Monday, December 22, 2008

From Basement Sewing to Big Box Selling

I wrote this article for StartUpPrincess:

Last September, I was sewing in my basement, which also served as my office, warehouse, shipping center, and business storage space. I was just grabbing my thread to start sewing a new batch of wet bags for next day shipment when my phone started ringing. This was my personal number, not the business line, so I did not answer but listened to the message being left. It was a big box store, calling because they wanted to test the Wet happened? wet bag. They wanted me to fly out to corporate headquarters and find out more information about the process.

At first I thought it was a joke, at the very least a scam. I mean, what small business gets a phone call from such a large corporation? Feeling very overwhelmed, I immediately called my good friend Marina Westerdahl. She told me I would be crazy not to go; a week later I was on a plane. I will never forget the feeling of dread upon landing. My stomach hurt, and as I was trying to hold back the tears threatening to spill any minute I thought, “What in the world am I doing?” I was still sewing out of my basement. My first professional manufacturing run was in the process, but I did not have the first clue about outsourcing the labor of my wet bags, never mind dealing with large quantities or electronic ordering. The samples I brought with me were handmade and lacked the sleek packaging of many of the other brands out there. Yet, they still committed to trying it out.

Each step of the way has been a stumbling block. I had no experience dealing with EDI, import brokers, warehousing goods, etc. It may sound cliché, but remembering to take one small step at a time has helped me get through this process. To look at the whole picture almost gave me panic attacks (and still does). Only now can I look back at how I transformed my business from sewing in my basement to dealing on a larger scale and national platform.

A few terms of interest:
EDI- stands for “Electronic Data Interchange”. It is the electronic system of communication between businesses. Purchase orders, confirmation that the POs were received, and invoicing are just a few of the things done through EDI.
Pick and Pack-the warehouse picking out the products that will be shipped
Distribution Center- big box stores move product into a distribution center before shipping it to the actual store
Import Broker- if you are manufacturing overseas, it is the person responsible for clearing your goods through customs and getting them shipped to your warehouse
Insurance-some require certain insurance protection, between $2 and $5 million is standard.

When I heard 200 stores, it seemed easy since I already sold to 50. I mean, how hard could it be to add a few more? Little did I realize that big box is completely different than dealing with boutiques or online e-tailers. For example: if I am out of a certain stock position, I backorder and ship when it becomes available. Big Box lacks that flexibility. Shipping timelines are tight and orders need to be filled on time and be complete. I never realized this before, but big box retailers actually charge you back in those circumstances. I have a good friend that shipped an entire line of calendars three days late. She was charged more for the error than she made on the item.

Manufacturing was my first big challenge. How do I find a reliable company to produce the goods? I asked friends and other businesswomen and had samples made at seven various places. Each one did not work for some reason- either the cost of the item was higher than I wanted to pay, or the sample was poor quality. After many prayers, I feel blessed that I ended up finding a sourcing company in the States that works with a manufacturer in Hong Kong. They guided me through the entire process of manufacturing to create an item that is shelf worthy.

Next was the product packaging. How could I grab the attention of customers with so many other great products on the shelf? They need to know what my item is and what it is used for immediately. I believe the time I was quoted was three seconds. I hired a graphic designer and she came up with a beautiful new design that I feel represents the product and explains what it is. This, too, had “inexperience bumps”. Testing out how large the band should be to fit securely around my product, what colors to use, where the various nuggets of information should be placed presented more challenges. Paying a designer by the hour, each change I made cost more money.

Fulfilling out of my basement was no longer a workable solution. Finding a warehouse that would deal with a small to medium size company without my getting lost in the shuffle was important to me. I needed someone that would help me understand the process and also keep me informed without having to track them down constantly. I simply do not have the time to micromanage. Finding a great warehouse took a lot of time and energy, but I am so grateful I found a reliable one with great customer service. It makes a difference.

The goods are made, the warehouse is set up. How do I get them from China? I needed an import broker. Long story short, I needed a small amount of Wet Happened? bags sent to me via airfreight very quickly so I needed to choose one. Clearing customs in one to two days was crucial to making my ship date. A good import broker will not only help clear customs, but also find the best percentage paid in terms of duties. Many import brokers I talked to were so vague about fees, bundling them up so they were hard to compare. Once I found someone that listed the fees upfront, and was willing to explain each charge and timeline, I knew I was dealing with a reputable agent.

As a recap, this is the process thus far:
Finalizing the product, what I want it to look like
PO for manufacturing the Wet Happened? wet bags initiated by me
Manufacturer makes the goods
Import Broker gets goods into the states and overnights them to my warehouse
PO sent to me from big box via EDI
Warehouse receives packing lists from EDI and sends RTS (ready to ship) notice that my goods are ready for pick up
Goods are picked up from the warehouse
Advanced shipping notices are sent that the goods are on the way
Goods arrive at distribution centers, and then they are shipped out to each individual store
I have not even mentioned trademarking my name, coming up with the funding for 9000 pieces, buying barcodes, forming an LLC, setting up with an EDI provider, and getting business insurance. I always viewed (and still do!) myself as a mom working from the basement, so I never did the things I should have done initially to protect myself. Scrambling to get this all accomplished made the costs and stress level a bit higher that business owners that already have this in place. Where to begin was sometimes the hardest part. Not even knowing what to ask for, or where to go, presented a unique challenge many days. Just when all hope was lost, I would usually find someone that knew something about the situation at hand. Ask enough people, and someone eventually will know.

Finally, the inner struggle. One of my retailers made a really great point when I was approached to do this. For my retailers, this is not a win-win situation. Once a product goes into big box, many times it loses marketability for online boutiques. I really struggled with what would happen to all the retailers with whom I had a relationship. After all, they helped me grow my business. I still am not really sure if it will hurt sales, but it is safe to say it was a big concern for me going forward with this.

It is hard to touch on everything involved, so this is just a brief overview of the journey I took. It seems like every step of the way got more involved and more complicated. Ultimately, it is easier to sell high volumes in this capacity, but it does take some work to get it all set up.
While mine is certainly not the only way to experience this process, know that if I can do it so can you! One step at a time will help get you through the maze of trying to set your business up to sell big box.

1 comment:

Kathy said...

You are such an inspiration to me! I thank God I met you! I hope you had a wonderful holiday with your family and I look forward to talking with your more after the New Year!!