- Chew On This
- The $55m Product Development Playbook (Pt. 1)
The $55m Product Development Playbook (Pt. 1)
Welcome back for another bite to chew on.
We hope you’re having a great weekend thus far and are all prepped up for BFCM.
In today’s newsletter, we will discuss an area of a DTC brand that can supercharge your marketing and front-end metrics… and that is; Product Development
We know this is a topic that you probably find boring, so we will try to make it as engaging as possible by including stories from Obvi and how we do it.
But before we dive in, we have a few things to share with you…
We recently launched our latest podcast episode with Harley Finkelstein - President of Shopify where he spoke about the future of DTC and e-commerce. This is one of those episodes you really don’t want to miss out on.
Ever wondered what’s going on “behind the scenes” of an 8-figure DTC brand? Like… what it’s really like - and NOT only what people showcase on LinkedIn.
Then you will probably like our new show that we just launched - The Office Hours. Here’s the full video.
Now that this is out of the gate, let's dive into today’s newsletter!
The 4 Phase cycle of every product…
When we started Obvi, we quickly realized the importance of thoroughly understanding the product life cycle.
This isn’t just about creating a new product…
It’s about nurturing its evolution.
There are 4 phases that every product has to go through:
Let’s dive in to each of them separately…
Concept: Every product starts with an idea
This could be as simple as a solution to a problem or something you’re passionate about.
For example, True Classic is a simple product (a tee) that solves a simple problem of good quality functional shirts for men.
For us, it was noticing a gap in the health market for a specific type of supplement.
For anyone who is just starting, become an observer and see what problems you can solve.
…. Make sure whichever problem you set out to solve is scalable and that there’s a massive audience of people who are going through it.
Design: Bring your concept to life with vivid visuals…
Before you go out to raise capital or figure out your finances or even think about running ads - you should have a mockup of your product ready.
You should already know what the product would look like, what the packaging design would look like, etc.
Sketch, doodle, or whatever it is you need to capture the essence of your idea. These mockups and designs play a HUGE role in how you would position this product in the market.
Prototype: Before you mass produce, prototype
Creating prototypes of your designs is essential because that's when you start seeing the nuances of what you could do to make this product even better.
Let's face it, whatever you visualize in your head doesn’t always come out to be that in real life.
Sometimes what you started with (or even first visualized) isn’t always the thing you end up with.
So, it’s a constant iterative process that you have to go through until you get as close to a perfect product.
For us, it was testing tons and tons of different formulations - until we found the right one.
… and we're still continuously testing this to always improve
Testing: Use your prototype to get feedback
Now - once you have the prototype ready, it’s time to start putting it to a test
Let’s face it, the first prototype you come out with will probably suck - so might as well have your friends and family try it out, and tell you that it sucks
At least… that’s what happened to us.
We had to go through 3 or 4 rounds of prototypes before launching to the market (because it just wasn’t good enough.)
The feedback we got from our friends and family was invaluable in refining the product even further.
That’s why it's important to get that third-person’s validation before you set out to launch your product and start pouring marketing dollars behind it.
How to establish a MOAT around your product…
With every e-commerce product, there’s always a certain risk associated with it, in the form of price competition and knockoffs.
Once you get your product out in the market and it starts getting traction, you will see many knockoffs come into the market and lower the price.
… it doesn’t end here.
… and therefore, you need to start building your MOAT from day 0.
A MOAT is anything that offers you brand protection against any price competition.
Now, if you’re bootstrapped like us and don’t have any venture backing, you might wonder how you can build a strong MOAT, with very limited amount of resources
So, here are 3 types of MOAT’s that we recommend bootstrapped founders to start building.
For anyone starting out, starting to build an audience is one of the least expensive things you can do.
An audience is something that keeps compounding and builds an emotional connection with you and your brand over time. The best example an audience MOAT is Prime - which was doing $250 million in it’s first year
At Obvi, our community is the backbone of our business.
But.. the power of a community is not just in “creating it” - but rather in nurturing it.
Don’t treat your community as a sales channel. Make it a place where people are authentic with each other and have fun together.
Attaching a brand name that people adore and recognize onto your packaging can be one of the biggest differentiators.
This is what we did recently with Coffee Over Cardio’s collaboration with Post Cereals. It’s one of the easiest ways to build trust and also justify your price compared to other brands at lower prices.
Creating a WIN-WIN situation for everyone…
Let's get into the part that gives everyone heebbie jeebbies…
In our view, this is the most crucial step of all because it will establish the boundaries of a long-term relationship with your supplier - and that is key for any business success.
To make it easier for everyone - here are some key things to consider before entering into any negotiation:
1). Achieving the best price
Negotiating for the best price is the primary focus of supplier negotiations. But what most people forget is: it’s not about getting the cheapest price possible but getting to a value that’s beneficial for both parties.
… and value to come in a variety of different shapes, ways, and forms.
A good example of value-creation on a negotiation with your supplier is the amount of time you have to pay the bill.
If you want to read more on this topic in particular - you can read the thread HERE.
Researching and benchmarking:
Before entering any negotiations, conduct thorough research on the market prices and industry. Have a clear understanding of fair prices to give you a strong position.
Your initial offer should be reasonable and reflect the market rate. Starting with an extremely low offer can strain the relationship and often start the negotiation on a bad note.
Leveraging bulk orders:
As your business expands, your purchasing power increases. Leverage that to negotiate better pricing based on larger order quantities.
2). Quality Assurance:
Of course - don’t get us wrong - price is important.
… but it should never come at the cost of quality.
Make sure when you’re negotiating for lower prices, you’ve written an agreement with your supplier on the quality expectations and requirements.
This leads to you and the supplier being on the same page.
It’s important to be transparent in this process.
Tool of the week
What’s the two things that can make any founder or operator shed a tear in an instant…
A) Site going down on BFCM
B) Anything that rhymes with taxes or legal
Wanna know the reason why?
Well - the first one is obvious.
And the second one is because those two things are among the most boring parts of the DTC founder/operator job description (no disrespect to people working in those fields)
… And it's also very complicated.
Hence why people working in these fields get paid big bucks.
Anyway, we found this tool called Numeral a few months ago. It's a white-glove service that handles everything related to sales tax filing for you.
If you've been in the eCommerce game long enough, you know how complicated sales tax filling is - and therefore, it's quite nice to NOT have to worry about that.
Before, we used Avalara, which is also supposed to be an automated tool. But they screwed something up, and we had to pay a big fine.
So it's also quite nice to know that it's an actual accountant that fills in your taxes and not just an algorithm.
Meaning - you get the benefits of both human service + SaaS
If you hate sales taxes as much as we do - we can definitely recommend you to check out Numeral.
Thanks for reading along
As always, we appreciate you taking the time to read this. We hope we were able to provide some value to you and look forward to serving you again on Wednesday
All the best,
Ron and Ash