A few months ago I ended up at the very top of the frontage for r/entrepreneur when I launched my second Kickstarter campaign for my comfortable boxer briefs.
Many enjoyed reading the story and how-to’s… so, in the spirit of sharing, I thought I’d tell you how things have moved along since then.
I’ve since relaunched with 9 different product lines, refined the products extensively, improved the manufacturing process, replaced my platforms, completely changed the branding, and reached $500k in total sales. I'm stocked up on inventory for the rest of the year and I have a growth plan in place. This post explains exactly how I got here, what tools I’m using, and what I’m planning on doing next.
Milestones in the Past 8 months
- First Kickstarter Launch - $142k - July 2015
- Second Kickstarter Launch - $219k - October 2015
- New Branding, Website, and Product Launch - January 2016
The Refined Concept Behind Comfortable Club
We started off naming the company The Comfortable Boxers Co. It works well for SEO and gave it a nice unbranded feel to it, which resonated with those not willing to pay premiums. After striking the underwear market on a fairly significant level and with intentions of expanding our product line, a lot of thought went into a re-branding. In planning for monthly subscriptions services for our apparel, we’ve opted for a lifestyle brand with a primary focus on quality, comfort, and pricing. We arrived at Comfortable Club. The whole theme revolves around the idea that we shouldn’t have to overpay for premium apparel, so, quite realistically, the product line can expand into many areas. For now, though, we’re mainly focused on underwear, undershirts, and lounge products.
Our name says it all. We make a premium line of obsessively engineered, ridiculously cozy underwear and lounge apparel – and deliver them at half the price of retail. Harry’s did it for razors. Casper did it for mattresses. Now, at Comfortable Club, we’re doing it for underwear and loungewear: building a great, premium brand that reflects the things that customers care about today: quality, cost, convenience and, of course, comfort.
Premium at a Fair Price
An immediate reaction from some of you will be: "Why would I pay $16 for a pair of underwear? I can buy X and Y for Z." My job is to convince customers why modal fabric is worth it, because your day absolutely changes when you're wearing these bad boys. Except this time, you won't be paying Calvin Klein or other brands over $35 for a pair. But I won't go into too much marketing lingo here, because the point of this post is to show you just how I managed to cut the price and built a sustainable business around the concept.
Bridging the Sourcing Gap
Quality underwear requires quality craft, so we partnered with the the best factory and fabric engineering experts we could find. The process was extremely long and patience was essential. First off, shy away from resellers and agents, do your research, and go straight to the factory, the same ones used by high-end brands.
Our relationships with the manufacturing plants are very close. So close, in fact, that during the peak manufacturing timeline we actually LIVE in the factory. This is part of our quality control program, which we’ll describe later. You see, the tricky part about sourcing is making sure you get a consistently high-quality product. Apart from a lack of organization, this is precisely the problem that plagues small businesses. Because small businesses usually don’t follow-up with recurring orders to the factory, the supplier is usually hands off once the product is on the boat. If you can establish a clear, long-term relationship, set your requirements up front, and have a presence in the process, you're set.
We learned this when sourcing metal sheet rolls for a multinational roofing company, so we opted for a closer relationship with the supplier. We established a permanent presence in Shanghai in partnership with a small sourcing office. This means we have feet on the ground in the factory, can supervise every step, and we establish our own quality control programs (at our expense of course).
Building Something Beautiful Through Manufacturing
Early in our research (of which I mean shopping around and trying everything out there), I learned there are three key factors that impact comfort: the stitching, fit, and fabrics. So in creating our underwear, we put a meticulous -- some might say, obsessive -- amount of attention into each of those areas.
The devil, as they say, is in the details, and when it comes to underwear, stitching is one that tends to get overlooked. We use a more robust, sturdier stitching in our products that make them last, while maintaining their comfort. But we shied away from traditional threads and opted for fluffy threads reserved only for the most luxurious winter apparel for a completely itch-free experience. Look closely at any pair of Comfortable Club undergarments, you can see the uniquely intricate, tight knit puffy stitch.
We opted for 92% modal fabric, an eco-friendly microfiber that enfolds the body in a light embrace. Modal is smooth, soft, and breathable, and its luscious texture feels similar to silk. It’s cool to the touch, super absorbent, and resistant to shrinkage and fading. In short, it’s the perfect microfiber fabric for body-hugging underwear.
Stitching, fit, fabrics. It’s a relatively simple formula, but the result is something pretty spectacular: underwear that looks great -- and feels even better.
The Actual Manufacturing Process
Here’s a generalized model of the prototype and final manufacturing process for a new product:
- Initial size, die-cut, stitching, waistband & fabric specifications created
- Textile production for prototypes
- Dyeing process for prototypes
- Prototype testing with real-world use
- Revisions for prototypes
- Revised prototypes created using same textile
- Prototype testing under more scenarios
- Sizing trials
- Final exact manufacturing specifications created
- Demand planning
- Manufacturing order created
- Quality control program created and programmed. Hiring process for quality control specialists begins.
- Textile production - depending on the factory, this is done in-house or outsourced
- Dyeing process
- Waistband production
- Quality control runs
- Lab testing for fabric weight, color fastness, and shrinkage
- Fabric cutting
- Quality control runs
- Revisions, if needed
- Packaging specs created
- Packaging order created
- Stitching and crafting
- Final quality control runs
- Revisions, if needed
- Ironing and folding
- Packaging and labeling
- Final check and count
- Loading onto container
- Freight shipping - FOB to door
- Receiving at the warehouse
Prototype as many times as you have to. Each round takes over a month of work, but the version you take to market has to be as perfect as possible. It's important to specify exact sizing guidelines and templates for every aspect of the product. Design specific packaging guidelines, including product tagging, warning messages on bags, SKU and UPC labels, and specify items per case. Color codes must be clearly stated. Fabric weight, fade, and shrinkage minimums and maximums be specified and tested. As an example, we raised our fabric weight to 190g/m2, and lowered our fade and shrinkage ceiling to 1%.
When you’re manufacturing thousands and thousands of items that involve a manual process, you can’t rely on a ‘set-and-forget’ attitude. Our quality control process involves actual third-party lab testing with SGS. We also send our own personnel to the factory.
After finalizing the prototype phase and finalizing specs, we establish a strict defect-rate ceiling at 1% and randomly test up to 10% of the products to control for this. The sample size is large enough to be a good representation of the entire product. Of course, some defective items sneak through the cracks, but as long as you can keep it below 1%, you’re golden.
To reach this rate, however, we tripled our quality control staff and rejected every anomaly. We ended up rejecting a whole blue textile batch that led to a few delays.
Quantities to produce depend highly on your demand model. With our initial Kickstarter campaign, we produced the amount pre-ordered on the campaign and at least an additional 50% for recurring orders. Problem is, we ran out of inventory within the first month! Lesson learned.
For our second Kickstarter campaign, we produced an additional 800% of total items spread out through 9 different product lines. For this reason, the transition into e-commerce was smoothly executed. Being out of stock is probably the most dangerous thing for your business.
As for quantities per size and color, black and gray are always the most popular ones by about 50% more than other colors. Sizing usually goes as follows:
- S - 15%
- M - 45%
- L - 25%
- XL - 10%
- 2XL - 5%
This, of course, depends on your target market. But this model has done rather well for us so far. We also extended our offerings to include Lounge Pants, Undershirts, and a Women's Underwear line. The same model applies for all.
Presenting Your Product
In presenting our product to the world, we could’ve opted for any local model and called it a day. we also could’ve sent our products over to a photographer that specializes in this type of photography. We truly believe we wouldn’t be here, telling you our story, if we had done this.
We instead researched the LA market for the best models we could find. They did cost us quite a bit, but the results speak for themselves. We personally flew to California, brought our own trustworthy photographer with us, rented a beautiful house on Airbnb, got some studio space, and ran the whole photoshoot ourselves.
For any product you sell online, you’ll need to create lifestyle images, e-commerce images, and product images. The theme around the lifestyle images depend on how you want your brand to be perceived.
As for retail packaging, these were created as a showcase and ‘show off’ concept. More on that later.
Optimize Your Storefront
The Comfortable Club shopping experience starts the minute customers hit our website. The landing page says exactly what we do and transitions into our whole product catalogue. For this and many other reasons, we’ve built and designed the site for unlimited growth potential and scalability using Shopify’s excellent platform.
Optimized for conversion? You bet it is. We’ve removed tiny roadblocks that shave off seconds from the shopping experience, like custom developed color and size swatches instead of drop down menus, as well as plus and minus selectors instead of a number input form. Every little improvement counts.
We’ve also made the navigation menu sticky and always visible for easy browsing. On top of that, the mega nav menu (the pop-up that shows up after hovering over SHOP) helps customers understand how our products are categorized and allows for easy browsing at any time, regardless of which page you’re on.
The website is always a work in progress. We’re constantly fixing tiny bit that improve the experience ever so lightly. After-all, it's all a numbers and psychology game.
Automated E-mail Flows
E-mail is a beautiful art. It’s also the highest converting platform out there. I’ve set-up my platform using Klaviyo and pop-ups using Privy. They integrate very nicely with Shopify and pull in a great deal of data that allows you to segment e-mails and create flows rather easily. As for e-mail design, here's an example of an abandoned cart e-mail:
Cart abandonment e-mails are what some people call ‘low hanging fruit’ and are huge drivers for conversion rates. It’s important to reassure your customer that you have his back.
The Enterprise Resource Planning System
Our ERP and information systems are designed to maintain exact inventory counts in every warehouse, with real-time visibility that allows us to plan our manufacturing requirements ahead of time, so we can grow with demand, instead of behind it.
A lot of testing went into choosing the right platform. The first and most important criteria is integration abilities with my other platforms. Second, automation functionality. We opted for the beautifully operated Stitch Labs inventory management platform as my centralized hub. It handles all my sales channels, including Shopify and upcoming Amazon and eBay openings. We then assign a fulfillment warehouse to each one, and using the new 3PL integration functionality, orders flow back and forth. We designed workflows and established flow parameters like shipment mappings based on weight and destination. Stitch Labs handles the rest, including a complete accounting integration with Quickbooks.
A new feature i'm probably going to end-up using is product bundling, which means I can finally build a virtual SKU composed of multiple existing SKU's. Stitch reports an inventory level of the SKU with the lowest availability. This will serve well for ‘packs’.
Reporting is robust enough to handle manufacturing requirements planning (MRP) and deep level sales insights, including customer loyalty and variant splits. I’m completely in love with it.
Automated Freight Logistics
Our logistics partner, Flexport, combines the power of the cloud and uses a proprietary bidding technology that guarantees the best rates and shipping times from our factory, all while streamlining the online-only process that eliminates paperwork and errors.
I go with FOB to Door. Customs, paperwork, and communications are handled entirely by the Flexport team.
Automated Fulfillment and the Science of Shipping
If you run a small operation in the hundreds of items of total inventory and can find the time to spend a couple of hours a day picking, packing, sealing, labeling, and dropping off orders at the post office, by all means, do so and use Shipstation for this. If you have a small amount of SKU’s but a couple thousand items, you can upgrade to a 3PL like Fulfillrite. On the other hand, when inventory counts start getting into the tens of thousands with hundreds of SKU’s, when you expect significant growth, and when you start requiring advanced order routing, you move into a larger, more established, 3PL with advanced connectivity features.
We opted for the latter with DCL Logistics.
We have the capacity to store, pick, pack, and ship any volume with same-day fulfillment and an optimized arrangement that places the popular items closer to the picking line. We also use special bar-coding in every single item to guarantee order accuracy -- making order confusion or missing items a thing of the past. In short, we moved in with the big boys!
We have 180 SKU’s over 9 product lines. Keeping track of each one is hard, but our 3PL handles it beautifully. Bear in mind, an organized inventory is crucial and begins from the factory, especially in regards to proper tagging an labeling. Registration with GS1 for a proper UPC code was crucial for the process, especially if we want to expand to retailers or Amazon.
The implementation process with a logistics provider of their caliber does require quite a bit of customization and know-how. The way we have it set-up is:
- Order received on sales channel
- Order pushed to Stitch Labs
- Invoice pushed to Quickbooks for immediate realization of income
- Order pushed to respective warehouse with mapped shipping
- 30 minute grace period for order changes
- Items picked, packed, and shipped
- Shipping notice sent back to Stitch Labs with packing list
- Stitch Labs triggers the shipment notification e-mail according to packing list
- Stitch Labs sends Costs of Goods sold info to Quickbooks to immediately realization of expense
The 3PL receive orders from Stitch Labs through the custom-developed API, granting a 30 minute window before the order is locked from any changes (for customers that make mistakes in their orders). They pick and pack, ship, and spit back tracking information to Stitch which triggers the shipment confirmation e-mail on Shopify. If yout can't develop an API between Stitch and your 3PL, you can bridge this connection via Shipstation.
The result? Same-day shipping on orders placed before 12:30PM EST. That’s unheard of for a small business!
The implementation process took about 2 months, which I consider to be a good thing. One-click 3PL's are very limited in functionality, whereas custom designed connectors have given me the ability to process returns, handle special rules like box sizing, and perfectly expandable features like EDI’s with large retailers. As an example, the new Amazon competitor Jet.com handles most of their sales through EDI connections with other merchants.
As for shipping providers, USPS is always the best way to go with average shipping times of 1 to 4 days. Our competitors use Fedex Smartpost or UPS Mail Innovations, services that save a few cents over USPS. The twist? They sort the packages and hand over the pre-sorted bulk to USPS anyways, except this time USPS has no incentive to deliver quickly.
Last, but of course not least: accounting. Yes, you guessed it: also automated. Stitch Labs spits out all invoices in one single format, regardless of the sales channel it received it from, and then sends out costs of goods sold to Quickbooks once the item is shipped. All we're left to do is match bank transactions and deposits with the appropriate group of invoices.
Accounting takes us about 1 hour a week. Bear in mind, the implementation and work-flow design process took months. But remember, preparation is key!
Take the time to learn accounting. Take a quick course or read an accounting book. It's worth the effort, as this is the base by which your business runs. It's not as simple as how much cash you have in the bank. When long-term inventory planning is involved, knowing your numbers on a deep level is crucial.
The Whole Picture
So, can we agree that automation is your best friend. What it comes down to is this: at Comfortable Club, we have the logistics of a Fortune 500 company -- without the Fortune 500 overhead. You might ask, what does all this streamlining, automating and general process-hacking get us?
It gets us the ability to run our entire operation -- thousands of dollars of orders across multiple SKUs every month -- as a one-man show. That’s right: the “we” we’ve been talking about this whole time? Well, it’s mostly just me. More on that in a minute.
Platforms I Use
All of my platforms have been carefully selected to be compatible with each other. It took months of work to get them talking in such a way that requires minimal maintenance:
- Inventory, Planning, and Sales: Stitch Labs
- Ecommerce: Shopify
- Custom development: Codementor and Freelancer
- E-mail flows: Klaviyo - Much much better than any other platform I’ve tried
- E-mail Pop-ups: Privy
- Sales Taxes: Taxjar - Counts taxes from every sales channel and creates a beautiful liability report
- Accounting: Quickbooks Online
- Kickstarter Order Organization: Backerkit
- Kickstarter Shipments: Backerkit & Shipstation
- Packaging: Pakible
- Freight: Flexport
Getting them to communicate is a matter of understanding accounting on a basic level, maintaining organized information, and mapping things correctly. In making them work, I've developed wonderful relationships with the support teams from all of these platforms.
The Almighty Profit Margin
I’ve noticed that the topic always goes into a heated discussion, and I have a few things to say about this: some markets require a deep commitment to an aggressive pricing strategy before you can start poking around looking for customers. And no, not anyone can price something low and sell thousands.
We required heavy investments in advertising to get noticed. It's only when you have validated your product, carrying a loyal fanbase of users, when you notice a strong rate of repeat customers, and when you can convince new ones easily that you can demonstrate long-term value and can start realizing healthy streaming profits.
This is the point at which i’m in. I’ve invested every single profitable dollar, funneling it into better photography, product prototyping, new product development, improved quality control programs, new advertising methods, and the development of my automated platforms.
Here’s the breakdown of factors you have to consider in your profit margins:
- Item cost - this cost is realized once it leaves the warehouse to the customer. In the meantime, it’s considered an asset in your balance sheet.
- Quality Control
- Import duties
- Commissions & Credit Card Processing Fees
- Kickstarter Fee
- Receiving and unloading
- Storage and warehouse space
- Picking and packing per item charges
- Per order fulfillment charges
- Actual shipping charges
- Advertising with Google PPC, Facebook, and Retargeting (starting mid-May)
- Photography and Models
- Influencer Marketing
- Video Production, although I handled all the video production myself, including the editing
- Cloud platforms and monthly charges
- Payroll for any employees
- Travel expenses
Social Proof and Reviews are Key
Like we said, we had a hunch that we weren’t alone in our quest for better, more comfortable underwear. So rather than waste time and money on expensive validation studies and market tests, we took it straight to the market -- and the results were beyond what even we expected.
In Summer ‘15, we launched our first crowdfunding campaign on Kickstarter. Less than a month later, we’d raised more than $142,000 and sold over 15,000 pairs of boxer briefs. So, being common-sense people, we launched a second, follow-on campaign, which went on to sell an additional $219,000.
All told, we have attained over 6,000 customers in less than 6 months and shipped over 30,000 items -- providing powerful proof that Comfortable Club has struck a chord with customers.
Next steps are opening up the Amazon sales channel and getting in on PR outreach. I’m shying away from expensive PR agencies and handling the outreach myself. It’s all about convincing influencers, bloggers, and publications to try on your product. And who better to do that than yourself?
The inspiration for Comfortable Club came after I tried my first pair of premium underwear. I believed in the premium aspect, but couldn’t quite reconcile myself to the idea of shelling out $300 to replenish my underwear supply. Having worked as a supply chain and planning director for a multinational company, I knew only too well that problems with product pricing start upstream, so I put my supply chain and sourcing experience to work to develop a better, more budget-friendly solution. I also worked as director for an SAP implementation initiative on a 500-large multinational company - being the main driver for my knowledge in accounting, systems, and integrations.
Want to Meet?
If you’re ever around Austin and want to meet up, discuss life and business, or just say hi, i’d be happy to grab a drink with you. We can make it a group thing too. I’m totally friendly:
Have any Questions? Want to make a suggestion? Have a partnership opportunity? Or do you just want to say hi? E-mail firstname.lastname@example.org