In the engaging conversation between Chris, the editor of ARTicles, and Kevin, the founder of Padmasplantation, we gain valuable insights into the remarkable journey of Kevin's brand over the past 22 years. As pioneers in sustainability, Kevin and his wife embarked on a mission to source sustainable products, and their initial focus on catalog companies led them to expand their customer base to include retailers and designers. However, they faced challenges along the way, including the economic crash that impacted their business. Despite the obstacles, Padmasplantation adapted and shifted its focus to the Ecommerce side of the business, currently undergoing a transition to a B2B and DTC model. This conversation provides a captivating exploration of their experiences, the challenges they overcame, and the strategies they employed to achieve their current level of success.
Chris: Hello, Kevin, how are you doing today?
Kevin: I’m doing good, thank you.
Chris: Great. So, let me give you a quick overview. I'm the editor of ARTicles, a free weekly newsletter focused on Ecommerce and DTC brands. I'd like to ask you a few questions that can inspire other entrepreneurs who are just starting out. Can you share a bit about your brand's story, mission, values, and how you got started?
Kevin: Sure thing. My wife and I founded the company, Oh Boy, about 22 years ago. We initially worked in Indonesia, sourcing sustainable products using materials like rattan and natural fibers. Our focus was on serving catalog companies such as Spiegel, and others.
As the business evolved, we expanded our customer base to include retailers and designers. However, when the economic crash hit, we lost many customers, including catalog and larger retailers. Our business with CSN Stores (now Wayfair) took off during that time, and we started shifting our focus to the Ecommerce side of things. Currently, we are launching an affiliate program and transitioning from a B2B to a B2B and DTC model simultaneously.
Chris: Okay, that's great, Kevin. It's impressive how you were pioneers in sustainability around 20 years ago. Back then, hardly anyone was discussing or emphasizing its importance.
Kevin: Yes, that's right. We were pioneers in sustainability when we started 20 years ago. It was not a popular topic back then. One of our biggest challenges has been ensuring that the products reach the end consumer undamaged. We had to develop effective packaging methods and work with testing labs to achieve this, but we still face issues at times.
Chris: Indeed, that's a significant challenge. Moving on, what were the main challenges you faced when starting your business, and how did you overcome them?
Kevin: The biggest challenge was building credibility since no one knew who we were. We worked hard to gain the trust of designers, retailers, and catalog companies. Once we established relationships with bigger players like Spiegel, we used that as leverage to gain credibility with other retailers and catalog companies. It was all about showcasing our expertise and demonstrating our ability to handle their requirements.
Trade shows also played a crucial role from 2000 to 2006. We participated in around 12 trade shows annually, which was quite expensive but helped us gain exposure. In 2010, we started mailing our own catalogs, targeting the B2B market. We were sending out 10,000 to 15,000 catalogs every month.
Chris: That's impressive. Overcoming those challenges must have been quite a journey. Thank you for sharing your experiences.
The main challenge, I assume, is building your audience and doing it cost-effectively, right? Finding a cost-effective way to make your brand known to the world and your customers is the most difficult part, isn't it?
Kevin: Exactly, that's the toughest part. You need to ensure that the world and your customers know you exist while being mindful of cost.
Chris: Okay, got it. One more question. Have you had to make any significant pivots in your business strategy or products since you started? If so, what led to those decisions, and how did you handle the transitions?
Kevin: We've had to pivot our business multiple times. When a company like Spiegel went out of business, we had to adapt. But the economic crash brought about a complete change to our business. Within six months, our eight largest customers, none of which represented more than 5% of our business individually, went out of business. It was a domino effect.
I recall that it happened around October of '07. From there, everything changed. If I go back to the trade shows we attended in 2005 and 2006, retailers, big or small, and designers would ask if we were selling online. At that time, it was a relatively new concept.
Nowadays, if I didn't have an online presence, around 30-40% of my business would be gone.
Chris: Now, let's talk about your current marketing strategy. I believe that as entrepreneurs, we learn a lot more from our failures. So, in terms of marketing, we often try different channels and face failures. What channel works best for you today?
Kevin: When COVID hit, we couldn't continue with our trade shows. Instead, we focused on one trade show—the High Point Market, the world's largest furniture market. We participate twice a year and share a showroom with four other companies. It seems to be gaining traction.
However, if I look at our core competencies, which are packing, shipping, and logistics, we are placing a significant emphasis on our affiliate program and direct-to-consumer approach. We want to leverage our expertise in those areas.
Chris: Sure, got it. Yeah, I understand. That's great to hear. Thanks for sharing. I have another question for you. I'm not sure if it's possible, but could you provide us with a rough estimate of your current annual revenue?
Kevin: Our retail revenue is slightly over $4 million. However, we are hoping for a 25-30% increase in the next twelve months through our affiliate program.
Chris: Thank you so much! Achieving those numbers is definitely challenging.
Kevin: Yes, before the economic crash, we were actually much larger than our current size.
Chris: You'll get there again. Now, I'd like to know if you could share some key strategies you've implemented to achieve this level of success, in your opinion.
Kevin: Certainly, it's been a journey of 22 years. We've operated as a 22-year-old startup, always adaptable to changes. Being a small player, the market has evolved and changed numerous times for us. Even our core customers, who were crucial to us, shifted their focus back to basics, leaving us out.
For a small company like ours, the Internet has proven to be very valuable. Currently, we sell only to retailers, but we're making a strategic shift in that area.
Chris: I see, that makes sense. Thank you for sharing. Now, let's talk about risks. I assume you've taken quite a few. What would you consider the biggest risk you've taken to move your company forward?
Kevin: Indeed, starting out 22 years ago, venturing into countries like Indonesia, China, the Philippines, and India where we were unfamiliar with the business landscape. Dealing with suppliers where you send them money before receiving the products is a significant risk.
Moreover, during COVID-19, the cost of shipping containers skyrocketed. While previously it ranged from $3,000 to $5,000, during the pandemic, we saw costs as high as $18,000 to $21,000 per container.
Chris: Absolutely, it must have been chaotic to adjust to those unexpected expenses.
Kevin: Definitely, it was a challenging time. We experienced an increase in sales orders, but the margins were severely squeezed.
Chris: I can imagine. It's tough when you have to decide between charging too much to the customers or accepting losses.
Kevin: Exactly, it was a crazy situation. The revenue increased, but the margins were greatly affected.
Chris: I understand completely. Now, could you share any exciting upcoming projects or initiatives for your brand?
Kevin: Our focus is on direct-to-consumer and our affiliate program. We're placing significant emphasis on those areas. Currently, we're working with an agency in Los Angeles, and we're in the testing stages. We hope to launch next week.
Chris: Okay, that's cool. I'm really impressed. Now, let's talk about your future goals. Where do you see your brand in the next five years? Do you plan to exit or continue growing?
Kevin: To be honest, after being in the business for 22 years, my goal is to find someone who recognizes its value and wants to take it to the next level. We would probably sell and exit the business.
Chris: That sounds like a strategic approach. Exiting at the right time can be beneficial. There are investors and D2C aggregators who are proactive in the market.
Kevin: Yes, I've spoken to some of them. However, the challenge is that they don't fully grasp the B2B side, which has been our primary focus for the past 22 years. If we can expand the direct-to-consumer side, it might make more sense for potential buyers.
Chris: That makes sense. By diversifying your market approach, it can attract the right buyer. Okay, just one more question. What advice would you give to someone starting a business today, especially a young entrepreneur?
Kevin: I believe the most crucial aspect is understanding your go-to-market strategy and how you'll allocate your marketing budget. Our showroom expenses were astronomical, and I'm not convinced it was the most effective approach. Knowing how to reach your target market and efficiently fulfill product delivery to customers is essential.Shipping costs, especially for larger items that require custom carriers, can be a significant unknown factor.
Chris: Yes, it can be quite challenging. Kevin, I don't have any more questions. I truly appreciate your time. Thank you for joining us.
Kevin: Thank you so much, Chris!
As pioneers in sustainability two decades ago, Kevin and his wife embarked on a mission to source sustainable products, initially working with catalog companies and later expanding to include retailers and designers. However, challenges arose, such as losing customers during the economic crash. To adapt, Padmasplantation shifted its focus to the Ecommerce side of the business and is currently transitioning from a B2B to a B2B and DTC model. The conversation highlighted the importance of credibility building, trade shows, and catalog mailings to establish the brand and gain exposure.
Navigating through various pivots, such as adapting to changes in the market and customer demands, Padmasplantation endured and thrived. Kevin emphasized the significance of having an online presence, especially in today's digital landscape. The conversation also shed light on the challenges and risks faced by the company, including dealing with unfamiliar business landscapes in other countries and fluctuating shipping costs during the pandemic.
Looking ahead, Padmasplantation aims to leverage its expertise in packing, shipping, and logistics through its affiliate program and direct-to-consumer approach.