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The Underbelly of eCommerce: Product Creation, Supply Chain, and Logistics
Today we have a guest post from BowTiedGator. He, along with BowTiedFawn founded biom. A personal care brand that’s officially 7 months old and has been having a good amount of success partially because of the their dedication to getting their supply chain right.
If you have spent any time operating an eCommerce business, you quickly learn of the multitude of operations that get very little airtime. The majority of the content out there discusses setting up your Shopify account, payment processing, product photos, etc.
All of the glitz and glam; the front end experience.
The back end is where the magic happens (yes that’s an innuendo). It’s where you transform ideas into products, moving them efficiently, and get them into customers' hands. I’m not formally trained in any of this, but merely a practicing dentist that’s learning things along the way.
Today, I’m sharing what I've learned about how to take a product from “shower thought” to receiving reviews on your website. I have found solace in many of the unsexy aspects of this side of running a business, and I’m hoping you will too.
Ah, the best part, creating the actual products. The very genesis of why we started our company in the first place. It's the guiding melody, the consistent rhythm that every other step in our dance follows.
It involves identifying a need, nurturing an idea, crafting a design, testing a prototype, and finally, the grand reveal - the product launch.
Some products will be easier than others, but ultimately they should solve some sort of problem and have a unique angle that market leaders do not possess. I hate that I even wrote that sentence, because it’s empty and vapid. I remember reading a similar sentiment at some point.
The very notion implies that you sit down with this calculated framework to solve a problem. Let’s say you want to make a desk chair. That sentence just told you to solve a problem. What fucking problem do desk chairs even have? Not many, and even if you find one it’s probably minuscule at best.
The point of me saying that sentence and then walking back on it is deliberate: change the way you define “problem” and reframe it to “feature”. Before we get carried away, that doesn’t mean aimlessly add features, but rather make a mundane object have a layer of excitement to it. This can be in the product function itself, it can be in the design, or even in the way it’s described in the copy.
Take Tesla for example. Were cars completely broken before Tesla? Not at all. Elon came in and made the car a more fun experience, which has caused a cult-like following on an arguably more needy and issue-prone vehicle.
Not every product will strike you like lightning where you frantically make a note on your phone to investigate more details, but the process should be approached from a sense of wonder, curiosity and excitement.
Let’s move ahead and assume that you already have your perfect product idea. Now you need to transform it from a thought into a working prototype.
How the hell do you do that?
There are a variety of ways to do this, industry-dependent, but there are some universal principles that you should abide by. You need someone who’s going to make the thing, you need someone who’s going to design what the thing looks like, and you need someone who’s going to package the thing.
Sometimes you can do this under one roof, other times you need to diversify the talent into multiple people.
The best way to start is by figuring out who’s going to make the thing. Go on Alibaba, Thomasnet, or Import Yeti and try to find relevant manufacturers. Set up a call to discuss your idea and align on timeline, minimum order quantity, and cost. Now do this with a few others to compare and contrast.
Side note: Products will take 3 times as long to produce and sell than you anticipate. Prepare accordingly. I go into product creation assuming it will be at minimum, 6 months until it is for sale.
Once you align with this manufacturer, you can begin to prototype. Some will charge you, others won’t. You’ll find that those who charge you for prototyping will take you much more seriously and will be incredibly more responsive. It may seem like a ridiculous fee to pay for a prototype you aren’t even sure will sell, but the juice is worth the squeeze.
Now you have a prototype. You can search for a designer on Behance, 99Designs, Dribble, or even Upwork to get the packaging squared away. When you find a good designer, keep them, as the design consistency will be felt from the consumer perspective. In some cases you’ll need to find a separate manufacturer for exterior packaging, so account for this possibility.
Step Two: Supply Chain Management - Creating a Symphony of Efficiency
Supply chain is a big topic from sourcing raw materials to delivering finished products to the customer. Every step needs to be coordinated and efficient. If you’re not careful, small details can destroy your whole operation.
Let’s take NOBS Toothpaste for example. There are multiple suppliers for a single product. Each of the following components have their own manufacturer:
What do you think happens if there is a shortage in peppermint extract from the UK?
Or if the lid supplier suddenly gets a huge order and places you on the back burner for production?
Or if the hydroxyapatite supplier decides the recent popularity justifies doubling their prices?
These are all variables that have not only happened to me personally, but are more or less a guaranteed obstacle that you will face in your supply chain.
How do we prevent this? Well, you can’t. At least not initially. However, you can minimize it and prepare for it. Creating partnerships with reliable suppliers is your first goal. People buy from people. Treat your suppliers with decency and respect as it goes a long way. It’s also important to have multiple suppliers, even if you’re happy with your existing one.
You’re going to want to understand the following processes in order of importance:
Raw Material Sourcing
Production Lead Times
You can’t worry about the lead time if you can’t afford the product. And you can’t worry about the cost of the product if you can’t source it. Understand the hierarchy of supply chain, and then smash each layer with efficiency and quality.
Once you are happy with your current supply chain, wait 2 months, then start picking it apart again and finding ways to improve it further. As you scale, one small change can save you hundreds of thousands of dollars throughout the year.
If you develop sloppy habits when you’re small, they will fester like a cancer as you grow. Then it’ll be extra hard to make changes. Always be iterating.
Step Three: Logistics - The Last Mile is the Most Important Mile
Now for the finale, the triumphant end of our performance - logistics. At its core, logistics is about delivering your product into the waiting hands of your customers as quickly and efficiently as possible. It’s the final twirl, the dramatic lift, the flourish that ends your performance on a high note.
Now let’s say you’ve got a killer product that’s already in production, and it’s ready for shipment. It's time to move them into the warehouse - a place where they'll wait for their final destination.
This is another huge topic that we’ll lightly go over today. Some smaller companies opt to store and fulfill their own orders. Depending on the size of your products, inventory quantity and order volume, you can decide whether this is something you want to take on personally or outsource.
From the beginning, we outsourced our fulfillment to a Third Party Logistics company, also known as a 3PL or a Distribution Center.
These companies can make or break you. Choose carefully, and generally stay away from the large corporate 3PL’s like ShipBob (Just google testimonials to read the horror stories for yourself).
The goal is to find someone who has the infrastructure that will allow you to scale, but will also give you that personal touch and extra bit of attention even while you’re small. There are plenty of them out there, so don’t think that you’re limited to ShipBob, ShipMonk, or any of the other big players. You will have to go into the deep results of google, but your best bet is to find other DTC founders and ask for a referral.
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My first 3PL company got purchased shortly after I onboarded, and orders weren’t being fulfilled for over 10 days after being placed. Shipments were getting lost in the mail. I was being overcharged. It was a disaster and almost killed my company in the first 90 days of operation.
Each logistics partner will have their own quirks, inventory management software, methods of communication, and style.
Don’t go into a relationship with your logistic partner trying to mold them. Either accept them and determine whether they are a good fit for your brand or move on and find another one. Once you scale, changing 3PL providers will prove difficult (Unless you’re adding another one to improve shipping times in different regions).
Finally, you need to have a system in place for dissatisfied customers and returns.
Regardless of what you want to believe, you will have unhappy customers. Every company does. The magic is behind how you handle this dissatisfaction. So, have a clearly defined return policy and a straightforward process to manage those situations. It can turn a potentially negative experience into a positive one, further cementing customer trust and loyalty.
Throughout the process from raw materials to last mile delivery, you will want to have a deep understanding and tight control of all of your expenses. This section was only a few hundred words, but the A-Z process will take your $1.20 item and bring the total cost of goods up to maybe $5 or 6.
Then you need to account for fulfillment fees, postage costs, and even shrinkage (lost or damaged inventory). If you’re haphazard about the costs, you can find yourself working hard only to lose money on your business.
Cultivating a successful eCommerce business is not much different from managing a brick and mortar business. You'll face some missteps, perhaps even a stumble or two. But with each fall, there's a lesson learned, resilience built, and before you know it, you're moving with a rhythm and grace you didn't realize you possessed.
Embrace the challenges that come with product creation, supply chain management, and logistics. See them as opportunities for growth and innovation. Remember, every professional was once an amateur, and every expert was once a beginner. Keep pushing boundaries, questioning norms, and seeking better ways to serve your community.
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Disclaimer: Nothing written here should be construed as legal for financial advice of any kind. These are opinions and observations, written by an anonymous cartoon Opossum, built up over years working in e-commerce & affiliate marketing.