In the first clothing company that Gary and I owned back in 1991, we decided to take a huge gamble and use a fabric that we had seen in the ski market, and attempt to bring it into the urban market where it had never been seen before.
We decided to premiere it at the biggest fashion tradeshow in the world, the Magic International Tradeshow in Las Vegas. It was a big gamble for us since this was very early on in our business to be taking such a risk, however, we figured we would give it a shot…
Step 1: Success! … almost
As it turned out, it was a hundred times the hit that we expected. We wrote so many orders we could barely bring the orders physically home. When we got back to the office, we counted up all the orders, which came to a little under a half million dollars. At the time, this was by far the most amount of business we had ever written.
Though we were extremely excited, it did represent quite a task for us, as it was only Gary, myself and two other people in a small warehouse in downtown Los Angeles and we didn’t have time to get a bigger warehouse or hire more people in such a short amount of time.
We also had an extremely hard time convincing our suppliers to give us that much product as it far surpassed our credit lines. So we begged, borrowed, pleaded, scratched and scraped every last dime and squeezed every ounce of credit we could and managed to miraculously get all of the product made in time for the season… All we needed to do was pack it for the stores.
When the product came in, there was so much we couldn’t fit it all in the warehouse so half of the product was stacked outside and we spent two days and two nights in the office packing everything… and praying it wouldn’t rain! Fortunately, we were able to get everything done until every last box was out of the warehouse.
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Step 2: Success! … Or So I Thought
About a week later, the phones started to ring off the hook. So much so, that we added new lines to take the calls. Stores were re-ordering like crazy… every company’s wet dream!!! The reorders were coming in like wildfire so much so it was literally insane at the office.
BUT… There was one small problem… we hadn’t planned for re-orders.
We immediately thought about calling back our suppliers but it was useless, as it was Christmas season, and there was absolutely no chance of getting more product before the season ended.
One account with multiple stores in the Midwest actually called us and told us to ship whatever we had in the warehouse. No discount, just anything and everything we had at full price. We had nothing. Not one single garment left.
That season, our company rejected millions of dollars in orders because we simply weren’t ready.
Step 3: Too Little… Too Late
By the next show we were ready. We went to the show ready for anyone and anything. When we got to the show however, we realized something horrible. Every single booth had our product… and it was better and less expensive than ours was. We were suddenly a zero-factor. A non-issue. The big boys had caught on and were ready for the kill.
Over the next few short years, hundreds of millions of dollars were spent on this fabrication thanks to the people who handed them the keys to the kingdom… Us.
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This is a classic story of supply and demand. If you have something that someone else wants but nobody else can get, you will get the sale every time, regardless of price. If you’re not ready to fill the demand, someone else will, if not now, then later. The key is to reap the most profits as you can until the competition catches on… and they will catch on.
The truth is, we could’ve probably shipped ten million dollars if we had the inventory. I made a big mistake. I spent all my time on making sure that somehow, some way, the product would be a smashing hit.
What I didn’t do was figure out what to do once that smashing hit took place.
Have a great day!