Anatomy of a Launch: The Year of Living Dangerously
This is the last in a three-part series on Earth Preserv and its national product launch. To comment, please send electronic mail to email@example.com or call 617-248-8473.* * *
Earth Preserv's seven-figure initial order from JCPenney was sweet. But a year into the deal, there was no denying the cold hard numbers. At JCPenney stores, the Earth Preserv line of bath and body products wasn't moving -- at least, not fast enough for Keith Waldon, CEO of the ecologically minded start-up in Irving, Tex.
Few things happened quickly enough for Waldon the first year. After his line's launch in 640 stores on Earth Day 1994, he oversaw the production of 50 products, aired an infomercial, and created a catalog. "We wanted to do it all," he says. Four months into his second year, Waldon paused to share a few lessons learned:
Do more field research. "We relied heavily on JCPenney's corporate office" for the scoop on bath-product sales trends, Waldon concedes. He wishes he'd talked to some of the 640 store managers. "Every store is different." Earth Preserv sold surprisingly well in some rural stores, for example. And gift baskets did well. But overall, JCPenney sales fell flat. That led Waldon to focus on health-food, drugstore, and mass-market chains.
What you don't know about selling can hurt you. Waldon had underestimated the cost of sales. He had been led to believe he wouldn't need to hire manufacturers' sales reps to call on JCPenney stores. But that wasn't entirely true -- Waldon did need help in the field. He found a way around the customary 5% to 10% sales commissions, though, by asking stores for the names of less expensive "field service reps," who today handle Earth Preserv's store setup for a fee of $11 an hour or 2% to 3% of sales.
Don't try to outsource everything. Waldon knew little about warehousing and fulfillment, and so he outsourced both -- a "horrible" arrangement, he says in retrospect. Today he runs his own warehouse. He also dropped the inbound-telemarketing service he'd contracted to handle consumer calls. "It forced us, through the eye of the needle, to develop our own customer-service department," he says.
Today Earth Preserv employs 20 people at headquarters, 10 workers in the warehouse, and 3 sales managers in the field. The company has surpassed $4 million in sales and is almost in the black. Is Waldon slowing down at all? He has curtailed the infomercial and the catalog. But he's hot on the trail of new distribution channels, lining up agents in the Far East and South America and launching an "eco mall" on the World Wide Web. He can't talk fast enough about his plans.
Hey, you're only a start-up once.