Earlier this month, I celebrated the first anniversary of the subscription box side hustle I’m working on going live.
Last August, after successfully completing a Kickstarter campaign, it was time to fulfill the 19 orders we had received.
Over the span of 24 hours, I spent about 12 hours getting the orders ready. My business partner and I at the time had no idea how this would work. While we did our best, it was inefficient and the products were a little less than visually appealing
Since then, it’s taken a lot of effort, thinking, and expense to try to grow this new business. Last year at this time, I would have recommended to never start a physical product business. However, as I reflect now, I’m not sure I have this same recommendation as the process has pushed me to levels I could never have imagined.
While the sexy thing is tech and phone games, there is still something to be said for an amazing product someone can hold in their hands.
In this post, going along the lines of this entire August 2018 month, I will be sharing with you some of the details of my subscription box side hustle, the steps I’ve tried to take to grow this hustle, and share why I believe creating a physical product is difficult.
The Death of the Physical Product by 1,000 Entrepreneur Cuts
In 2018, it’s not sexy to create a new and unique physical product for your business. Supposedly, it can’t easily scale, it requires more upfront capital, and it requires inventory (which costs money and space).
The sexy business in the 21st century is technology: program an phone app, scale the app to 10,000 users, sell the app for $1,000,000 and repeat! Easy enough right?
Another sexy business is Amazon FBA. Let Amazon do all the work for you: shipping, storage, and web hosting. Figure out which product has the best margin, look to improve it a little bit, and boom! $10,000 a month, easy!
In the United States, as the economy and population has matured, there is less (maybe not, who knows) opportunity for “new” products as many things have already been invented. Building a business around service or entertainment digitally (an app, website blog, podcast, YouTube channel, etc.) is easier and potentially more lucrative.
Unfortunately, I’ve learned this the hard way: it’s very difficult to build a new and unique physical product.
Over the last 16 months, I’ve “invested” about $15,000 in trying to create, market, and grow my kombucha subscription kit business, and haven’t gotten any return. (cue the noise from the stock market perma-bulls telling me I’m missing out on compound interest 😛 )
From all of this, I’ve learned a lot about myself and about creating a physical product which I’m going to share with you below.
Related reading: Wake up an Overnight Success (5 Years from now)
Why is building a physical product so difficult?
First, let’s set the stage with what I can directly speak to: my subscription kit business and our products.
My subscription kit business is DIY Kombucha Kit: a flavored do-it-yourself kombucha tea homebrew kit.
What is kombucha tea? Kombucha, or a kombucha mushroom, is a symbiotic culture of bacteria and yeast (SCOBY). Kombucha tea is a lightly fermented fizzy, low-sugar drink full of probiotics, flavor, and history.
The first kombucha Tea was brewed in China around 220 BC. Now, kombucha tea is an ancient longevity elixir consumed for thousands of years by people all over the planet.
Many people swear by kombucha tea as a healthy drink. While it does have many nutrients, vitamins, and probiotic, it’s not going to cure cancer, help with colds, or help you become superhuman. That being said, there are benefits for your gut and will help flush out some of those nasty toxins your body accumulates. In addition, it is pretty easy to home brew! (I do it myself 🙂 )
What’s are the products and what’s inside this subscription kit?
On my business website, I currently offer two different subscription options: a starter kit and a flavoring kit for experienced homebrewers.
What makes our company different is that we are the only kombucha company devoted to providing a flavored kombucha kit (and the only kombucha subscription kit company). Each month, we source amazing organic fruits, herbs, sugar and tea for you and your homebrewed kombucha tea. In the past some of these flavors have included strawberry lemon, cherry vanilla, ginger hibiscus, mango lime, and spearmint lavender.
Inside each subscription starter kit, there are the following items:
- Kombucha SCOBY
- Responsibly sourced premium fruit, sugar, and spices to make a one gallon batch of kombucha tea.
- Months 1, 4, 7, etc. come with a glass gallon jar.
- Months 2, 5, 8, etc. come with flip top bottles.
- A monthly surprise – merch, additional goodies, and more in months 3, 6, 9, etc.!
- Rubber band, muslin cloth, plastic food grade funnel, and labels and branding
All inclusive, there are roughly 15 moving pieces to incorporate to produce a starter kit successfully.
For the flavoring kit, we include responsibly sourced premium fruit, sugar, and spices to make a one gallon batch of kombucha tea, monthly surprises and all of the other pieces of equipment to homebrew kombucha.
Again, there are about 15 moving pieces. Right now, I’m doing all of the sourcing, packaging, and shipping work – which takes about 20 hours a month at this point (but around the holidays, I expect this to seriously ratchet up!)
The Difficulties of Physical Products
Now that we have set the stage with what I’m marketing and selling, let’s talk about some of the difficulties of physical products.
Going in reverse, the process starts with the customer. For me, I had to answer the question, “When the customer gets their kit, will they be happy with their purchase? How can I make this product high quality and memorable?”
At the beginning of this business, our product looked very bland and website wasn’t optimized for sales. Even with this, last December I had $3,000 in sales.
During this time, I would receive emails saying “Why did I get this item and not this other item? Your website isn’t clear on what I can expect!” and “I loved the ingredients though the packaging could look a little better!
There was validation and hope for my idea, but it needed a lot of refining. When you create a physical product, the person is going to touch it with their hands and have a positive or negative emotion. My product wasn’t quite there yet.
In January, I took it upon myself to re-brand and focus in on creating a great product. During the first half of 2018, I spent countless hours on the website, getting new pictures, turning inward to challenge my thoughts on what was actually necessary in our kits, and look to become more efficient with my packaging process.
The result has been a beautiful looking website and a product worth celebrating.
Retail Sales are Slow in Summer and Fulfillment is a Tough
Unfortunately, another challenge and difficultly I’m facing now is during the summer, many people don’t have their wallets out.
Since this is a retail product, my customers are people. During the summer, people are vacationing, spending time with kids, being outside, or doing a bunch of other activities. People aren’t browsing the internet for good deals or new things to buy!
As a result, sales have been slow throughout all the summer months, but I’m hopeful for the fall and winter months!
Another challenge (which I touched on a little bit) is the fulfillment and storage of everything. I currently am doing all the packaging (after going to a commercial kitchen for the dried ingredients) at my house. It’s not pretty and takes up an entire room…
At the end of each month, depending on how many kits I have to send out, this process can take anywhere from 5-10 hours of my time.
Soon, I’m going to try to outsource this work but it’s a work in progress!
Finally, with all businesses, there needs to be an effort to continually challenge yourself to make the product a little bit better each and every month.
Questions I’m constantly asking myself are:
- If I’m a customer, what would I think about this new feature?
- Does this flavor and recipe make sense?
- How can I make the website more clear?
- What’s the best packaging and presentation for my kit?
Things take time to develop and grow, but with consistent efforts, I’ll get there 🙂
Creating a Physical Product is Difficult but can be Rewarding
It’s been a tough road to here for my subscription kit business but I’m learning a lot about marketing, product development, operations, and finance along the way.
Creating a physical product is difficult because at the end of the process, you want the customer to feel good about their purchase from a price perspective and from an emotional perspective.
At the same time, creating a physical product can be rewarding! You and your efforts are now physically taking up space in another person’s life and they are using something you had the idea for!
I’m excited to keep this business growing and hopefully turn it into a side hustle worth something (I’m currently not making any money…).
Over the next two posts, I will be diving into the challenges of creating a website that sells, and also talk outsourcing versus doing the work yourself (this is a real time discussion I’m having with fulfillment centers now!)
Readers: have you ever created a physical product? What’s your business idea? If you were going to start something in 2018, would you go digital or physical for your product or service?
P.S. if you know a kombucha tea lover, I’d very much appreciate it if you could share DIY Kombucha Kit with them!