Selling Your Soul to Big Box Stores - Part 2

When you start out as a small company from your basement/garage, getting your products into big box stores is like a validation that “you’ve arrived”, or that you’ve made it.  You’re no longer some unknown peddler because you’re now shipping products out by the truckloads.  You also think that having your products in all the thousands of chain stores all across the country translates to multiple 0’s added to your bank account.

Getting into big box stores can either make you or break you.  Unless you have a really low cost item that is easy and cheap to mass produce, doesn’t take a genius to figure out what it is, and have investors or a really big trust fund to back you up, you might as well forget it.  One of the biggest chain stores in the country has been known to cause more business bankruptcies in the U.S. than anything.  A friend of ours got an order for 4,000 bags from one of the baby chain stores.  Because she was having her stuff made in China, it took over 4 months for her to receive the products.  By that time, the chain store decided they didn’t want them anymore.  What do you do now with all these bags that had customized packaging just for that store that decided to change their mind?  When you have products made in China, you have to pay for them upfront.  Double ouch!

Cloth diapers, at least the ones we make, are probably not best sold at chain stores.  It’s like having a registered nurse perform brain surgery.  There are a lot of variables in making the system work, and the concept is still too new to be adapted by the masses and their automatic gag-reflex at the thought of cloth diapers.  And I’m not sure it would be possible to require the staff of a chain store to educate themselves in how to use our products so they can answer any question a customer might have.  I think that would be asking too much of them.

After reviewing everything we have to do just to get into the big box stores and a lot of soul searching, none of it felt right.  The stores don’t have to do anything but they have to get tremendously lower pricing just because of who they are and the clout they have.  They don’t have to market your products but they get advertising allowances.  They don’t have to have a clue how to use your products, but they’ll probably get the sale anyway since the customer (that doesn’t know how to use the product either) can just return it and claim it as defective if they can’t figure it out.  And if the store chain decides your product isn’t selling fast enough, if at all, they can just drop you like a hot potato and either clearance your products or send them all back to you.  Nothing personal, it’s just business.  You’re just a commodity item to them.  It doesn’t matter that you just put up your entire life savings to be able to afford that production run to fill their order.  That’s not their problem.

Then I look back at all the retailers we already have and those who’ve supported us right from the start, from Australia all the way to Iceland.  They juggle trying to teach a new customer how to properly use and wash our products with a baby on their hip.  They educate other moms about the benefits of cloth diapering via email while nursing a newborn at their keyboards.  They are constantly thinking of better ways to serve their customers while cooking dinner.  Sometimes, they will forgo buying their kids little luxuries just so they can afford to buy the inventory to fill a customer order.  They either stay up late past midnight or wake up really early to answer emails and pack orders just so they can spend the rest of the day with their kids.  If a customer is having trouble with any of the products they purchased, our retailers will troubleshoot the problem with them until they get it right.  They take full responsibility for any of the inventory they decide to stock in their store and only purchase what they can sell.  They market themselves, their store and the products they carry using innovative practices and by building their own followers and connecting with their own communities.  They can make a much bigger difference in the life of one mom and their own families than any of the big box stores can.  They’ve supported us through all the ups and downs, product revisions, price changes, shipping delays and backorders.

Can it get any better than this?  I don’t know.  But how can we risk taking sales away from them and giving to a faceless corporation that may not really care?  There’s really no reason for us to get into the big box stores.  The grass isn’t always greener on the other side.  We’re still growing by leaps & bounds doing what we’re doing.  We’re able to provide jobs and a means of income to a lot of people who truly believe in what they do.  And we’re creating products that help families without having to compromise anything.  While world domination may sound attractive and what a lot of companies choose to aim for, we prefer to practice concsious capitalism.  Right now, I don’t see the point in reaching for the stars when we already have the whole world underneath & supporting us.

Selling your Soul to Big Box Stores - Part 1

Early last year, we felt as though the natural progression of the business was to start getting into big box stores (Target, Walmart, Babies R Us, etc.).  We felt we were ready for it.  And we hear a lot of people saying that maybe more moms would consider cloth diapers if they were in chain stores.

We hired a consultant whose job was to introduce us to the decision-makers for the big box stores, and to give us advise on how to properly present ourselves to the giants.  To be able to get in the game these big players played, we had to figure out the following:

1. Pricing. First thing on the agenda was to create a price sheet with multiple pricing levels.  The bigger the chain was, the lower prices they got.  We also had to factor in giving advertising allowances, extra markup for reps, etc.  By the time everything was said & done, we pretty much had to sell our products at a much lower price than what we were currently offering our retailers.  If we were to continue having our products made in the U.S., we’d be making a whopping 50 cents on each diaper that would retail at about $25.  We might be able to squeeze $1 if we really tried.  We’d have to “dumb down” our products by using cheaper materials if we wanted to make more money.  But if we were going to do that, we might as well just have them made in China.

2. Packaging. The product has to “pop” when placed on store shelves.  People will have to quickly understand what the product was just by looking at it.  I’m not sure if you can really put everything you need to know about cloth diapers on just the product’s packaging.  It’s not exactly as self-explanatory as toothpicks or socks.  Since we typically just sell to online retailers who mostly work at home, there was no need for any kind of elaborate packaging.  Those that had brick & mortar stores pretty much had their own way of displaying our products.  There was no need to have a ’self-explanatory’ type of packaging because the store owners were the one telling their customers how to best use our products.  But if we wanted to be in the bigger chain stores, we had to have standardized packaging (singles, 3-packs, 12-packs), UPC codes, lot numbers, case packs, pallet packs, and the list goes on.  We will have to invest A LOT of money in packaging.  Not just for the products that go on the shelves, but even for the boxes that the products will be shipped in.

3. Production. We needed to make sure that we had production ramped up to a level where we’d be able to fill a big order in a matter of weeks.  This means that we would have to carry a lot of the materials in stock & ready to be cut & sewn at any given point in time.  Most of our materials are custom-made for us and takes 6-8 weeks to be made and shipped.  We usually only keep about 3-4 month’s worth of materials, but if we were to get a big box store account, we’d have to carry maybe 3 times that amount.  But that is if we kept production in the U.S.

4. Customer Service Issues. We all know that big box stores have very lenient return policies.  While most of our online retailers carry a 30-day return policy on unwashed & unused items, big box stores typically have 90-day return policies with no restrictions.  This means that you can turn a nice-looking shirt into a dish rag, tell the store clerk there’s something wrong with the shirt, return it and get your money back as long as it’s within 90 days.  The store takes it back, dumps it into a box, sends it back to the manufacturer and gets a credit back for all the returned items PLUS the cost of shipping it back to you.  One of the major online stores that approached us had a policy that we needed to respond to any customer email sent through their store within 24 hrs (regardless of weekends or holidays) or we get fined $5.  Product returns/exchanges also needed to be responded to within 24 hrs.  Otherwise, they will respond to the inquiry themselves and charge us for whatever it costs them to resolve the problem, plus $5.  So if we decided to take off for some federal holiday, we’d have fines gallore to come back to work to.  Basically what all this boils down to is that these big merchants are absolved from any kind of responsibility for your product other than to put it in their stores.

5. Payment. We would need to be able to float several tens and even hundreds of thousands of dollars worth of invoices for at least 30 days.  AT LEAST 30 DAYS.  We’ll need to give at least 2 more weeks for late payment.  Remember all those customer service issues I just mentioned?  They don’t bill you for them, they take it out of the check they’re supposed to pay you.  One manufacturer we knew that had her products in a baby chain store said that a lot of times, it felt as if she was paying them to sell her products.

This is by no means everything that we needed to do, and just part of an extensive list of things we have to comply with.  As we were trying to work through all this and evaluating our sanity for even considering it, representatives from the big box stores started approaching us.  Even major online retailers started inquiring about adding our products to their site that gets tens of millions of visitors a month.  Holy crap!  That’s what we wanted, right?  We stalled on the vendor agreements and after several months of talking to other manufacturers, I seriously don’t see why anybody would want to put their products in the hands of the chain stores.  Sure you’d get more product visibility, and the prestige in being able to say your products are in chain stores, but at what cost?  It almost feels like you’d have to sell your soul.

To be continued….

Marketing to Celebrities

A couple of years ago, I thought it would be really cool if we could get our products into the hands of celebrities.  We had the opportunity to participate in one of those celebrity gift baskets and swag events.  I thought if only we could get it to some really popular celebrity, they would surely think our stuff was cool.  Hopefully they’ll use it and get some paparazzi pics taken with our stuff on their babies.  Then everybody will want to buy our diapers, right???  Well, not exactly.

For those who aren’t familiar with what a celebrity swag event is, it’s basically an event where a coordinator (usually someone well connected with the entertainment industry) puts together a bunch of vendors and invites celebrities to the event to get stuff from vendors for free.  It’s usually held at a nice hotel, or an exclusive venue where the crowd can be controlled.  This gives the vendors a chance to meet one-on-one with the celebrities and get their pictures taken with the celebrities holding their products.  This is very common especially around award ceremonies.  The cost to participate in these things are in the several thousands of dollars, depending on the exclusivity and the type of celebrities attending.  That is on top of all the products you will be giving away, plus travel expenses.

Celebrity gift baskets, on the other hand, can cost a lot less.  These are usually given to celebrities having babies, birthdays, winning an award, etc.  Your product is pooled in together with other products in a huge gift basket and sent to the celebrities.  You then get the honor of being able to say you gave so & so one of your products.  Then you sit and wait and hope they’ll talk about your stuff or have pictures of your stuff being used by them.  I’ve not personally participated in gift baskets, only because so many people are promoting it and saying the same things that it starts sounding like a used car salesman pitch to me.  It starts out just a few hundred dollars or even a couple thousand, then if you want to be the only product of its kind in the basket, it costs more.  If you want your products over in the front of the basket, it’s additional.  There’s no guarantee the celebrity is actually going to use them.  They may have pictures of the recipient holding the basket, but that can also be extra $$’s.  For all the exclusivity you pay for, do you realize there are probably a dozen other promoters putting together gift baskets for the same celebrity?  Surely Angelina Jolie won’t just get 1 gift basket after having twins.  Celebrities receive so many of these gift baskets that a lot of them are just donating them to charity.  There goes all your money.

I have only personally participated in one swag event, and that was enough for me to say “never again.”  First of all, I’m probably not the right type of person to be participating in these things since I do not follow the who’s who of the celebrity world since I don’t watch a lot of TV.  Ever since having kids, the only celebrities I know really well are cartoon characters.  Secondly, I’m such a dork when it comes to mingling and socializing with strangers since I never really know what to say.  I mean, what do you say to a really famous person??  “umm hi! want some diapers?”  I couldn’t even get the nerve to ask to have pictures taken since I felt like that was in some way exploiting or taking advantage of their status.  The only pictures I have were those where the celebrity themselves asked me if I wanted some pictures taken.  How pathetic is that?  Anyway, what I also realized is that most of the people attending these events are assistants, B/C-list celebrities, and a lot of “unknowns.”  I was told that the really well known celebrities and A-list types don’t attend these things because they don’t want to be seen taking stuff for free.

At the end of the event, I just felt disappointed.  While we did give away a few hundred diapers, a lot of people took them just because they were free without really understanding how they worked or what the heck they were.  Of course, we also got the all-too-famous reaction to cloth diapers “Eeewwwww, gross.”   We did meet some famous people.  Big whoopee.  After spending several thousand dollars and giving away all those minky diapers, is that it??  All those people that took the diapers, are they even really going to use it or are they going to trash it?  Why am I giving away all these diapers to people who can very well afford to buy them on their own when there are cloth diapering moms out there who can barely even afford to buy prefolds?  Why am I giving away all these diapers to people that don’t really care when there are hundreds or even thousands of moms out there that would be tickled pink to get a minky diaper for free?  Tell me again why I decided to do this?

What if I spent the same amount of money and gave away all those diapers to OUR CUSTOMERS–to the very people that it mattered to, to those that would appreciate what it is??  I’m sure marketing to celebrities may have worked for some people.  It probably pays off really well for those who have really deep pockets.  But when you’re a start-up, a $2,000 marketing budget won’t take you very far in trying to hit on the stars.  An actual celebrity endorsement costs a few hundred thousand dollars.  But that same $2,000 will definitely get you a long way when you give it to your customers.

This brings me back to one of the most basic things you have to know in business–know who you’re marketing to and who your customers are.  Who are the people that will most likely buy your products?  Celebrities are definitely not our target market, so why spend so much money trying to get to them??  I don’t know, maybe I just had to experience it for myself.  I’d like to think our customers are smart people that don’t easily get swayed by what they see on TV unless it resonates with them.  So what if Salma Hayek is working with Pampers?  Does that make our customers want to buy those diapers instead?  Heck no.  They know those things don’t work as well as cloth diapers.  And they know our $32-diapers are a bargain compared to how much disposables are going to cost in the long run.

So what did I do after learning all this?

We launched Blueberry Diapers with a Buy One Get One Free offer.  The rest is history.

Goof-proof Chocolate Cake You Can Make with One Hand

This recipe is a personal favorite.  It’s very easy, very moist and versatile.  I can probably eat this all by myself in a matter of days.  I also recently found out you can make this with one hand when I had to make it for a family gathering while holding my 2-month old who doesn’t like to be laid down by herself.  As much as I pride myself in making almost everything we eat at home from scratch, so far nothing beats this recipe in terms of convenience and taste.

What you will need:

1 package chocolate cake mix (preferably the one with pudding in the mix)

1 3-oz. package chocolate Jello pudding mix (caramel or french vanilla flavor also works well)

eggs, vegetable oil & water (as the cake mix requires)

2 tsp. instant coffee (optional)

chocolate chips (optional, I like to use the mini chips)

The coffee gives the cake a rich chocolate flavor and also helps make the cake taste like it’s made from scratch.  If you like dark chocolate, you’ll want to add slightly more than 2 tsp of instant coffee.  If you don’t have instant coffee, you can use regular coffee in place of water.  Just dump everything, except the chocolate chips, into your mixing bowl and mix until combined.  Then throw in the chocolate chips if you’re using them & mix until combined.  Pour into prepared pan/pans & toss in preheated oven & follow bake times on the box of your cake mix.

Actually, pouring them into your cake pans is probably the only time you’ll need 2 hands.  If you’re making them into muffins, you can get away with just 1 hand.

You can use this cake in several different ways.  Here are just some variations:

Plain Chocolate Cupcakes (excellent if you’re adding the chocolate chips)

Chocolate Cupcakes w/ Cream Cheese Frosting

Chocolate Cake w/ Chocolate Frosting

Plain Chocolate Cake served warm w/ Berries & Whipped Cream

Better than Sex Cake  - this is actually the most requested cake at family gatherings.  They just know it as “Margarita’s Chocolate Cake w/ whipped cream”.  How do you tell a conservative southern Baptist family that they’re eating cake that’s Better than Sex? 

When Someone Steals from You

Let it go.  If it’s not a matter of life and death, or if the welfare of your loved ones don’t depend on it,  just let it go.

You may experience this at some point in your life.  Maybe a friend takes something away from you, you get robbed, an employee steals from you, you have dishonest customers trying to get freebies, somebody copies your ideas, etc.  It doesn’t take long before you start looking & acting like a disgruntled 2-yr old trying to get his toy back.

I don’t believe in fighting for the “principle” either.  It’s a waste of time.   If the other party is willing to stoop so low to take something from you in such a manner, they probably need it that bad.

Something that is truly yours can never be stolen.  You’re not any less of a person because some material thing was taken from you without your permission.  At the end of the day, if you’re still alive and well and have the people that you love most, that’s all that really matters.

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