How I almost got killed by logistics and distribution!
As our resident contributor, DT, learns…never forget even the most mundane! Here, he shares with us the not-so-cheery side of his iPoor t-shirt business - the part that most entrepreneurs dread: the actual logistics!
Really this should have been the Art of the Small Start Part 3, but I figured this title was punchier.
In the last discussion, Part 1 and Part 2, we talked about the critical aspects of People, Product, Pricing, Promotion and Place (Distribution) as part of a business strategy in making successful products to sell.
A failure to consider any one aspect is a recipe for failure.
Furthermore in the Long Tail strategy, we discussed that low inventory does not mean no inventory, and there are still cost to be considered.
Yep, thats what nearly killed me. I failed to consider the cost of distribution, and the logistical cost of getting things around. I suppose, this is an area that I have very little experience as this aspect of the business I deal very little with at my day job.
Here are the things to consider which I did not!
1) Cost of shipping a product is based on exact weight. Do test runs, get a weighing scale, but you need to calculate you cost exactly. This is very important especially if your business, like mine, runs very lean. I totally miscalculated my shipping cost, barely breaking even for each T-shirt.
2) Cost of travel for you to deliver or get things done. I totally missed this. Having to lug 35 orders, approximately 60 T-shirts, to the post office is no laughing matter. Furthermore I had to make 2 trips to the post office as I had to buy packaging materials first.
3) Cost of your time. How much is your time worth? This is normally known as the “administration†cost to the lay man. What else can you be doing instead of spending this time, the opportunity cost of doing this activity?
4) Finally the cost of working in a different currency. The logistics of moving your money. Yep this was one of the contributing factors that ate into my bottom line and the cost of doing business. The strengthening Singapore dollar meant that the US dollars I was selling my iPoor T-Shirt in, was worth less. Even in small amounts, my cost for shipping grew and was not covered.
At the end of the day, I failed to make correct calculations and my bottom line was eroded. I did not have much choice, but to cover the remaining cost, I had to increase my shipping and handling cost for each T-Shirt.
Oh well as they say nothing ventured nothing gained, or nothing learned in my case!
No related posts.
Loading ...
7 Comments, Comment or Ping
ATHK
Hi,
Is there any entrepreneur in Singapore who can give advice on any creative ways of starting small with a personal care product without spending heaps of money in retail stores like watson’s and guardian? I was told to have at least 100k if you want to consider watson’s or guardian as a distribution channel.
Any advice is appreciated.
Rgds,
Alvin
Sep 7th, 2006
DT
Hi alvin,
You might like to look at my previous posts on “The art of the very small start” at
http://www.designsojourn.com/index.php/2006/08/04/the-art-of-the-very-small-start-part-1/
for some ideas and primers on how to start. Often its about the marketing angle and how you deliver your product. If you need more help or questions please email me.
Sep 7th, 2006
wannapreneur
Hi Alvin,
Not too sure why you need to emulate Watson and Guardian becuase they constitute a pretty
saturated market (red ocean) already.
Starting small is a good idea but the key irregardless of size is still differentiation. On this count, its up to your own creativity and imagination.
Have fun!
Sep 8th, 2006
Gwen
I don’t think Alvin wants to ‘emulate’ Watson’s or Guardian, but want to place his product on their shelves. Nevertheless, I think Wannapreneur’s point still holds true: saturated market. There are tons of personal care products in those stores. You gotta make sure your marketing and branding is pretty darn good, or somehow your price beats everyone else’s yet without seeming too cheap! And thus input the notion of “cheap=lousy” value in people’s minds.
Sep 9th, 2006
ATHK
Yes Exactly, when we are in these stores or supermarket, there are tons of different product and their advertisment flashing at us. Even a niche product needs to work very hard on A&P to stand out. What I wanted to know is is there any advice on what other creative A&P we can employ to successfully deploy a personal care product into the market before spending tons of money into these cash stripping stores.
Sep 10th, 2006
Design Translator
I think you should look at other means of promotion, blog marketing, viral marketing, are all other good ways. But it this way we are in a cusp of a revolution on how people transfer and absorb data.
Its would be a good idea for you to embrace the technology as more companies that do often have first mover advantage.
Sep 10th, 2006
Karen
Can anyone recall the newspaper article on exchanging of games by Singaporeans using a points system? I’d like to visit the website. I’m also looking for the book exchange site
Oct 1st, 2006
Reply to “How I almost got killed by logistics and distribution!”