Building an Ecommerce Business, Part 16: Custom Manufacturing

Selling manufactured goods directly to consumers, with no retail middlemen, has exploded on the internet. An entrepreneur with an idea for an original product can design it, find a manufacturer, and sell it online via any number of sophisticated ecommerce platforms.

I’m the founder of Beardbrand, an ecommerce business in Austin, Texas, that focuses on beard care and men’s grooming. This is episode 16 in my series on building an ecommerce business from the ground up. The previous installments are:

• “Part 1: Choosing Partners,”
• “Part 2: Selecting Platforms,”
• “Part 3: Early Days,”
• “Part 4: Copywriting Matters,”
• “Part 5: Paid Acquisition,”
• “Part 6: Hiring Employees,”
• “Part 7: Shipping and Fulfillment,”
• “Part 8: Customer Service,”
• “Part 9: YouTube Strategy,”
• “Part 10: Apparel Sales, Manufacturing.”
• “Part 11: Selling on Amazon.”
• “Part 12: Acquiring Companies.”
• “Part 13: Raising Money.”
• “Part 14: Using Kickstarter.”
• “Part 15: Content Essentials.”

For this installment, I spoke with Jimmy Hayes. He’s the co-founder of Minaal, a manufacturer of “bags and gear for life on the move.” I asked Hayes about developing and launching consumer products and then managing the ongoing inventory operations afterward. Our entire audio conversation appears below. The transcript is edited for length and clarity.

Eric Bandholz: Tell us about Minaal.

Jimmy Hayes: We started in 2013 with one carry-on bag. A single product launch. We launched a second bag, a more daily bag, in 2015, with accessories. Then, last month, we introduced another couple of bags. Our goal is to have the right tools for every situation. No more, no less. People who need to stay efficient and productive on the road are our core users. That’s who we are.

Bandholz: I own the big bag and the little bag. I know you have proper names for them. The big bag looks so simple. But when you open it and you dive into the compartments, it’s very complex and very well thought out. How many components go into making that one bag?

Hayes: The honest answer is I don’t know. It’s in the hundreds. Our bill of materials is an extensive spreadsheet of individual components. The simplicity of the look was a very intentional thing for us. Our product design philosophy is to look incredibly simple or sleek or minimalist, in terms of aesthetic, but then it packs a punch internally. It gives you the tools you need to move quickly and make stuff.

Bandholz: So you’ve got hundreds of components. Are those different suppliers?

Hayes: When we started, we worked with a manufacturer who had existing relationships, the existing supply chains. We went to them and said, “Here’s what we want to do.” Then they sourced it all. As our needs have become more complex, we’ve started contacting specific suppliers directly. So, having key suppliers is what matters. Things like zipper pullers or fabrics, where there’s a benefit to a deeper relationship, that’s where we’ve started to do our own thing. It means we need more in-house expertise. So far, it’s been worth it.

Bandholz: Say our listeners are new to product development. How would they start?

Hayes: It’s getting easier to do custom products. More and more companies are springing up to help. You may not have previous expertise or knowledge of the industry, but you have a vision for a product. They can help with all the operational stuff, and make it so that it’s kind of a bolt-on to your vision.

That said, doing what we did is very valuable. We flew around the world looking for possible manufacturers. We ended up with a manufacturer in Vietnam. But we also looked in the States. We looked in New Zealand. We went all around Asia. We looked at a ton of options, and we learned so much from that process.

Bandholz: Your first product was a Kickstarter launch. Did you tour these factories after your Kickstarter launch or before?

Hayes: Before. It has to be before because on Kickstarter you need an actual prototype. We received much feedback from that Kickstarter campaign. Then we dropped the purchase order.

Bandholz: How important is it to see the manufacturers in person?

Hayes: It was an overwhelming experience of so many questions directed our way. It would have been much more difficult to communicate via email or Skype.

Bandholz: What should entrepreneurs expect with a new manufacturing relationship? Who pays for the prototype? Who pays for shipping?

Hayes: It’s different in every industry. We pay a designer to develop sketches and prototypes. Once we get to the manufacturer, the salesman samples, the ones that traditionally have gone out to retail stores to get purchase orders for the next season, those are double priced.

So whatever you pay in production unit costs, you’re paying double for that salesman sample. And then there’s the actual production cost. I’ve heard varying stories. I think manufacturers would be a lot more willing to take chances on new companies if the manufacturers were charging something.

Bandholz: When you finally place your purchase order for your big lot, is it half up front and half on delivery?

Hayes: It depends. At first, we were 50 to 100 percent up front when we dropped the purchase order. We’ve now moved to 100 percent released at shipping — released from the factory, basically.  That’s a long time after the P.O.

Bandholz: Let’s shift to your internal operations. How do you make sure all the production deadlines are hit, and the projects move forward?

Hayes: We could be much better at it. We’ve improved over time. With one product, it’s pretty simple. Now we’ve got 12. That’s a lot more complex. So we hired an operations manager. His role is to know how much stock we have, when we need to order, and how long it’s going to take — all that stuff.

For us, it doesn’t go too far past an Excel spreadsheet and the software to manage inventory. We have a Shopify store that connects to our warehouses. Then we use Excel to extrapolate that out to future needs.

Bandholz: Let’s talk about the benefits of developing your own product. Why aren’t you just private labeling a product or reselling someone else’s bags?

Hayes: It was never an option for us. My co-founder and I couldn’t find a bag we liked. We met other people who had the same sort of needs. My co-founder had a very clear vision of what he wanted the bag to be.  I added my two cents worth. We had something that we wanted to exist in the world, and it wasn’t being supplied. So we decided to make our own product.

Bandholz: If you could go back six years, with all the knowledge you have now, what would you do differntly?

Hayes: I feel like everything in your past leads you to the point you’re at. So, to me, the journey was worthwhile. Beyond that, my advice is to not tie your entire life to the business. I burned out at one point and fell out of love with what I was doing briefly. It was because I had stripped away everything in my life to grow the business.

I lost perspective, which probably wasn’t the best for the business. So that’s what I’d do over.

See the next installment, “Part 17: Growing a Community.”