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….

Balancing Your Life

Striking a balance between family, work & personal time has by far been one of the biggest problems most businessmoms have. Most self-employed moms usually have a hard time separating work and home life, especially if they work at home. You tend to have that guilt that you’re not paying enough attention to your child if you’re working, or you’re not working hard enough if you’re playing with your kids. I know this situation all too well since at one point, I was having to juggle between my responsibilities in owning & operating a restaurant that was open 14 hrs a day, 7 days a week, a fast-growing online business, and 2 kids under 2. A lot of people would always ask me “How do you do it?” or “How can you manage all that?” Easy. I can’t. I was a total wreck and felt like a zombie most days.  Between employees calling in sick because they had a little too much fun the night before, constantly trying to increase production for Swaddlebees, and keeping the house clean enough so we actually walk on floors without “stuff” sticking on our feet, it was a little too much between just me, my husband and our kids.  Dinners at home usually consist of reheated leftovers from several nights ago.   Sometimes it’s even cold cereal (which my kids actually like). Even though we had a babysitter that worked 4 hrs a day, 4 days a week, that wasn’t enough and I ended up doing the other half of my work from 9 pm-2 am.

Needless to say, I wasn’t the happiest person at all.  I was doing a lot of tasks I hated to do, kept getting into situations I would not rather be in, and couldn’t enjoy my family and our life.  Something had to change.  I was putting everybody else ahead of me that I had no energy at the end of the day left for myself.

Most stay at home moms open up home businesses so they can stay home with their kids while hopefully earning themselves some money.  And a lot of times, if they do it right and the business grows, they end up spending less and less time with their kids and more on the business–which totally defeats the purpose of why they started the business at home anyway.  We all need to always focus on what is really important and what really makes us happy.  It’s hard to be a good mom to your kids if you’re stressed and overworked.  If your line of work makes it too hard to keep your life balanced, you may want to consider doing something else that will make it easier on everyone, cut back on your work…or really do some heavy-duty prioritizing.

I believe one of the keys to living a balanced life is to always be striving to find ways to focus your time and energy on the things that matter.  In most cases, YOU are what matters most.  Force yourself to eliminate unnecessary time-wasters.  80% of what most people spend their time on are not important.   It’s amazing to realize that you can really do something that would normally take you an hour and do it in 15-20 minutes if your life depended on it.  If you only had 2 hours to work (because that’s how long your baby will nap), do the most important things first.  Quit reading the news, tabloids or going to online discussion boards.  Quit complaining about your customers, or how much work you have to do.  You don’t have to answer each and every email either.  Automate as much of your tasks as possible.  And set yourself a working deadline and stick to it.  If you have unfinished tasks, don’t worry about it.  Do it tomorrow.  Let the laundry rot for another day.  Get on with your life.  Go play with the kids, eat some chocolate and snuggle with your spouse.