Tuesday, September 7, 2010
The great thing about my rings is that they give you that cool knuckle-duster look without paralyzing your fingers. You can even type in them. I’m wearing the OMG set while writing this post, as a matter of fact. I wanted to show this on video, but I don’t have a helper and, as you can see, couldn’t type normally with the iPhone in one hand. Alas. At least I was able to say “hi” to y’all.
I assure you, I’m typing much faster now that I’m using both hands. I’ll recruit someone to take a less craptastic video later this week.
As I explained previously, the pre-sale of the rings (and the sale of other items also listed on my Kickstarter page) is paying for their production. Back in January, I wrote about the challenges of manufacturing: to make lower-priced goods, you need to produce in quantity, overseas. The more you make of any product, the less expensive each finished piece is. The catch is that the more you manufacture, the more you have to spend up front. I originally planned to do only the OMG and LOLZ ring sets, and successfully raised my minimum of $7,000 to do that. Now that I added the NYC ring set, I need to raise over $10,000. Technically, I will only be spending $10,000 but I hope to raise extra, because Kickstarter is going to take 5% of my total and credit-card fees are going to cut into it as well. This money will also have to cover other related expenses, including packaging and shipping fees from Asia and to customers. I’m getting close to $10,000! Help me make at least that much by ordering now. The new rings will come in time for the holidays, so buy a gift for yourself or someone else.
As a bonus, even though I’m producing what’s considered a large quantity for me, you’ll still be able to feel very special when you wear your rings. See, when I produce “in quantity,” I’m only making a couple of dozen to 100 pieces at most. Let’s say I do 50 of a piece. Only you and 49 other people will be wearing that jewelry. Compare that to Forever 21’s capsule collection by Brian Lichtenberg. WWD reported that the initial run for the collection was 150,000 to 200,000 pieces, which included nine women’s styles and three men’s styles, all retailing for just below $15 each. I don’t know how many of each style was produced but let’s pretend 200,000 units were divided equally among the 12 styles. That means there were about 16,667 of each style. And THAT means that if you felt chic and special in your Forever 21 t-shirt, more than 16,000 people had the opportunity to feel the exact same way. Hate to break it to you, but you weren’t making a unique style statement.
The Forever 21 example, in turn, is nothing compared to Walmart, which orders in mindboggling quantities to get rock-bottom prices for its 8,576 stores around the world. Back in 2003, the New York Times wrote about the Walmartization of America and how the discounter’s size let it force down labor costs. I see the effects of Walmartization all the time: people expect dirt-cheap prices for everything without sparing a thought for what that means. Yes, every so often, there’s a scandal about conditions in overseas factories or worker suicides and customers get self-righteous and angry. But do these customers volunteer to pay more for U.S. labor? No. They go right back to buying cheap goods and being clueless about the value of other people’s hard work. Note that no one devalues his or her own work, just other people’s work! No one says, “Don’t pay me this much, I’m not worth it. I want a demotion.” I am beyond tired of this shizz. That’s what inspired me to write my Get Smart (About Manufacturing), Get Smart (About Quality) and Get Smart (About Custom Work) posts. You can also review this recent post on a custom engagement ring I made to see the extraordinary amount of time and energy that goes into creating a one-of-a-kind piece.
Meanwhile, here’s an example of a small order for Walmart: 48,000 pens in 500 stores for 30 days. Those figures come from a 2005 series that Gwendolyn Bounds wrote for the Wall Street Journal about two business partners who were trying to get their PenAgain ergonomic pen into Walmart. I highly recommend reading the three-part series:
PenAgain succeeded at Walmart. When Gwendolyn (or Wendy, as I know her from my Wall Street Journal days) followed up with the pen guys in 2006, they were dealing with a 470,000-unit order for Walgreens. In You Got the Big Break. Now What?, Wendy wrote about the challenges of that kind of success.
It’s heady stuff — but immensely taxing on the infrastructure of Pacific Writing Instruments Inc., a tiny five-person operation based in San Mateo, Calif., which is experiencing the kind of crisis of growth that can sink a small business if not handled properly. Every major retailer has unique demands: from pricey charges called “slotting fees” that PenAgain must pay to get a foot in the door, to special packaging requirements — like printing five different languages on one label or designing two-packs or three-packs with certain ink colors.
Partly the pressure is a growth Catch-22: PenAgain needs money to pay the fees and hire new staff to help get these accounts rolling. But without the new accounts in place, they don’t yet have the cash flow to do so. Payment terms are tougher at this level, with retailers sometimes taking 90 to 120 days to pay for large orders. Meantime, the reams of paperwork, travel and logistical minutiae — such as finding a good deal on a forklift — required to field so many large accounts has engulfed the two 34-year-old founders, forcing them to pass up potential business and at times straining their friendship.
All of that for a below-$4 pen!
I don’t have my sights set on Walmart right now, but maybe one day I’ll be producing 10,000 rings for a fast-fashion chain or QVC and selling them for $15 a pop. In the meantime, you’ll have to spend $300 to $400 on one of my solid, sterling-silver ring sets, but at least you’ll be special. You’ll also get the same high quality you would get if I produced the rings in New York and sold them for the made-in-America price of $1,000 to $1,200 a set! I made no changes to the design that would make the pieces flimsy and less desirable. Instead, I made the original samples in New York according to my usual standards, and had the factory do production samples that I put side-by-side with my originals to confirm that there was no difference. The price difference is due solely to the less expensive labor overseas.
By the way, I’m sending out the rings in nice suede pouches. I had designed gorgeous cardboard boxes for them, but I decided not to make them. The overseas factory’s minimum was 8,000 units for $3,000. I found one U.S. manufacturer willing to do a small run of 1,000 units of the exact same box … also for $3,000. Neither option was agreeable to me, but at least I got another excellent example of economies of scale!
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