This month’s WAH Power Lunch was all about distribution. You’ve built your product, but what's next? How do you plan your strategy and when do you know it’s time to outsource? Well, we’ve got all you need to know, wah girls! Whether you’re working with a physical or digital product, this Power Lunch has everything you need to know.
Meet the panel…
Sisters Hannah and Sophie Pycroft founded beauty start-up Spectrum Collections in 2014. They have only recently begun outsourcing their distribution and were on hand to give advice to all of our baby businesses!
Perri Lewis is the co-founder and director of MasteredHQ, a talent company for creatives launched in 2014 that provides courses and programs taught by some of the industry’s most respected professionals. Perri added a fresh dimension to the panel with her experience in reaching an audience with a digital product.
Sarah works for KeepMe Group, a warehouse and fulfillment company that take care of the international distribution for WAH London, as well as many other brands. Sarah added a different perspective to the panel, explaining the nuts and bolts of distribution and advising us on what makes the perfect client.
Girlbosses! You’ve set up your business and your product is on the market! When do you decide to make the leap and outsource your distribution?
All start-ups have been there, distributing products themselves. You wake up to a house overflowing with products that you package through the night in your kitchen, before putting it all into bags4life and hauling it to the Post Office after breakfast. Pack, post, repeat.
“It gets to the point where it all just gets too stressful and you need to pay someone else to do it,” Sharmadean says.
Hannah and Sophie had the same problem, their at-home distribution system was taking over their lives (and other aspects of their business!).
“We distributed our Christmas orders ourselves and we had to stop people ordering because we just couldn’t keep up with demand. We literally waited until we were on death’s door before finding a distributor, we were losing money and it was becoming a detriment to the business. It was a big step for us, but it really helped us grow. When we outsourced our distribution, we had so much more time for marketing and developing new products.”
So like Sophie and Hannah, you’ve decided you need to outsource, but how do you find a distributor and make sure you’ve got the best one?
“We found KeepMe Group through a recommendation and the big draw for me was that they were already distributing a nail product, because nail products have such a specific packing and hazards process. It’s definitely a plus if you can find a distributor that works with a similar product to yours, because you know they can deliver,” says Sharmadean.
But if you don’t have any girlboss friends to offer recommendations, there’s always the Internet! With their start-up business booming, that’s exactly what Hannah and Sophie did.
“We just started looking on Google to be honest! Sometimes that’s just the best place to start. Then we just use Shopify as our sales channel.”
When you’ve found your perfect distributor, make sure you factor in cost…
“One of the things that I didn’t really know about distribution was that when you’re calculating your profit margin, you need to add all of those costs in as an overall for each product,” Sharmadean explains. “So say a nail polish costs you £1, you don’t realize that you have to factor in the cost of the warehouse, the carriage and the pick and pack before you know your true price of your product.”
So, you’ve found your distributor and factored all necessary costs into your business plan (woohoo! 10 wahgirl points for you!). Your product is a huge hit and you’re being approached with offers from other retailers to sell your product. But how do you know if this is a good move? How do you choose between stocking in Topshop or Urban Outfitters?
Sophie and Hannah learnt the hard way, when their collaborations with big retailers didn’t go as well as they’d planned.
“We’ve had Asda, Argos and Not on the High Street approach us and ask to wholesale the products. We tried Not on the High Street but that just didn’t work for us. We had to create an exclusive, personalized product for them which cost us a lot of money, and the website just didn’t suit our customer base. Also, we were still managing distribution ourselves which made it more complex, because we then had two sales channels to manage.”
Despite their deal with Not On the Highstreet falling short of expectation, Hannah and Sophie thought their luck had changed when Selfridges got in touch.
“Selfridges approached us for their pop-up summer shop. I think people automatically assume big companies make big orders, but Selfridges placed a small order and then sent back 30 that they didn’t sell. We put them online and they sold within 3 minutes. So we knew that wasn’t working for us either.”
“This is why direct to consumer is so important,” Sharmadean adds. “It’s so important to know your customer, your girls are on Instagram, not shopping in Selfridges. You have to know your customer inside out, their hopes, dreams, hobbies, everything about them. Only then can you start making decisions about which retailers to stock in, because you’ll know where they would shop.”
Knowing your customer is an essential part of your distribution strategy…
Sophie and Hannah made the mistakes so you don’t have to, and Sharmadean was quick to offer her advice for start-ups facing the same dilemma.
“Try not to jump at every single opportunity you get because it might not be right for your brand. Knowing your customer profile is so essential, it allows you to have a framework for every single decision you make. The more information you have about your customer, the more you’re de-risking every aspect of your sales process. Direct sales for me are always a better investment than anything else, so if you’re trying to prioritize spending, build an amazing website and content before launching in someone else’s catalogue.”
Knowing your customer inside and out is VITAL for any business, whether your product is physical or digital. So far, we’ve spoken mostly about physical products, but If your product’s digital or you’re trying to build a digital platform, how do you make sure you’re reaching your audience?
As the Director of a company offering a digital product, Perri offered her pearls of wisdom.
“When we launch a new program, we first identify our target customer. We then try to simplify the program and distill the concept into one sentence so that anyone can understand what our product is and what it can do for you. The best way for us to recruit is with social media, using both organic growth and paid advertising on Facebook, Twitter and Instagram. You’ll find now that when things happen organically, through press releases or a review in a magazine, a brand will often post that on their social media pages and put some money behind it so that people actually see their positive press.”
“If you’re building something and you don’t have a marketing budget, it’s kind of pointless,” Sharmadean adds. “How can you expect anyone to know about your product if you aren’t pushing it out there?”
So, you’ve had a super successful marketing campaign and your product is HOT HOT HOT! You’re getting requests to go international, but what’s the best strategy?
Working for an international distributor, Sarah has seen countless brands on their route to global domination.
“The first step once you’re established in the UK is to go to Europe and you tend to then go to America when your brand is big enough,” Sarah explains. “China seems to be a growing market. Asian customers are very interested in getting British products that they can’t get elsewhere, so it’s definitely worth looking into if you have an unusual product. Territories do vary from product to product though, we deal with a luxury perfume brand that do 75% of their sales to the UAE, but our nail brands don’t deal with that part of the world much at all.”
If you’re selling your product online, there’s no reason not to be an international brand from the start.
“If you have a dry product you can ship it anywhere in the world. If the extra cost is no problem for the customer, which it often isn’t if you’re a cool brand, you should be global online from day one,” says Sharmadean.
Sophie and Hannah offer worldwide shipping of their product and are finding their international orders make up a sizeable amount of their sales.
“What we’re finding at the moment is that we have a large customer base in America, but we have to charge them so much money for postage and we still make a loss on that. We’re now looking for more distribution options with companies that have more experience with international shipping.”
It goes without saying that in business, it’s always best if you can avoid making a loss! But it can be difficult when you’re trying to keep your customers happy.
“One good piece of advice I was given when I wanted to charge more for a leopard print manicure was ‘if you charge £2 more no one will care’, so, if you charge full postage, people will still buy your product. When a product is so hot, it’s almost part of the kudos and the hype that you got it from London and had to pay extra for postage. Customers would rather have the option to pay more for it than not be able to get it at all.”
So there you have it! Our experts’ top tips and advice for beauty distribution and world domination!
Wish you could’ve attended and watched the whole thing? Don’t worry wah girls, if you missed it, you can visit our Facebook page to view the live stream here!