July was wholesale gift show season again, and I went to Atlanta, then to my mom’s induction into the Quilting Hall of Fame in Indiana, and to Columbus to visit my friend Allison at Igloo Letterpress, then came back to find out our totes and towels were delayed again. We also exhibited at our first SF Gift Show in July; I’d had quite enough of travel and needed to get some actual work done, so Charlie went to that one.
At the same time, I was researching different fulfillment houses, trying to find a partner to take over our wholesale order fulfillment and assembly of our cards. We were running out of space in our office, and it had become clear that waiting until Q1 of 2015 wasn’t viable – we either needed to make the switch immediately, move to a larger studio immediately, or get an offsite storage space for inventory. If we were in Florida or Nebraska or basically just Not Los Angeles, we might have decided to keep doing our own fulfillment, but the real estate, insurance, and labor costs here are bananas. And leaving Los Angeles isn’t an option, due to family and the fact that I like it here.
I’d heard a lot of horror stories about fulfillment relationships gone wrong, and awful fulfillment houses, but also that the good ones were really, really great for streamlining business and freeing us up to focus on what we were best at, rather than chasing the UPS guy around our building. (We are REALLY good at that now, btw.) But a move to fulfillment is an expensive investment, and it totally changes how the business is run, so it was a pretty involved process to find the right partner. We also really wanted one within relatively easy driving distance of both our card printer and a major shipping port, in order to make it as quick and inexpensive as possible to move product to them. And, we wanted one that was within a few hours’ drive of our office.
We planned to continue shipping our orders from emilymcdowell.com and Etsy ourselves, from our office, so we knew we’d have to split inventory. (The reason for keeping retail shipping in-house has to do with the fact that many of our online customers order one card at a time, and small orders like that don’t make financial sense with a third party fulfillment model.)
By the end of August, after much research, I’d settled on a fulfillment house to take over our wholesale fulfillment starting in September. And, in August, our fifth employee, Betsy, moved from Indiana and started working with us. Betsy, I would like to publicly apologize for the insanity of your first three months of work. You handled it like a champ.
August was also the month when I designed all our mugs, which we’d originally hoped to manufacture in India and release for wholesale in January 2015. In fact, in August, I still thought we were going to be doing a bunch of our production in India. So, I booked a trip to India for October, to meet with some factories, meet up with my friends there, and, let’s face it, to meet up with India itself because India is rad.
Meanwhile, in order for outside wholesale fulfillment to happen, we needed two other things to happen at the same time: our new Shopify website had to be up and running, and more importantly, we needed an inventory management system that met all our needs and wasn’t ridiculously expensive. We thought we found one in Stitch Labs, but after purchasing it and trying it out, we discovered that it didn’t actually work with QuickBooks as seamlessly as they’d said it did, so we had to return it and start the search over.
We launched the new Shopify site in September, which for the most part was fine. Lots of work to input all our products and redo all the photos and figure out which apps we needed to add on and all that junk, but there were thankfully no major issues with it. And we were really psyched to be able to offer international shipping and mobile-optimized shopping. (As someone who lives basically my entire life on my phone, this was super important to me.)
Inventory management, on the other hand, was not so easy. We ended up failing in our quest to find something inexpensive, but did find something we thought would work (and I still think it will work, although as of today, January 28th, 2015, it is still not working). We bought software called Fishbowl for a cool $15K – and I learned that $15K, in the world of complex inventory management software, is still at the low end of the cost spectrum.
We made a plan to manually send orders down to our new fulfillment partner in San Diego, and manually track inventory between our two warehouses, while Fishbowl got up and running; we estimated that we’d be doing this for about a month, and everything would be working by the time the holiday rush hit. (HA!)
Back to our tote bags and towels. They ended up being sent on different boats, and the totes arrived first, in mid-September. By then, we were fielding daily phone calls from unhappy stores wanting to know why their orders were so late. Not a good situation.
It turns out that ten thousand tote bags takes up a lot of space. An entire 16’ Ryder truck from floor to ceiling, in fact. I know this because we had to rent one at 7am on a Saturday morning, pack it with all 10,000 bags, and drive from our office to a sewing house in south Los Angeles to have every bag handle re-sewn. At a cost of an additional 25% of the price we paid for them in the first place. (Bye, profit margin!) Yep, the bags finally showed up… with all the handles falling off.
If this blog post were a text, this would be a good spot for the laugh-crying emoji. This would also be a good spot to point out that my team of employees is fucking awesome.
The silver lining here is that Los Angeles actually has a large piecework garment industry, so I was grateful for the fact that it was even possible to send the bags out to be re-sewn. A friend of Sara’s found us a place that turned them around in under a week, which was fairly miraculous, but then they had to be sent down to San Diego, QCed, and repackaged before we could send them out to stores. (Bye, rest of profit margin!)
(Dear stores: I am so sorry. We tried as hard as we could. Things are way better now.)
While all this was happening, we were searching for a mug manufacturer. Our original hope of launching India-made mugs for wholesale fell apart due to cost, risk, and terror that we’d buy a container of mugs that would arrive broken or printed backwards or get swallowed by a whale at sea. I just wasn’t ready to invest in that many mugs, not knowing how they’d sell, especially after Tote-Gate 2014. So we decided to print the mugs locally for a cost that wasn’t doable for wholesale, but we could test them at retail and figure out which styles were most popular, in the event that we could eventually figure out a wholesale solution. And I really wanted to make them.
I feel like I’m forgetting something major from this quarter because SO MUCH HAPPENED. And I haven’t even gotten to Towelgate 2014 yet! (That’s in Q4.)
One major lesson from this quarter was that wholesale manufacturing can be incredibly hard, and it caused me to do a lot of thinking about the kinds of things we want to take on in the future. Even if something is doable and you make a little money, is the potential hassle and stress worth the effort? Sometimes yes, sometimes no.
All of this logistical insanity this quarter also meant that I spent maybe 10% of my time actually making work. This isn’t sustainable for the company, since without me making work, we don’t have anything to sell. I think my biggest challenge so far has been figuring out how to balance running the business with creating our products. If it weren’t for brilliant people like Leigh Standley of Curly Girl, who’s been successfully doing both jobs for a decade, I might think it was an impossible task.
Tune in next week for Q4, when we wrap this baby up!