My New Brand Has 91% Gross Margin. Here's How (With Lara Guevara)

Lara Guevara, one of my most trusted friends in the E commerce space, somebody I've been working with for a while now and who you've heard on this show before, built my supply chain for my brand called Resolute. I have recently done a podcast episode where I showed you everything that I can show you about the unit economics of Resolute down to the penny for the way that we are expecting to launch and how the finances of this business are supposed to work. If you have not heard that episode, you should go back and listen to that podcast episode. It's called Every Financial Detail of the Brand Starting. You can go check that out. But what I want to do today on this episode is actually break it down further and in more detail by actually having Lara talk through what she did to get me such a freaking killer supply chain. It is humming right now, already, even on launch, even with MOQ level ordering and those sorts of things. And so I want to take to spend an hour or so here with Lara and say, okay, Lara, how did you generate some such good prices on our packaging? Part of that is the category, of course. What did you do? We have totally custom packaging. How did you go through that? What are the opportunities in the future for us to optimize this even more? And how good can the margin get in this business while maintaining the product quality? Laura runs Move supply Chain. She's been building E Commerce supply chains for a bunch of years now. She knows her way around it. Last call we had, she hung up and immediately went on some factory tours. She is out in Manila, I am in Los Angeles. We're having the conversation now. This is technically a sponsored episode, but it's barely going to be pitchy because what we're going to do is really just say, what did Lara and Move supply chain do to build my supply chain so you can hear about it? And like I said, what are the opportunities in the future? Okay, that's a long intro. Let's get into it with Lara Guevara from MOVE Supply Chain. You know her, you love her. Welcome back, Laura.

Good morning from Manila. And first of all, Andrew, thank you so much for giving us a chance to work with you. And this is a like perfect partnership wherein you know how we work, you know exactly how we work.

And I know nothing about how to build an E Commerce supply chain. So it really works out great because I have said to a lot of people, like, I think literally, in fact, as we started going down this road, this is because this brand, right, it's solid Cologne. So people who didn't haven't heard my old episode. Like, it is cologne, but instead of spraying it on, it's like a balm that you put on. I have some here. If you're watching a video, here's a sample from the manufacturer. You just kind of do that. You put some on your wrists, on your neck like that. That's how it goes. Okay. Smells great, by the way. And. And so that's. That's how you. That's how you do it. Well, that. This is, like, not necessarily a hard thing to manufacture. In fact, that was the first thing you told me about it when I showed you this idea at my home in Los Angeles. You. You. I showed you some. Some competitors and said, I'm thinking about building this. And you were like, oh, yeah, we could do that. But I. I mean, I. As we began to talk especially about custom packaging and some of those things, my mentality very quickly was like, oh, I would have no idea what to do here. Especially because this is like a side thing for me. This is not my main everyday thing. So you and move supply chain, which is your agency that does this kind of thing for people with Filipino talent, have. Have built it from the ground up because you're the people I trust to do it. And so it's been amazing to work with you. You know, I've gotten the pleasure of working with you on a bunch of stuff now, and it's just been really fun. So. Yeah. Okay, so let's talk about it. So I showed the finances of this business before and just to again, kind of catch people back up, right? There's basically two elements of the core product, right? There's. There's the balm that I mentioned here a second ago, and then there's this custom packaging. Okay, so this is kind of the trickier part in a lot of ways. You're not going to be surprised to hear that the balm, solid cologne balm, it's very high margin, just like spray colognes. Extremely, extremely high margin product. Sort of famously high margin, actually perfume and cologne, maybe, maybe even higher margin than something like skincare or whatever. But the other part of it is that famously in fragrances and perfumes and colognes, you need. You need, like, to have a brand that looks and feels good and premium and beautiful. And so we built a brand called Resolute with my great friend Robby Aronson doing all the design work there. And so this is the custom packaging. I actually didn't have it with me when I did that. Previous episode. But here it is. It's really cool. It's this little slider just like this. There's, like, how thick it is. This is actual walnut and there's an aluminum top, totally custom. It'll actually be slightly different than this. But this is. This is about right for what it is, this little cube. And we had to build that. So, Laura, what I want to do is talk you, is just take you through, or have you take us through the way you built the supply chain and then each kind of little part of how we are trying to optimize it. So where do you want to start? Do you want to start on the bomb or do you want to start on the packaging?

I can start by explaining how difficult, not difficult, how different the balm and the packaging was in terms of sourcing. But they have their own pros and cons as well. So the balm is typically, if you see it's a more easier product to source. The manufacturing process is very easy. It's melting, it's mixing, it's cooling, and that's it. And probably maximum of three raw materials for you. And. And then the hard part of that is we want the highest quality production. Of course, we are sourcing in the US and some in Europe because of the fragrance. The perfumers and the fragrance manufacturers are also high in in Europe, while the packaging is like, in general easier to source. But the design, it's so beautiful, it's so elegant. It's complicated in the sense that we are combining two different materials and it needs actually a manufacturing expertise to have that produced at the same time. So it was a very challenging and exciting project for us. And so first of all, I just wanted to shout out to the team, Omar and Lizelle for doing this with me, because the strategy is coming from the expert, but they are doing the execution and they did a really good execution in that.

They've been amazing. They did better, really. I mean, really good. Undersells it. I have said to my co founder many times, like, I don't know where we would be without Omar and Liesel. Like, they're so awesome to work with at every step of the way. They've been on top of things, guided the project at every step of the way, like on the project management side of things. And I should say, like, unbelievably good and also like, totally affordable for us. And that's just because there are people with good resumes, but they're in the Philippines and it's just this thing I say all the time. About working with you and the sister companies to move supply chain is like finding high levels of talent in the Philippines. For us, business is an arbitrage that is like, we can get them paid well. They can be really happy in the work. We can also keep the margin. It's like, it's just a really big win. So, yeah, they're. They're awesome. I love Liesel and I love Omar. They're great. Got to meet Omar, at least in the Philippines. Last year, earlier this year.

Yeah. So it's two different products, two different process, two different style. But in the beginning, it's always mass to match. Like, that's how we do our sourcing framework. We're in. It's a wide funnel. We begin with a mass RFQ blast. Request for quotation is RFQ blast. Like, it has been helpful, Andrew, that you've shared with us your target costs, because for other clients that we had, we don't have a target cost. So at least we can easily shortlist our clients with that. So mass rfq, like, we reached out to hundreds of manufacturers explaining the product and eventually creating that list. And then we filter and shortlist that list depending on the requirements that we have. Like, for example, we have a template that we use. It has the specs that is required for the packaging and the solid cologne, and then we have the volume requirement. The certifications is actually important for the formulation because we want organic and natural for that.

Yeah, that's an important note here, Lara, really fast. Sorry to interrupt you. It's an important note because the. While the balm is relatively simple to make, you know, we're really insistent on clean ingredients. We think that's like a critical part of how we'll differentiate. And so we wanted to find people who were where we could feel great about listing the ingredients on the product and going, like, we can stand behind this 100% and make some strong claims about our product versus others in the space that's critical to our marketing plan. So. Yeah, yeah. So you said MOQs were a big part of that. MOQs were a big part of that too. Right. Because we also don't have, like, tons and tons of money to throw at this. So.

Yeah, And I had an experience working for many years in a. In a personal product like this that is using clean ingredients. And so I was thinking when you said we want this for. For the formulation, I said we need to source more. More than what we usually do, because probably 75% of those are not using natural and organic. So I Already have kind of an idea how much of the percentage will be offering natural and organic. So I told the team we need to source as many as possible directly and communicate, align expectations. This is what you're needing. And so we don't waste time communicating with them if they can't produce it. So again, the timeline is also important. And the goal is. I told the team the goal is to cast the widest net possible so that we have more options of shortlisting a better partner down the road. And that was stage one.

I mean, that I think is something that already, like whenever I try to pitch, move supply chain to people and tell them to go hire you guys to do stuff, I just say, like, I just know that they. That most folks have just talked to way fewer people than you guys talk to. For us, like just that on day one, we're coming in with having had so many more calls, basically, you know, just. And just like RFQs, like you said, actually filled out. Do you, do you know what the. Do you. You might not remember this, but do you know how many manufacturers, both for packaging and product you guys ended up having some level of contact with? Like actual contact?

Yes. So for, for, for the manufacturing, we have 30 plus total production. And then for, for the, for the packaging, it's more than 100 vendors that we've, that we've talked to.

I've been underselling that because I always say 60 on packaging. So I've been cutting. I've been, I've been. Yeah, you should have yelled at me about that, Laura, when I said that on a podcast at some point.

But I always.

That's amazing.

I always share, Andrew, that the sourcing process, the stage one, the. The sending of our rfq, it's not very complicated that. I'm not saying that you cannot do it. You can do it. All you need to do is to create like a specification sheet where all of your requirements are there. Just doing that and then sending it to all the suppliers that you can. There are so many sourcing tools right now, and then there are websites. But I think what we have that you don't have is just the time to do it, like creating that specification sheet. And then the first week that we do is just source or source. It's. It's 100. Just sourcing, sending those specifications, asking for the details. And, and that's how we started and sorting out.

I mean, that's true, but also like sorting out, sorting through all the stuff that people will feed back and quotes and all those kinds of things is challenging as well. And I also don't, wouldn't know where to start looking for that. You mentioned sourcing software and some of that, and that's great, but I, I mean, I, I don't know what sourcing software to use. I've never used it. I'm not familiar with the interface. Like, all of those things represent friction for me in a way that, yeah, don't, don't, you know, make sense to me. Okay, so let's talk about, let's talk about the balm itself. Well, did you want to go somewhere else? Did you have something to say?

Well, I just wanted to say that stage one is the easier part, where stage two, that's where the filtering comes in. So maybe that's the one. That's the stage wherein we have to separate the sourcing strategy between the balm and the packaging. And maybe your question would answer.

Yeah, yeah, let's do it. So you mentioned I had target costs. I did and do have target costs. I'll share right now where we landed. I shared this before because I wanted people to see this, the stuff that you guys had done for us. But, but here's our unit economics at each part of it. As I mentioned on my previous podcast, I expect the ordering phases, the ordering to happen in a few phases where you just kind of have a sample box to start. We're not really going to talk about the sample box quite as much as a much simpler thing to figure out. But the full packag is the stage two here. And we really wanted to get that number down to, you know, we have about five bucks per unit here. I really want to have 70 points of landed margin to the customer at the very least, and I would really like to get that to 75, if not higher over more time. Now, one of the things about this detail is that you, of course, this is all ordering it literally at moq, right? So we're ordering at the lowest possible volume. And anybody who knows anything about this, even me, which I. This is not my area of expertise, I know you know that you're going to save a bunch of money just by ordering it more in more volume pretty fast. And that will have diminishing returns over time, but pretty quickly, just by not being at the lowest order volume, you'll get pretty far. So we'll launch with something very close to 70 points of landed margin and I think we can get to 75 for not too long. Also tariffs are in here and who knows what the future of that is? We have Some interesting stuff that you were just talking about there and then sort of on refill packs. That's where it will be also really, really high margin if we can actually get people to that stage of things, which. Which is going to be another question. So. So let's talk about the bomb first. As you can, as people who are looking at this can see, you know, I've got us at about $252.50 per, you know, half an ounce. That, that number may actually change a little bit, but it's going to be close to that per half an ounce fill. So. So how did you land on our manufacturer? I don't know. We should say who it is or not. I don't think I mind.

I think it's called.

It's quite fine. Yeah. What do you think? You think we shouldn't say it? Should I bleep it? Okay, all right.

BLEEP it.

Saying to my editor right now, bleep that. That's funny. Email me. Okay. I don't know why we shouldn't.

Okay, great.

All right. Yeah.

And so great.

Go ahead.

Yeah, I told you that our numbers is at like almost 40, 30 plus for that. And those were the already considered manufacturers for you, where we can, where they can produce like natural and organic. And so the way that we continue sourcing it is that we have been asking about their compliance and product capabilities. So we have some shortlisted companies from the us, from Europe and then also from Canada. And then I think we didn't have a lot of problem with MOQ in lead time because MOQ right now in the manufacturing, they now have the small capacity machines, medium and then high. So if we don't have that much volume in the beginning, then we can just ask them to produce in that small kettle for this production. And so the compliance is a bigger thing for us and the cost, of course.

So are you saying most manufacturers now have smaller kettles that are saying like smaller?

Yes.

Yeah. That's interesting. Okay, so MOQ in general, you think, is not a big problem for a lot of brands? In the same way?

No, for your product. For your product. Yeah, formulated products. Because they have been like, they would start with a medium size and then they will eventually get a smaller one and a bigger one. Just so they are flexible with their customers. Because a lot of the bigger problem there is how they can get a smaller brands right now if they don't have a smaller capacity, then they won't be able to support.

Got it. Okay. So that was not really an issue and it's interesting. When I look at this supply chain immediately and I look at like 250 for half an ounce, my immediate thought is like, I mean, I don't know, maybe we can get it to 150 someday and saving a buck on every order at real scale would really matter. But like, it's not at that point, it's not nearly. It's not the next thing I would care about for this brand. Like, what I would actually care about is like shorter lead times or better terms or something like that. I don't know. When you look at like the future optimization of the bom, what do you. What do you think of, like, how do we. How do we make it better if we want to?

Yeah. So what's interesting is we find we found a supplier that can. Can source the raw materials for us and then produce it at the same time. My ideal scenario is we source for them. Raw materials are coming from us, we buy it, we store it, which is the typical tall manufacturing partnership. Like you produce, we provide. So it's easy. 30% cost reduction there, Andrew. Where we source it. Because like in construction. I don't have a better analogy. In construction, when you pay for the company, they have a percent for the. For the materials on top of the service that they provide, the labor. So when I always say, when I do construction, I will say that I will buy my own raw materials and just give me the price for the construction. That's the same thing with this production where I will be the. Again, the raw materials are very easy to source. And it's a maximum of two to three combined raw materials. And we are. It's not. Aside from being natural and organic, it's not hard to source. So that is. The next easiest way is to create that sourcing strategy where raw materials are coming from us and they're just done manufacturing it and they're not owning the formulation. We own the formulation. So that's the next easiest step.

That's worth noting that we are. We don't own the formulation at first. And that's basically just a matter of keeping our. Like, we'll kind of cross that bridge when we come to it. Like, our mentality is like, get the, get the sense out, get. Get the product launched and don't pay to like have custom fragrances, etc. In the early days. Instead, we'll just kind of work that through the manufacturer who helps us supply a fragrance or somebody is a perfumer or somebody to do that.

And we're future thinking about that. We. We Already thought of that. And so all our manufacturing that we shortlisted is capable of accepting a formulation from us. So again it's, it's the carrier oils, the fragrance oils and then the wax. And so it's just for us it's very easy. It's finding it's formulating a special scent for Resolute is the next step. So it's like not just choosing from their thousands of libraries, scent libraries, but creating our own is the next step. And, and they are open to doing that. They are open. They have perfumers that will. That is open to. With us on that. So those manufacturers that we've shortlisted, they are willing to do that route in the future.

How did, how did you actually confirm that like of the. Because we did get to this point where we were at like you know we had. We got from 30 or whatever manufacturers down to three that we were like sampling with. How did you actually narrow from 30 to 3 or whatever it was? What were the things that knocked people off the list?

Yeah. So basically there were soft qualifiers as well. Like I immediately shared earlier the MOQ pricing, pricing has filtered a lot of those vendors and then the lead time is not as much problem the unit cost. And then there's soft qualifiers where responsiveness and communication score because comparing it to China, China is the fastest communicators in the entire world. But having of course sourcing with other options, we have to make sure that they are responsive to our questions and then willingness to iterate or collaborate. This is the one thing that I mentioned earlier. Are you willing to support us down the road that we wanted to do this and that and it's not just like thinking about now, it's thinking about the future, what we want to do with the brand in the future. And then there were proactive questions that, that we've asked and then we spotted red flags and so those red flags were they. They weren't giving. It feels like they're gatekeeping. They. We cannot talk to the perfumer which is unlikely. We cannot know where they get their fragrances from. And there were, there were like we also sourced for the fragrance houses Andrew aside from manufacturer. So we both like two way. Because some fragrance houses with. With excellent perfumers talents they don't have a manufacturing so so we both, we kind of separate sourcing on that so that we are. We can also like have an option to. If we can find a manufacturer and a perfumer at the same time we have the option to like develop it with this fragrance house and then give it to the tall manufacturer. And so those were options. And then we review feedback from networks and so we ask for their clients, if they can share the names of their clients, the reviews, the referrals and like deep research on that part. So narrowing it, doing that soft qualifiers will narrow down to like around 10 vendors for sampling including the filter of like unit tooling, cost, payment terms, terms in good terms, samples and cost.

The result of that is that we have like low moq, very fast turnaround. And when I look at like our, the where the challenges are going to be in our supply chain especially, I'm like, I keep doing this. Like I've talked to other brands that have, have launched, you know, CPG products like this, personal care products, whatever and I see like these like 3 month, 5 month lead times on their products in the early days because they're so small or whatever. And I keep kind of waiting for that to happen in a conversation with, I mean I like I was on the phone with our manufacturer the other day and the, the you know, I was like saying okay, well what, you know, what would the lead time d if you guys do this or that or like oh, you know, a few weeks. And I was like what like I like I just like we're worth nothing to you? Why, why are you. Why is this happening so good and so fast? They've just been like incredible like immediately incredible to work with. I'm gonna have lunch I think with their. With with our representative there like this week, like just kind of get some face. So just like really like I just every con I keep going like wow, this is like going to work like as long as the, in terms of. On the supply chain side. This is going to be a good relationship. They're just awesome to deal with. So let's. Anything else you wanted to say about the cologne itself?

Yeah, I just wanted to double click on that, Andrew, because those shortlisted at least the top three that we've referred to you, we've already tested how to communicate with them. We felt the partnership already and so not just the technical shortlisting process, but what I've mentioned earlier, the soft qualifiers are very, very important because as you've said, you feel like it's already a good partnership even without not yet starting it.

Totally. Yeah. And yeah. And I mean I think at the end if we end up with on launch when I expect everything to be at its worst basically. Right. That's the thing. My expectation in my mind is that everything about our supply chain is the worst right now it will ever Be. And. And I look at it and go like, I think that it's already pretty close to our target margin, which is by far the thing I care about the most because margins, a cheat code in E commerce. And then like the lead times are not crazy. And I don't know that we'll have like great terms with them on launch or whatever, but I don't really care about that. The world is going to be small. We'll worry about that later. Like, yeah, they just. It just seems like we're just really set up for success here. And I know we'll run into other problems along the way, of course, and there will be challenges, but it's. It's just really awesome. So thanks. Thanks, Laura. It's awesome. Okay, so let's talk about the packaging. The I've got here again, the packaging again, I'll just kind of repeat. This is like wood aluminum. There's this like separate box that needs to be this separate little tin that needs to be able to come out for refills, etc. It's magnetized. You can see it like snaps into place like that. And. And it's really fun to play with. I sit here and do this all day long and snap it around. But, but like, as. As I'm looking into those things, this is like totally custom. This was like a harder job. I know this sent you to China at some point. I believe there's also a Vietnam trip at some point. There's tariffs involved. So where do you want to start there? Like, how did you come up with this and with this manufacturer and, and, and yeah, talk us through that process.

Yeah. So again, it's the mass and match. We. It's kind of easier for this because Alibaba is a platform that is reliable for this kind, but we just have to be very clear, careful how to shortlist like reliable vendors. And so I, I trained our sourcing specialist how to do that in Alibaba. And so mass RFQ and then being clear with the specifications is something that is key for this. A key for a very complicated design with different types of materials is kind of the most challenging start that we can do. So you have the wood. You have to think about what wood is cheapest, but not cheapest, not cheaper, higher quality and also readily available and easily available in that country so they don't have to import so many raw materials. And then we have the metal and we have the magnet and the tin inside. And how do we connect all of these hardware? There were like multiple discussions. It's a longer discussions than the formulation. Of course there were a lot of 3D drawings. So Andrew, if you remember, we had a 3D design for this because we really wanted to make sure that the creativity of your designer will be, will be created like exactly the same idea. So we had a designer.

You supplied the designer, the 3D designer for that. The CAD for the CAD design.

Yeah, yeah.

Which was awesome.

Yeah.

We wouldn't have had a clue where to find that person. Yeah.

Yes. And so that is the most important information or document that the suppliers can, can get. So when we, when we send Those out after NDA, of course, we were able to easily shortlist like 10 manufacturers who can do it. And then I remember it's, it's our time to go to China, like, like October last year. And I said, we have to do this. And you were like hesitating and you said that. Do you think we need this? I think we need this. I wanted to see how they do it because in my head, like, it's kind of complicated already. I've been in this industry for a very long time, but this is a very beautiful packaging. But at the same time, no offense, Robbie, but so hard. Thanks for doing that.

Well, you know what's funny about this Lara, he told me when he sent it to me, he like, hey, like I said, I know Robbie really well. He's a good friend of mine. And I said, do you want me to. I said like, build something that you think is going to be awesome and then let, let somebody else's problem be sorting out how to source it. Because like, I want you to do what you think is great because you're a great designer. So he, he's like, okay, well I'll do that. But like, it's going to be expensive. Like, I just know it. Like he's, he, he's a designer first, but he's, he loves designing packaging. He's been around the world enough to. Around E commerce business enough to know how this kind of stuff tends to work itself out. And he's conscious of that. He was thinking about it as it was going, but he's. And I was like, don't worry about it. Let it be somebody else's problem. Make something awesome. And because my thought was honestly, like, I could give it to you, you could look at it and see if it's possible. And then if we need to make changes, we'll make changes. You know, Robbie will come around and make edits and say, okay, how do we make this a little bit Easier if this is going to be really hard. But I just thought it is different and cool and custom, but it's not, it's. It's wooden metal. Like it's not impossible for somebody to make this, you know, so.

Yeah, yeah.

So when you say it was so hard, Laura. Yeah. Say what? What made it so why is that hard?

The manufacturers are avoiding this complicated production wherein they need like that machine and different components together. So like of course they wanted, they wanted, they wanted customers, they wanted money. But choosing like this packaging versus others, they would definitely choose an easier ones compared to this. And that's why I'm very eager to see how the production goes. Because the combining this hardware is something that not all manufacturing can do. So I wanted to see it firsthand. The team has seen it firsthand how they do it. We've seen the sample, we've seen the kind of woods that they have, we've seen their warehouses. And from step, step one to the last step, we've seen the production. And so that is the thing that I've been looking for. Because again, before Andrew, before E Commerce, this is a standard and not like an option before Pandemic. So before we even order, we have to see the plant wherever they are. So even we are working with KFC before we're traveling to Brazil, US to do it. And so it's the same thing that we're allowed to do now because we can travel. I said I wanted to see the production. So having that willingness from the vendor to do a complicated work is also something that will give us like a hint whether it's a good decision to work with them because if it gets harder after launch. So this is just the beginning. The challenges that we're going to encounter in supply chain in the future will depend on how willing our partner will work with us to solve those. And so if they can do it but they are not willing to support us, then that's not a good partnership. And so what has been ultimate decision factor for us is when we did sampling, that's actually where a lot of our vendors got removed from the process because they are not able to first produce a sample or they are asking too much money for the sample, if you remember that. And then there were like three to five vendors that gave us a decent amount for the sampling. And it's actually something that we can refund when we start the production. So yeah, those were the critical points for a packaging that is complicated like this.

Do you think that this would have been able to get done if you didn't go to China in person, I.

Think, I think yes. But I will still push to visit them before mass production. It's because our current vendor right now, the shortlisted one, they have provided videos that made us confident. So that's another plus points for them. They showed their manufacturing in a video. They shared everything. It feels like they did not hide any information to us. So I'm kind of confident for that vendor. However, it's my, like, it's my, it's my curiosity that I wanted to make sure that even if they are the right partner, they can really support us long term and not just in the beginning of sourcing so maybe we can launch but like the confidence to continue with them long term is what I, what I have is the answer that I get after, after the visit.

Makes sense. How long of a flight is it for you again? Manila to. To where was it? What city was it?

So, around. So they are in, in Guangzhou. So less than two hours. Yeah. Yeah, less than two hours.

That is just like sometimes people frame working with people in the Philippines as like this big problem. And it, for me it's been like, I mean there's times when it's frustrating, of course. Like, you know, you and I have to schedule this kind of conversation at a time that makes sense for both of us. It's morning for you, it's afternoon. But whatever. Like it's not that hard to, to block the time. But there's these things where I found it to be so convenient on stuff like this. And actually in this process it's been really awesome because, you know, same thing like we'll schedule a check in meeting when we need to, but there's been times when like we'll ask for something during the day or something that needs to get put together. I recently asked Liesel who sourced the, you know, who's led on the packaging. Like, hey, can you put together all of the costs from all of our manufacturers? And just as we kind of take some final steps here and put it all into one place for us to see, you know, you've sent us a bunch of stuff along the way. Just compile it. All right. And it was great because like I said that at the end of the day I woke up and it was there essentially like in my inbox. I didn't have to like. Yeah, it was just like I didn't need it right away. It was just like this really easy back and forth to where like the. Yeah. Anyway, so I found that to be true. A lot of Cases. And this is another thing with supply chain where I just think if. Because we're manufacturing in China, having you so close to there is just great. Like, it just. It just is like, man, we can send a team member who is like, really a team member on our team to go and represent us there at some point. I mean, if we get enough volume, then I'll go myself as well. But, like, until then, you know, it's like really helpful to have somebody who can just go make that trip and go make the relationship and all those things, you know, you. Now we have a tariff problem here, which is that, like, it's going to be 30 to 60% tariffs. I think it's 30. But we, you know, I. I just got. After I released this last episode, actually Greg Cary reached out to me and said, hey, you might want to check that. So. So you started to source it in Vietnam to go look and see if that was possible?

Yes, yes.

That was kind of a dead end, it turned out.

Yeah. So we did it for many brands, not just for Resolute, but the question is, can we find this somewhere else? And I kind of have hinted that this is. I mean, this is hard to source in China. How harder could it get if it will be in other countries? But we still try it. I think the main lesson that we've. First, the main lesson that I've learned is that when we shortlisted this vendor in China, the number one factor that we've considered in their technical side is how to combine the wood, the magnet, the tin and the metal. And that is where the Vietnam options fell short. Like, Vietnam has great source of foods, even better than China, even better than China and even cheaper than China. But they fell short when we are already asking for a full sample. They cannot produce it already. So what happened is they refunded our sample fee. They said that they can do it. Maybe what's the next option for us as a next step is to find someone that can piece them together and not to focus, because right now we focus in someone who can do it all. Maybe there's someone who can piece them together if it's cheaper, if wood is cheaper in Vietnam, and if metal is also cheaper in Vietnam, maybe we can get that raw materials together and someone do it for us. So it's not for the launch phase. It's kind of hard to start doing that. We definitely need someone who can do it all. But like the optimization in the future, that's something that we can do because they can do the wood, they can do the metal, they can't put it together. So that's something that we can explore in the future. But yes, it was a, it was a dead end for now, especially for the launch schedule.

And that's fine I guess worth checking out and understanding. And again, it would have been a huge pain for us to go check that off the list. Do you think Vietnam is viable for other brands?

Yes, yes. We've found so many vendors in Vietnam actually just to be very transparent, there's one DTC brand that is almost closing this year and the only thing that made it survive is because they found a vendor in Vietnam that has 15 days lead time as compared to 45 and 60 and has the same quality. Like samples were approved already. They have started po and Portless is already in Vietnam just in case others didn't know yet. So Portless in China is also now in Vietnam. They started, they are starting. And so what happens is that DTC brand is now able to get pre order. So they don't have a po, they don't have to invest money in this in the bulk PO because what they'll do is they'll get money from the customers before they actually produce it. So that's the, that's the main, it's mainly in apparel packaging and those kinds of products that is, that is, that is highly produced in Vietnam like shoes and bags as well.

Yeah, right. The, the other question I have is like for the future of this product. So again, we started with 60 manufacturers, got down, I feel pretty good about 5 bucks per unit on, on, on this to start. It's actually I remember I asked you on a call at one point like what do you think we're going to pay for this? When you had looked at it and even with all the customization, you said three to five bucks, it's going to be somewhere in that range. And I was like, I won't hold you to it, I promise. I'm just curious where you know, you might. Five to seven, I don't remember. But, but I, you know, I've started to think about like okay, what is the steps to getting this to be better for us? Because that, that is a larger cost to where if we could knock a couple bucks off that it would really help. Some of that's volume for sure. I, we've already got quotes saying that just ordering it even a little more scale will definitely help us there. 20 or 30 cents a unit like pretty much right away. Which, which, which matters. And you know, if we get, you know, 10,000 units orders or whatever it is, then, you know, it'll, it'll go down more. But my question is like, I mean, you know, you mentioned the idea of like a tool manufacturer in the US with our, with our, you know, us going and sourcing raw materials on the cologne. Well, what about this? Could we do that? Like, could we go source wood, could we go source aluminum? Is that like a viable pathway for us to go down and try to like go hammer away at their bill of materials basically, and see if we can save some money there? You mentioned the idea of somebody else assembling it. And I want to talk about your Philippines idea in a little bit because it's really interesting. But, but, but, you know, what about, what about doing that, like going and chasing down raw materials for this? Is that viable?

Definitely. Yeah, definitely, Andrew. And actually the, the one, the biggest learning that I've got from Vietnam is to see how cheaper the other raw materials are from other sources. So they have a huge gap in the wood and aluminum costing. So Vietnam is a lot cheaper. It's like 25% cheaper than what, what we have right now. And the only thing that we need to solve there is to find that manufacturing who can piece it together, like I've mentioned earlier. But it's always aside from, aside from increasing the order, which is an obvious savings if we don't have that capacity, it's really getting and understanding the raw materials that you have sourcing it our own, that removes the additional percent that they add in their sourcing. And these vendors that we've talked to, they are open to open costing. We know the cost of their raw materials and we know the cost of their production. And so if we support them, like, what if we find you a better, cheaper wood option, Would you be able to adjust the cost for us? So that's the negotiation and that's the projects that we can do with our existing vendors. So material, raw material sourcing, sourcing our own raw material and then sharing it to them. And then there were also other opportunities, Andrew, in the future, wherein we try different kinds of materials that could be lighter, could be cheaper. Anything that can eventually make it cheaper in logistics, in your three pl in shipment. So if it weighs like this right now, how else can we improve the design or how else can we replace the raw materials of those products to make it lighter and to make it like, cheaper even in raw materials. So right now we are using that specific kind of wood. Maybe there's an option in the future to change it. It.

Is, let's Talk about the other idea you had because the actual other killer on cost for us is tariffs. And you just had a suggestion that I think is really fascinating as a way of potentially getting around those. And obviously there'd be a lot of steps to sourcing here, but you want to lay that out. It's really interesting.

Yeah. First of all, I'm very excited for this project. I'm doing this for a lot of our clients because Philippines now has the chance to compete to China. And that's something that we are very, very happy to do because again, very big brands before were here. Fila, Adidas, they were here and they transferred to China. Apparel was here before and they transferred to China. We cannot compete with our costs. And so right now that their tariff is heights, I'm not saying that I'm happy hearing that, but the opportunity for the Philippines is giving us now an opportunity to fight for the unit cost. Now, because we are considering landed cost and because Philippines and US have a great relationship at this point, we were negotiating tariff as well. So if we can send the packaging here and we. What do you call this? We, we assemble it here, then it's a, it's a, it's a very cheap cost to send it here and then we are going to be saving the tariff when we send it to the US and of course there are some alternative options as well that tall manufacturing will be here in the Philippines, but 100% of the raw materials are coming from US and Europe so that we maintain equality. And so if finished goods, if all of those like the packaging goes here, we produce here and then we packed it, packaging is also the box, packaging is here and we send it to you. I'm curious to know how much will that be compared to sending packaging to us, to China, then tariff and then producing it there. I still believe that our labor and our labor cost is cheaper than in the US While I saw the machines when we visited, it's the machines from Germany, similar to the machines that other manufacturers are also using. So we can compete. I think I have a high confidence that we can compete with the cost right now. So that's something that I am doing at the back project. I already did that without telling you, Andrew. I think I have an idea to make this cheaper.

Yeah, it's extremely cool. I mean, I just look at us and go like we're already going to launch with so much margin that we'll be in really good shape and margin. Like part of the reason I care so much about this is that like I've worked with brands that are just extremely high margin and when that happens, it just makes everything else in the business easier. If you want to cash flow an E commerce business, one of the best things you can do is have really great margins because it just means that your cost of buying a bunch of inventory. Like I have literally worked with somebody I know a guy who does not keep, keep a cash forecast in his E commerce business. And the reason why is that he doesn't really need to because his inventory, his margin is so good that it basically doesn't eat up any of his cash even as he scales. And at points he scaled like 2x the business at times. That's unheard of in E commerce. And it means that if you overspend one day on Meta, it's not great, but it's, it isn't nearly as costly as it would be. Like, it's just you make a, you make an improvement to your funnel, you make an improvement to your return and cut to your retention. You just multiplies the value of that. The margin is just magic. And, and so being able to do that and then design your supply chain so that you can deliver a great product, which is like critical in all of this. And you've been awesome about that, just like never sacrificing quality. I think we're gonna deliver something that's really good at the end of the day, like, like, and, and to do that while also just like really pouring over this to see how, how much margin we could save I think is a really, really big deal. Every point or two that we can get back is really worth doing. And so anyway, it's, it's. I've been insistent on it from the start. You said I had a target cost from the beginning. This whole business for me, the whole reason I'm interested in the category is a margin play. And so yeah, so I think it's a, I think it's a like critical part of it and I don't think we would have been able to do it without you.

Yeah. Thank you. And I think I mentioned this to you Andrew, that we now have formulators from multinational companies in personal care. So like, like on your team, you mean? Yes, on our team. Like formulators.

Like people working for like the biggest CPG brands in the world who are formulators there are now on your team to consult with little old me and my stupid little E Commerce.

Yeah. Because we've been two clients that we've got that is formulated came from your ad. And so we have Three now that we're working with this formulator so I'm so excited to really just try. We're getting more and more clients in the formulation side. Majority of our clients is in FG side like finished goods already like apparel, shoes, bags. But this is something that, that is more challenging but at the same time exciting to do because it has that formulation part production part where my experiences has been for the longest time. So we've got formulators on our end. We've, we have perfumers, we're doing formulation and we're connecting and partnering with doll manufacturers. So I'm excited to use and help help resolute to even bring down the cost and and improve your margin even more.

Amazing. Okay Lara, people should reach out to you@ movesupplychain.com is there anywhere else you want them to reach out to you?

Yes. You can also follow my X account at supply chain Lara as I share more news over there. We also have Andrew as now a Slack channel which, which I shared. I will be giving you the link. Yes, yes, we have now members in that we have like live ask me anything every Friday and so experts are there. It's free, 100% free. We provide to our friends in supply chain. We're trying to increase the awareness in supply chain for e commerce. So we did that and yes. Movesupplychain.com and I'll be sharing with you the link how to join in that supply chain lounge. Slack channel.

Yeah. An E commerce Slack community entirely dedicated to supply chain problems is like one of the coolest ideas I've ever heard. So okay, all the links for that are in the show notes. You should definitely go check all of that out. Movesupplychain.com is the place to go work with Lara and her team who I recommend really highly. Thanks for your time Laura. I appreciate it.

Thank you Andrew.

I have the same feeling every time I talk to Lara which is that she knows a lot and that there's all of this knowledge in her brain that is getting applied to my business. That is why I like working with her and her team so much and you should do it too. Movesupplychain.com is the place to do it. All the links for this episode are in the show notes and so you can follow up with her, join that Slack community, etc. I am convinced that supply chains are the most under optimized part of e commerce businesses. Lara can help you solve that problem in your business. Save a bunch of money, generate more cash, do all the things that make an e commerce business better. So do follow up with her there. Thanks so much for watching listening. If you have any other comments feedback, please leave the comments on this episode. You know how to comment on YouTube? It's easy. Just comment right now and then and then also reach out to me. PodcastJFGrowth.com is the place to do that. Or if you want to work with AJF growth as always, you can do that@ajfgrowth.com for really everything I'm doing. It's all there. So thanks so much for watching listening. I will see you next time.