Entrepreneurs have many reasons for building a business. Some build for ego. Some to change the world. Some to get rich.
I am building for freedom. That’s what draws me to entrepreneurship — telling my own story, serving customers I want to serve, being around folks I want to be around, making products I want to make, and investing the time and resources I choose.
I launched Beardbrand, a maker and seller of men’s grooming products, in 2012. This year, 2023, has been among our toughest in terms of sales.
This episode of Ecommerce Conversations is not an interview. It’s just me recounting 2023 to date.
Beardbrand has no debt. We’re bootstrapped — no outside investors. Listening to podcasts where every guest is doing remarkable things is easy. It’s tempting to compare yourself to folks doing eight or nine figures in annual revenue. But behind the scenes those businesses sometimes have warts. Big hurdles. Potential catastrophes.
Beardbrand’s challenges are in three primary categories — product, marketing, and operations. It’s been a perfect storm of calamities for us this year. Seemingly anything that could go wrong has. We’ve stacked losses month after month. It tests my will to continue.
Many contract manufacturers we’ve approached this year have high minimum order quantities for our volume. Others had poor quality control.
So it was a tradeoff between quality control versus lower order quantities. We reduced our SKUs for higher per-item orders. We discontinued three of our fragrances and streamlined four products into two, hoping we could go through the inventory and thus order more.
But that strategy didn’t work. Our manufacturers increased minimum order quantities causing us to spend more on inventory, not less.
I’m a believer in cutting off poor-performing products. I like the idea of every product selling a million dollars per year. But that never happens of course. Nonetheless, it’s a good strategy, although this year could be the exception for us.
Target was a big source of sales. Our products sold pretty well there. We then took an aggressive approach and retooled our goods from top quality to low cost. That meant repackaging our items into bigger containers at the same or lower selling price. We dropped per-ounce prices when our competitors raised theirs. We hoped the strategy would increase sales and boost our minimum order quantities with manufacturers. We hoped higher volume would justify the lower margins.
We switched to aluminum packaging from glass and plastic. It made sense then, but we now realize it eroded trust with our customers.
Finally, we’ve had sourcing issues going back to Covid, which required extended manufacturing lead times and more money tied up in inventory. Plus, certain ingredients were no longer available.
Throughout 2023 we’ve experienced an overall decline in pay-per-click ad performance. We eventually stopped those ads entirely as they were not profitable.
The other marketing challenge was our organic content. We rolled out some of the best videos we’ve produced. But YouTube shifted to Shorts, and ours were long. We had success with Shorts, but they didn’t drive brand awareness or sales. Views on our long-form videos went from about 5 million per month to less than 2 million.
We’ve gained market share from affiliate marketing. We’ve landed some good partnerships with notable publishers. But it’s a slower investment. It’s not yet breaking even considering the cost of the person managing it. Affiliate marketing is an opportunity, but it’s not filling the top of the funnel as we envisioned.
The loss of Target resulted in fulfillment costs going through the roof. We paid essentially a monthly retainer for software to sync Target with our third-party fulfillment provider. We’re still paying it, resulting in an outrageous cost for fulfillment — twice what we should be paying for picking, packing, materials, and shipping.
A lot of that is due to my mistakes. I’ve ordered many units of an item without realizing how it impacts our fulfillment company, or how much space it takes up.
The good and bad news is we have a ton of inventory. We’re focused on selling it, growing our Amazon channel, and trying to generate revenue with our leftover Target inventory.
June was a better month. We’re back at it. Our goal for the remainder of 2023 is to manufacture and distribute our products on our own terms, not with contract manufacturers who don’t want our business. There’s no worse feeling as an operator than working with a manufacturer that doesn’t care. We want partners who value our business and support us.
We’ve experienced in 2023 a drop in sales the likes I’ve never seen. It’s difficult to pinpoint a single cause as we’ve made so many changes. Perhaps it’s all of them.
Yet I’m grateful. I have my health and my family. I have a great business despite being smaller. I still wake up with the challenge of solving problems. I’m energized, in rebirth mode.