but they’re mostly in the spring and fall and I didn’t want to be a seasonal business. I also needed to move out of my house; we were getting serious about renovating our fixer upper and Mama had worn out its welcome long ago. So a workshop that served as a retail storefront made sense for us.
Classes were going to be a big part of my business plan when I opened the store, but there was so much to do just running the business that I didn’t actually get around to starting those until 2013.
Starting out with a retail store, even one off the beaten path with limited hours, meant hiring employees from the get. It wasn’t the cheapest way to get a business off the ground, but it did allow me to focus on more than one thing at a time, which is how I like to do things. And then taking on that overhead out of the gate necessitated multiple revenue streams to keep paying the bills.
We had a modest Internet business that had kind of been putting along behind us since we started in 2002 and opening the storefront landed us some press (A Southern Living magazine mention in December was fortuitous for our 2009 holiday season), which helped drive a good bit of Internet sales and a little bit more foot traffic. I have always wanted the retail store to be our main source of revenue, so my original plan in 2009 was that I would use the festivals to drive traffic to the store for a few years and then cut back our participation. But festivals continue to be a great source of revenue and the store is still off the beaten path, so now we do as many as we ever did, if not more.
I’ve never focused a ton on the website because we have products you need to see and feel and experience in person. So most of our Internet customers are either repeat customers who can’t make it to a store or they’re buying as a gift.
I never really saw wholesale as an ideal way to grow because we make everything by hand using high quality ingredients that aren’t cheap, resulting in tight wholesale margins. Until 2012, we only opened wholesale accounts that came to us and were a good fit. We were in about 10 stores around Atlanta as well as a couple of co-ops and I didn’t put a lot of time or effort into getting more.
But at the beginning of 2012, our growth at the store and festivals was starting to flatline and I was getting antsy. I really wanted to move the store to a busier location, but the economy was still crap and a lot of Main Street shops were really struggling, so it didn’t seem like the right time to make that investment. Plus, I couldn’t really find the right scenario in any of the areas in Atlanta where I wanted to be. So instead, anxious for growth, I decided to do a trade show. It was a huge investment and took a lot longer than expected for the ROI I was hoping for.
In 2013, our revenue chart was a perfect little pie – we did just about equal amounts in the retail store, at festivals and wholesale, with a little smaller slice for Internet. So it’s definitely safe to say that all of these income streams have been equally important to our business.
In 2014, if all goes as planned, the retail store pie slice will get a good bit larger. And classes and supplies really just took off at the end of 2013 and are doing great for us in 2014, so they should be getting a decent sized sliced too. All of this is leading toward more focus on the areas I’m most excited about, which is really exciting.
3. Your company teaches soap making classes. Teaching customers how to make the product you sell might seem counter-intuitive to a lot of entrepreneurs. What prompted you to start teaching your craft and how has this helped your business?
The main reason we started teaching classes was to drive more business to our retail location and to add a service to our product offerings – yet another revenue stream. Packing up heavy boxes of soap and hauling them all over town to sell gets really old after 5 years, so I wanted to find a way to bring more business into the store.
In addition to a dearth of soap making classes in Atlanta, I also realized there was really no place to go locally to buy quality soap making ingredients. We buy them in bulk, so packaging and selling them to hobbyists seemed like it would be a good additional income stream that wasn’t too time-consuming. And both classes and supply sales have really taken off. Most people who take a class end up buying something, so we always have our best days at the store on class days.
4. Do your students want to learn to make soaps just for fun or do you run across a lot of students that want to create a business like yours. If you have students who want to get into the soap business how do you handle that? Do you ever run across students that you think will succeed in starting a soap business and why do you think they’ll be successful (or if you think they won’t be successful, why do you think that)?
We have an interesting mix of people who take our classes. A lot of people think it’s interesting and just want to try it because taking classes is fun. Some want to take it up as a hobby and make soap for family and friends. And then there have been a few who I think are more serious about it and might want to take it to the next level as a business. I’m pretty forthcoming and open when people ask questions about the business as long as it’s not proprietary information, like our product recipes or our essential oil supplier. If people are willing to invest in us as their teachers, I’m willing to share what I know. I’ve found it promotes trust not only in us as teachers but also in the business. And it keeps them coming back for more classes and supplies.
Here’s my philosophy about teaching other people soap making. Firstly, for the most part, DIY people aren’t our customer. If they think they can make it themselves (even though most people will buy all of the ingredients and they will sit under their kitchen sink for the next 2 years), then they’re probably not going to pay $8 for a bar of soap. But hopefully, they’ll come to us to teach them how to make soap and then buy their supplies from us! It also lets us promote our mission of teaching people about natural ingredients, which is my mission in life.
Secondly, starting a business, especially a product business, is really hard and expensive. It’s difficult to make much money doing it as a hobby or on the side. So I figure if someone has the gumption to start a soap business, then more power to them! Funny story: a few years ago, a lady (who I had never met) called me at the shop begging me to make her lip balms for her. She was a lawyer who wanted to start a lip balm business, but once she started doing it on a business level, she discovered what a pain in the butt it is to make things over and over and over and she was so exasperated and just couldn’t do it anymore. I laughed and told her she should keep her day job.
5. Tell us about a difficult period or big mistake you made with your business. What went wrong and how did you recover?
I wouldn’t call doing wholesale tradeshows a mistake, but I would say that making that leap made things much more difficult than anticipated for about a year and a half. I had done a lot of research going into our first tradeshow and read it would take a couple of shows to really get things going, but everyone hopes they’ll be the breakout hit even though you know it’s not terribly likely.
It took 3 shows for us to break even on our overall investment and we didn’t have what I would consider a successful show until our fourth, so that was a year and a half of having valuable cash tied up in trade show expenses. As soon as you finish filling orders for one, the not-cheap booth fee is due for the next one. And a lot of time orders placed at the show are spread out to fill over 5 or 6 months, so the money doesn’t come in all at once.
The reason I ultimately decided to keep doing trade shows (for now) is because it fills in some downtime in our retail calendar, since trade shows crank up during down retail months. And it has helped us grow and does help pay the bills. It makes more sense for me to try to get in front of as many stores at once than to try to carve out time to make cold calls throughout the year (I’ve tried – it doesn’t happen). But honestly, I still don’t love wholesale. It’s just not where my heart is.
The brands that seem to do the best at trade shows have much better margins and a lot more resources (money) to invest than we do and they also make it their main focus. For us, it’s only a piece of the pie and it’s the most effort for the least profit. My plan is that now that we’ve found a great location for retail store #2 and a better location for retail store#1, we will be able to put the majority of our focus into retail while maintaining our existing level of wholesale business without much more of an investment.
6. What would you say is the most valuable thing you’ve learned since you started your business?
I’ve learned A LOT of valuable things since I started my business, but probably the most valuable is how to hire and manage employees. And it’s still a work in progress, but I’ve gotten a lot better at it. Truthfully, I’m much better as a solo worker. I love bouncing ideas off of people, but I don’t thrive on collaboration like a lot of people do. I’m a perfectionist and I’m not super patient and I hate micromanaging to the point that I undermanage. If I tell you once and you don’t ask any questions, I presume that you’ve got it all under control and I end up finding out that hard way that isn’t the case.
I started my business so that I could be creative and I started making soap so that I could make soap. When I was dreaming about quitting my day job, I didn’t really consider that to grow I would have to hire people and teach them to make soap while I focus on the less fun but more important aspects of growing a business.
I have consistently overestimated my ability to do it all myself for most of my life. Bringing other people into my business — with their various personalities and their own agendas and ideas about how things should work — has been the most challenging aspect. When things are great, they’re fantastic. But I have lost more sleep worrying about how to deal with a difficult employee situation than I ever have about anything financial.
I’ve always hated the saying “business isn’t personal,” because there’s nothing more personal than working for someone who owns a small business — both for the business owner and the employee. I feel a lot of responsibility for these people who rely on me for their income and their daily job experience and I don’t take any of it casually. We spend most of our waking hours at work, so the work environment is really important to me.
Early on, more than once after a bad employee situation, I thought about shutting my business down and doing something else because I knew I couldn’t grow without help and I didn’t know if I could be happy with the drama that comes from hiring and managing people in such a small business environment. But I toughed it out — I read a lot of books and articles, talked to a lot of other business owners and learned how to do a better job in the interviewing and hiring process. I hired some great women who are committed to the company and our mission and there’s far less drama these days because I’ve become a better manager. I’ve learned to be more clear about my expectations and boundaries and it makes for an easier work environment for everyone. But I’m always continuing to learn.
7. If you had to start over from scratch with a new business today what would you do differently?
I would definitely do a service rather than a product. Something where I could work by myself for the most part, preferably from home (no overhead) and something that is more project oriented. No business is easy, but I would probably choose something easier than the one I have now. Probably something in the design realm, like web design, graphic design, surface pattern design, garden design, etc.
I’ve actually considered each of these careers more than once during tough times with Mama and I’ve even taken a few classes. But at the end of the day, I keep going back to the fact that I have this business that I’ve invested a lot of time and money into, not to mention my heart and soul. And we continue to grow year after year. I love this business and what we have created and the women who work for me and the customers who support us, so I hope I will have the good fortune to be able to continue doing it and growing for a long time.
March 24, 2014
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My partner Matt and I have been in the clothing and accessories business for several years, consistently selling hundreds of thousands of dollars worth of product that we genuinely like. By all accounts this sounds like success, but honestly we work a ton of hours and the income-to-effort ratio is really not to our satisfaction. Things have shifted very recently though and I’m thrilled, though you might be surprised at how.
We’ve started selling clothing and accessories we honestly do not like and would not wear, and we’ve been selling a lot of it every single day since we started doing it. We opened a second online store and started offering trendy t-shirts and accessories with cliches about keeping calm and mustaches. This is a radical departure from our usual design work, which features clever humor paired with well-executed original illustration. We prefer the latter, meaning it’s what gives us joy and constitutes what we ourselves would wear. That said, I have no problem with our new online store. I’m not “doing what I love” — I’m doing what’s profitable. And no, this doesn’t make me a “sell out” — it makes me a successful entrepreneur. I’m doing what’s extremely easy for me and what I know how to do really well as a professional. I’m providing a product people want to buy at an affordable price point, which is a win for me and my new-found customers. If you think less of me for doing this, that’s fine. I’m not looking for anyone’s approval; I’m looking to pay my bills.
There is a pervasive and toxic ethos in small business culture (especially in creative small business) that you should do what you love and love what you do, and that by sticking to your artistic principles your market will eventually “find” or “discover” you or your brand and catapult you to success while still retaining your creative credibility. But if you capitalize on a trend or simply do something you’re indifferent to for profit, it’s seen as less than desirable, or even worse, people will tell you you’ll fail for doing it. I’m here to tell you this is WRONG and any business coach who tells you otherwise is LYING. This touchy-feely, start-with-why, follow-your-dreams-and-money-will-follow fairytale sounds good, but it’s NOT practical and it leaves no room for discussion of important matters that determine profit, like discovering marketplace inefficiencies and exploiting them to your advantage. Running a profitable business is not about YOU. It’s about making money, and that means it’s about selling what other people want to buy, not what you want to buy.
The “do what you love” mantra is a recipe for disaster (and also classist). It’s what keeps starving artists starving. If doing what you love doesn’t earn you money and doing what you’re indifferent to is frowned upon, you’re stuck. Even worse, that type of failure is an indictment of you personally. You were selling YOU (in the form of your love, your passion, etc.) and it didn’t work, therefore you suck. Don’t get me wrong, doing what you love is great! But strict adherence to this kind of mindset should only be expected in the realm of hobby, not the reality of a for-profit business. If what you love and what makes you money coincide, that’s great, but it’s absolutely not necessary and it’s often not possible.
I have to say, moving to Los Angeles really crystallized my thoughts on the “do what you love” ethos. The Los Angeles economy is primarily based on creative work. This city is home to actors, writers, set designers, cinematographers, costumers, artists, comedians and other creative professionals from all walks of life. Since moving here I’ve met so many talented creative professionals that blow me away.
While many of these professionals do what they love, they also do what pays the bills, and the best part of being in Los Angeles is that this is considered the norm. No one here is going to look down on you from behind their Urban-Outfitters-approved-eye-glasses-as-a-fashion-accessory. The comedians you think are so smart, clever, funny, and edgy make extra cash doing punch-up for movies you think are stupid. The illustrators you think are so mind-blowing that got featured in Juxtapoz or Hi-Fructose are making extra cash freelancing for Disney and Nickelodeon and The Cartoon Network. This is talked about openly and with no shame in the creative community here, but it’s a reality that’s largely ignored by many aspiring creative professionals.
The major difference between a hobbyist and a professional is that hobbyists are doing something they enjoy and professionals are doing something that pays their bills. If doing what you love isn’t paying your bills, you’re not a failure; you just haven’t started doing what’s profitable. If you want to earn a living doing creative work, think about what people will pay you the most for, NOT what you most enjoy doing. Doing what’s profitable (even if you personally do not find it interesting) doesn’t make you a fraud — it makes you a smart business person.
February 4, 2014
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Every day I get sales calls and emails. Most of them are asking me for money right off the bat and if I said yes to them all I’d be out of business. Whether you’re selling manufacturing services, web hosting, or even your product line wholesale the biggest worry your customer has is that dealing with you might lose her money. I’m not buying ad space on your blog because I might not get any sales and you still get the cash. I’m not buying your product to put in my store because my customers might not buy it from me and then I’m stuck with it. I’m not manufacturing a new product in your factory because it might not sell and I’m stuck with that inventory. That’s the kind of thought every customer has when you try to sell to him or her.
The good news is there are ways you can eliminate this worry from your sales pitch. If you’re 100% certain your customer WILL benefit from your product or service, offer to prove it to them. Here are a few ways you can do it:
1. Money Back Guarantee
If you’re certain your product will sell in a store, make that promise to a potential wholesale customer. Next time you’re talking to a boutique owner you want to close, tell her you’re so sure your product will sell that if she’s not happy with the sales after 30 days you’ll send her a prepaid mailer to return any unsold merchandise and issue her a refund for those items.
This will help ease your customer’s mind because now she knows she can’t lose money working with you. You can try this approach with service based offerings too. If you can’t get people to buy ad space on your blog offer a money back guarantee on the ad space. If you are confident your advertisers will make money working with you, you shouldn’t have any problem with this and it will get you a lot more “yes”.
2. Partnership (We make money if you make money)
Selling something your customer pays for before she sees any benefits is difficult. Another way to circumvent this risk is by offering an arrangement where you only make money if your customer makes money. This is the model Square has adopted. This credit card processor provides its customers free hardware and comes with no service charges. The only fee Square charges is a percentage of sales. So if Square’s customers are selling products and benefiting from their service, Square gets paid. If the customers aren’t selling anything, Square gets nothing too.
You can use this approach for product-based businesses too. If there’s an online retailer you’d like to work with offer to drop ship products as their customers order. That way the online retailer doesn’t have to buy any inventory up front. If the products sell, you and the retailer make money. If the products don’t sell no one loses anything.
This is actually the model I use for my t-shirt printing service DropShipDTG. Since we print t-shirts for designers as orders come in, there’s no need for the designers we work with to spend any money up front. We only make money once they’ve made money.
3. Free Trial
A free trial is a great way to allow a customer to try before they buy. If you’re selling a service, offer that service for free for a week or two so the customer can decide if it is something worth paying for. If you’re selling a product you could consign the items to a retailer for a short period so they can make sure your product line sells before they spend money on it.
This business model is also starting to become trendy with web design/hosting businesses. You’ve probably seen commercials offering to build, host and market your business website for free. The idea is that these all-in-one service providers will do all the work and if you are happy with the finished product you pay them, if you’re not you don’t.
The biggest catch with removing risk from your sales pitch is that you have to be really confident that you’re selling a product that’s going to truly benefit your customers. If you’re just out for a quick cash grab and don’t care about the success or failure of your customers, not only will this approach fail, you probably won’t stay in business very long.
Have you come up with a clever way to remove risk for your sales pitch? Tell us about it in the comments below 🙂
January 23, 2014
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In perusing Etsyology, you might get the impression that bigger is better. This site displays statistical data on sales activity on etsy.com, and offers a fascinating view of what makes for a successful shop and what people buy. One thing you’ll notice on this site is that many of the shops with the most sales also have the most products available, giving the impression that bigger is better. The more stuff you have for sale, the more orders you get, at least that’s how it appears. Is that really true? Let’s discuss:
1. The Long Tail
In terms of retail strategy, the long tail refers to selling a many unique items with relatively small quantities sold of each. This is the strategy used by many of the high performing shops on Etsy, and no doubt retailers all over.
What are the advantages of this retail philosophy?
– It allows you to have something for everyone. If you make posters and you’ve got posters about dancing, beer, baseball, cookies, etc. then regardless of a person’s interests, you are likely to have a product that suits them.
– Metaphorically speaking, this approach is like buying many lottery tickets. The more tickets you have the more likely you are to win. Simply having a lot of stuff on Etsy or Amazon or the internet in general means there are more chances to get orders.
So what’s the downside to this approach?
– The obvious big problem with this approach is that it requires you to design a lot of items AND stock a ton of inventory! It’s a big job to offer something for everyone and not everyone has the space to stock so much product or the creative juice to design a zillion things, especially products the designer may not be passionate about. This approach is well-suited to products that can be made-to-order, but might be a real headache if your product has to be produced in bulk.
– The other drawback of this approach is that is may detract from brand cohesion. If you want to build a brand that’s all about food and cooking, you can’t start making products about baseball and robots and kittens. It would detract from your singularly focused brand identity.
So who should employ this type of strategy?
If doing a lot of online sales volume is your primary goal this strategy can be great. It’s a proven way to make money selling stuff online and if you care more about bringing in the cash than following your vision this could very well be the way to go.
2. Keeping it Short and Sweet
If your goal is to keep a tight cohesive brand offering something for everyone may not be ideal for you. You may want to keep your brand focused on a specific theme or aesthetic and offering 1,000 different items may not be possible.
What are the advantages of this approach?
– Keeping your product offerings limited means you can maintain a cohesive theme or aesthetic for your brand. This may be especially helpful if you want your brand to be known in the brick and mortar world. Think about brands like Sanrio, Ed Hardy or Paul Frank. All of their products have a very similar look that’s easily identified with those brands.
– Keeping a limited selection of products also makes it easier to manage and stock inventory. If you have a product you have to manufacture in large quantities to make your margins, it may be necessary to limit your product selection. For example if you design shoes and your shoe manufacturer requires you to order 500 pairs of each kind of shoe you may not want to have 100 different shoe designs.
What are the drawbacks of this strategy?
– Not everyone is going to be your customer, in fact, most people won’t be. So you’re going to have to work extra hard to connect with the people who are. You’ll need to think more in terms of relationship-based marketing. You may not sell as much volume online as other online shops because you can’t sell to everyone.
– Since your product offerings don’t appeal to everyone, you’ll need to make sure the people who are a fit for your brand really love your product line. You’ll need to produce more “hits” to make sure everyone who might buy your product will buy it. For example, if your brand is all about birds you better have some of the most amazing epic bird art ever so that every bird lover under the sun will definitely want your products.
Who should employ this strategy?
If you are more interested in wholesale than online retail this approach may be a better fit for your needs. This strategy also makes more sense if you are trying to maintain a consistent theme or style for your brand. If your products have to be produced in high volume before they are sold this approach may be your only option.
January 22, 2014
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Pop up retail events are a major revenue stream for my company. We sell our products at all kinds of events such as street fairs, comic cons and festivals. A large part of our success with pop up retail has been booth set up. Here are some of the most important elements of our booth:
1. Awesome Signage
You can’t sell products to people if they don’t notice you, that’s why an eye-catching outstanding display is key. Make sure your booth is tidy, well-merchandised and easy to browse. You want your customers to be able to see all the product options, pricing and the brand name itself pretty easily.
When we exhibit at shows we use a large logo banner in the front of our booth and display pictures of our best selling designs right up front. That imagery lures people into our booth and gets them to shop. Having our signage front and center means we can grab the attention of passersby and help them decide that they do want to stop at our booth. They don’t have to get close to get an idea of what we sell.
2. Loss Prevention
It’s a sad fact that sometimes people steal, and as a small business that can be a huge problem. It’s a good idea to merchandise your booth in such a way that stealing from you would be hard. If you have products that customers can touch and pick up, make sure they are all within your view so you can keep an eye on them. For more expensive items you may want to have them in a display case so people can’t pick them up and walk off. Sometimes when I do conventions other exhibitors have their booth so covered in products that they can’t possibly keep an eye on everything, making them a target for thieves.
When we exhibit at shows we display our messenger bags clipped to the side of the booth so they’d be hard to grab and run off with. We keep our tees neatly folded in in shelves behind us so customers can’t just grab them. We keep lower dollar value items like keychains and pins on our table, but that means fewer items on the table to steal and the items that are there are low cost items that wouldn’t be a nightmare to lose.
3. Marketing Materials
Exhibiting at shows should be as much about marketing as it is about selling your product. We maximize our exhibiting experience by having a newsletter sign up at our booth and giving out fun free swag with our branding.
I’ve said this before but it bears repeating: do not give out swag that just has your info on it. People don’t keep business cards or a vinyl sticker with just your logo (unless your logo is super awesome, like the Johnny Cupcakes logo or something).
When we do shows we give out vinyl stickers featuring our cute characters like Fuzz Aldrin. Our url is in the bottom corner but the focus is on the art and it gets people to take these stickers and keep them. They end up on skateboards, car bumpers, laptops and other places they’ll get seen which is a great advertising tool for us. We also hand out funny comic strips that people keep and hang up at home or work.
We give out all this free swag that people are happy to take because it’s cute and funny. We are happy to give it away because we know it will help them remember our brand. Even if they don’t buy today they might buy in the future or send friends our way.
4. Well-Organized Inventory
When you’re busy at a show the last thing you want to do is root around for inventory under the table. Having your inventory organized helps get customers in and out faster and helps you restock displays quickly.
We keep our shirts neatly folded in stacks sorted by design and then size so we can easily find a large mens Fuzz Aldrin shirt or a small ladies Unicorn Ranch shirt in a few seconds. We even organize our stacks of shirts by color so we know all the black shirts are on the right and all the jewel tone shirts are on the left.
Traveling with items like clear plastic storage boxes of varying sizes helps keep like items together and makes it easy to see what’s in each box. Even separating like items by size or style into large ziplocks helps avoid digging around for things you need to find quickly.
Got some favorite tips for exhibiting at shows? Share in the comments below.
December 11, 2013
If you started your business purely because you really enjoy pulling a squeegee across a mesh screen or manually operating your vintage letterpress, this post isn’t for you. If you started your business to make money, then listen up! Every day I talk to artists who are convinced some aspect of their production methods or manufacturing materials is a must-have and that their customers care deeply about this thing they’re so stuck on.
Here’s the reality: Most of your customers probably aren’t married to wearing American Apparel t-shirts. Most of them don’t know what the heck “giclee” means. They cannot tell the difference between a notecard set that you made by hand with a letterpress vs. the set that was mass-produced using modern machinery to produce a similar effect. Your customer doesn’t view your products through the same lens as you. More often than not they are buying a product because they like the design of something, not necessarily due to the specific components or manufacturing techniques used in its production.
When evaluating your product manufacturing methods and components, ask yourself these questions:
1. What Will Make Me More Money?
My partner and I sell t-shirts and accessories and we do not print on American Apparel; we print on blank shirts that cost about half as much as American Apparel. They’re perfectly nice and soft and well-made with a great fit, but don’t have the hipster cache of American Apparel. We sell thousands of shirts at live events every year and no one has ever decided not to buy a shirt from us because it wasn’t American Apparel. It’s very rare that we run into someone who has an opinion on our blank shirts one way or another. Mostly our customers are looking for a comfortable tee with a good fit that features a good design that speaks to them in one way or another. We also very rarely run into a customer who doesn’t like our shirts because they want a thicker, heavier weight shirt — it can happen, but it’s extremely unusual. We don’t expect to please everyone, so we try to design our products based on what will please most people.
If we chose to print on a more expensive blank shirt because we just assumed our customers insisted on it we’d make less money. We’d either have lower margins (less money for us) or we’d have to raise our prices (making our price point too high for many customers — again, less money for us). I’d print on a more expensive blank shirt if I had some evidence to support that my customers really wanted shirts made of organic cotton or a certain brand of shirts, but it’s simply not the case. I see no reason to adversely affect our income to add a product feature that the overwhelming majority of our customers don’t care or ask about.
2. What Is Scalable?
When you started your business, maybe advertising that all your products were handmade by you sounded like a charming selling point. But what happens when your order volume increases or a department store calls wanting to place a large wholesale order? Is it realistic for you to keep making everything yourself by hand when you have to sell thousands of pieces every month? Even if you could keep up with all that production, is that going to give you enough time to tend to the other parts of your business, like new product development?
A product is not inherently bad because it was made by a vendor or employees, and your customers certainly won’t enjoy the product any more or less based on who physically made the item. If your creative business is your livelihood (or you want it to be), think about how you’re going to keep up with production as demand increases.
3. How Do You Know What Your Customers Really Want?
Are you assuming your customers want you to use specific production methods or components or did you come to this realization based on their feedback? How do you really know your customers would *only* buy posters you designed if they are screen printed vs. printed digitally? How do you know your customers prefer a more expensive piece of jewelry with fine gem stones instead of a more affordable piece with faux stones? Selling at live events is a great way to get customer feedback in real time. What are your customers focusing on about the products? Are they actually interested in the manufacturing process? Are they more concerned with price than the quality of the materials? Are they buying your items specifically because they are handmade by the designer or 100% organic or 14 karat gold? Take note of what your customers seem to like about your items when they’re right in front of you, and think about ways you can lower your manufacturing costs while still producing a quality finished product your fans will enjoy
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November 21, 2013
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I recently stumbled onto a thread on a marketplace website where the merchants were complaining that customers said the pricing on the marketplace was too high. Some of these merchants were imploring the site owners to re-brand the marketplace as a place to buy handmade and small business products, reasoning that customers should be willing to pay higher prices for handmade/small business because they shouldn’t support evil, corporate, big box stores and their dirt cheap prices.
On the face of this, it sounds good. But the reality is that all things being equal, people are motivated by price. While this marketplace site has a lot of handmade and small business products, the marketplace is dominated by products designed around the pop cultural properties du jour such as Breaking Bad, Dr. Who, Adventure Time, etc. And right now, that stuff is absolutely all over the place. You can get that stuff at Walmart, Target, Amazon, etc., not just handmade versions and not just small business versions.
Here’s a fun thought exercise: imagine I have a Dr. Who fan on my Christmas list and they could use some art on their walls. If I can buy a Dr. Who poster on Amazon for $6.75, why would I go to another marketplace website and pay $15 or $20? Sure, maybe the $20 Dr. Who poster has a different design and was silk-screened by hand in a hot, uncomfortable basement studio, but at the end of the day if I’m shopping for a Dr. Who poster and I can get such a poster for less than $7.00, why would I pay two or three times as much for a fairly similar product?
Being a small business or a purveyor of handmade goods is not compelling enough of a reason to get people to buy from you. You need to either compete on price or offer something those other stores and merchants can’t offer. I personally prefer to offer something no one else has. I prefer this for a few reasons:
1. It’s better for my brand
If I were selling Adventure Time tees, I’d know customers were buying my products because they like Adventure Time, not because they like my brand. When that customer walks down the street, they blend in with everyone else. Their shirt would look pretty much like everything passersby have seen a zillion times.
Instead, I know customers are buying items from me that only I’ve designed. Those designs don’t look like everything else in the vast consumer market, and will prompt passersby to ask those customers “where’d you get that?!” Every time I sell another tee or hoodie or messenger bag featuring my art, it’s one more person that’s going to be out in the world showing off my totally original material to everyone who passes them, thereby growing MY brand, not someone else’s.
2. I can set my prices where I need them
My company is the only source of products featuring my art. That means I get to set the price and I don’t have to sell my products on razor thin margins. My customers aren’t going to find a vastly cheaper Fuzz Aldrin
shirt from another company because Fuzz Aldrin is my creation. That means I get to say what a product featuring Fuzz Aldrin is worth.
By contrast, if I were selling Breaking Bad themed products I’d have to do a fair amount of research on my competition and see how others have priced Breaking Bad merch so people will consider my products. Instead, I’m selling products featuring my own creations and it allows me to justify selling $25 shirts instead of $10 shirts. It also helps normalize the idea that independent artists are the place to go for unique, new, original material and that unique, new, original stuff is worth more money.
When even one company touts itself as being the product of an indie artist or purveyors of handmade goods but then sells products featuring famous corporate characters like Batman, Mickey Mouse, etc., it’s bad for ALL handmade/indie artists. It conflates cheap, mass-produced, unoriginal products with the concept of handmade, independent art. It trains consumers to expect everything should be cheap and unoriginal because they see that from companies billing themselves as handmade and/or indie artists. It blurs the distinction between Walmart and Etsy.
So much of my own job at Ex-Boyfriend has become consumer education. I’ll be exhibiting at a festival and someone will ask me “what’s this from?” I have to explain that it’s from my imagination. It’s sad that people are so used to homogeneity in the marketplace that they assume everything is from something else. Usually people are delighted once they learn that they’re seeing something that’s awesome all by itself without being attached to a TV show or movie.
3. I get to help shape the culture
I don’t know about you, but I’d rather be the Beatles than Beatlemania. I’m not interested in being a cover band; I want to inject my own humor and aesthetics into the cultural zeitgeist. I can do that because I’m creating original material. If I just designed products around material other creators produced I wouldn’t be adding anything new to the culture. I’d just be trying to capitalize on the success of another creator.
Think about the successful artistic brands you know of — Sanrio, Paul Frank, Johnny Cupcakes, Blue Que, etc. They didn’t achieve their success by glomming onto the meme of the moment; they created their own universe, their own brand, their own artistic vision. They didn’t follow the trends, they set them. This is really what all creatives should be striving to do because it results in a world that’s filled with more interesting, original, new material.
4. Getting sued sucks
Riding the coattails of other creators is a recipe for legal trouble. Intellectual property owners are well within their rights to sue anyone who sells products featuring their trademarked or copyrighted material without permission. When they do decide to get litigious, IP owners can sue for thousands or even millions of dollars. And if you sold infringing products to a store, that retailer could get sued.
To me, it’s not worth the risk to my own business or my retail partners. I’d rather know I’m free and clear to make money off of my art in any way I like because it’s mine. I can retail, I can wholesale, and I can license, and I never have to worry about someone telling me I don’t have the right to do that.
If you’ve been selling products featuring other creators’ characters, know that you don’t need to do that. People absolutely will pay a premium for good original products. I know it’s true because I sell thousands of my own products featuring original material every month. Think about what you’re trying to accomplish. Do you want to make a quick buck and keep your fingers crossed that you don’t get sued, or do you want to build a brand with staying power and put something new into the world?