We are launching a new series called Backstage Pass. These episodes are a backstage pass into running and building a surf brand. I am pulling back the kimono and giving everyone a peek at what it takes to run an eCommerce brand.
In this episode, we talk about the following:
- The new business model that is emerging in today’s world—brands are selling directly to customers.
- COVID is accelerating the online shopping trend away from brick and mortar retail.
- Amazon has changed the way we think about buying products—but you are always an Amazon customer when you buy from that platform.
- Why Wave Tribe cares for you more deeply if you buy directly from us.
- Relationships with customers and factories are the key to growing a successful business.
- Have a business idea? Keep it simple.
- Why surfing is a spiritual experience.
- Any product ideas for Wave Tribe out there?
Hey guys! How are you doing? Welcome to another session of Saltwater High. Today, I'm flying solo and I wanted to do an episode called Backstage Pass, and I got this idea from a podcaster and I would call him a mentor also, that I listen to, his name is Cal Newport. And he wrote a book called "Deep", which I love and he also has another one called "Digital Minimalism". And I would definitely recommend any of his work.
And his podcast is awesome and really is about productivity and getting things done and all that good stuff. So he has these episodes where he gives a--well, it's like a ticket to the backstage of a concert. And in this case, you're getting a backstage pass to what it's like to run Wave Tribe and to have a surf brand or an e-commerce store and all that good stuff. And I get a lot of questions from people.
And I know because of COVID, I got a lot of buddies that are maybe looking to pivot or do some online businesses or do something different. And so I thought it would be interesting to share some of my experiences as I've been in this game now for, wow almost 15 years, a little bit longer. I started Wave Tribe in 2007 when things were quite a bit different in the surf industry and definitely, back then what we did, the whole idea of having a brand was that you produce the product.
And then you hire these sales reps and those sales reps went around to all the surf shops and those surf shops basically bought all of the equipment directly from the manufacturer, which would be me in this case, usually heavily discounted.
So the markup to the surf shop would be 30 to 40 percent, and then they would then mark it up additional 40 to 50 percent and sell that direct to the customer. And as you can imagine, it's a really hard business model for a manufacturer because one of the most difficult things about manufacturing a product is basically working with all these factories, sourcing the gear, getting it to the United States, and then selling it, just point blank selling it. And back in the day, we had a bunch of middlemen. You either had to go to a surf shop so the surf shop gets a big cut, the sales rep gets a big cut.
And the end of the day, the manufacturer, Wave Tribe in this case was really left with very little money. And then, I would say about 4 or 5 years ago, we saw a really big pivot in all of the United States where manufacturers started offering their product direct to the customer, so you have this whole really boom of direct to customer sales that were happening not necessarily at the retail level, but they were happening online.
And then, of course, then COVID hit this year and we really saw a big shift where people were no longer going direct to or they weren't going into surf shops because surf shops were closed or they didn't want to go into surf shops because they didn't want to get COVID.
And so they were buying all their stuff online. And as they shifted to online sales, a lot of people have just stayed there. And another reason that it's really changed is because of Amazon. Amazon has been--it's changed the way we think about buying. I can just see in my own household that the first place I go normally to buy something is on Amazon.
And so as a manufacturer, if you're not there, you're leaving a lot of money on the table. But it's not easy and you have to play by their rules. So for a lot of customers that don't know, when you see a product on Amazon, behind that product is either a manufacturer or a brand or Amazon themselves who are actually selling.
So you're buying your products from Amazon. But Amazon, except for in some cases, isn't manufacturing that item. You're buying it from somebody like Wave Tribe, somebody like me through Amazon. So Amazon's kind of like the new storefront. It's the new retail. It's online. Instead of Amazon buying the product from me though, what I'm doing is I'm putting the product on Amazon and then they're getting a big cut. They're getting a cut across the board. They're getting a cut on the fulfillment, they're getting a cut for the sale, they're getting cut on advertising.
So at the end of the day, the margins really look a lot like they did back in the old wholesale sales rep days. But there is a little bit more control, I guess you could say, with the Amazon model. But here's the thing with Amazon, much like the surf shop, when you were selling to the surf shop, you don't get the customer because Amazon doesn't share the customer data with the brands or the manufacturers.
So when you make an order on Amazon, I might see the name, but I don't have any contact with you. I don't know who you are. I know what part of the country you're in, but you're really Amazon's customer. You're not a Wave Tribe customer. You've bought a Wave Tribe product, but you're not a Wave Tribe customer. So ideally, in a perfect world, you come to the Wave Tribe website somehow or you hear about Wave Tribe and you buy your items there.
And when you buy your items on Wave Tribe, basically you're skipping any middlemen. You're going direct to well, to me and my team, very small team that's fulfilling the order and in that scenario, not only do we have the opportunity to make things right when they're wrong, but you then get to be in our ecosystem.
You're cared for in a much deeper way because we have your email and we have your phone number and we have your address.
And it's not that we're necessarily going to use those things to market more to you, though we will try. Because what we want to do is if you buy a leash, we'd love for you to try one of our day bags and if you buy a day bag, we'd love for you to try one of our travel bags. So as a Wave Tribe customer, we want to move you up the Wave Tribe chain of products as you become more friendly with the brand, you become more stoked on the products that you have.
So that's really our mission. We really stand behind the products that we have, the quality of the products, and I want to talk a little bit about that today. I'm not trying to sell you anything in this podcast and this backstage pass. I'm just giving you an insight into what's happening behind the scenes here. I think a lot of people who've never run a business don't understand the complexities and the dynamics that are happening.
So in the case of--let's start with the production. So most of the production is happening in Asia, but I have a very close relationship with those factories. They're all certified, they pass ecological standards, they pass fair wage standards, they pass quality standards. So we have the same ISO certificates that like a Japanese factory would have are in other factories across Asia. And so working with those factories, I feel good. I've been there also. I've been to visit them. So nobody's pulling a fast one over on me. But it's really the relationships with the factories that are super important.
And it takes a lot of time and effort because it's on the other side of the world. I can't just roll up and see the products. We have to do this back and forth of samples and constant tweaking and also a lot of confidence and trust, just like you would with your buddies or with any industry. Everything in business is based on trust. And just to give you an example.
I worked with a manufacturer for about 10 years, and it was always contentious. It was always like, it was really difficult for me to get them to put in quality components. This is the one thing that I've always been adamant about, especially in today's world, you guys. There's so many opportunities and it's so easy to bring a product to market like if you go on Amazon and you type in board bag or leash. A lot of those products are, they're not very good. Those products are one-offs, they're going to snap, there's no brand that's standing behind them. A lot of them aren't even run by surfers. Some of them are manufacturers directly so they're selling the products that they already manufactured and they're going to use the cheapest components possible, they're going to get the products out the door.
And they know that a lot of customers are price sensitive. So they're going to sell that item at the lowest price. And Wave Tribe is not at the lowest price of the market. And it's not there because our products are made with better components and unfortunately, recycled materials actually cost more, like recycled plastics. When you use recycled plastics, it costs more. When you use hemp instead of nylon or plastic, it costs more. So that's just the reality of doing business. And so when a product costs more for me to make, obviously I need to bump those prices up so that I can make enough margin to have a business and to basically run a profitable business, which at the end of the days, it's not an easy task.
And that's what this podcast, this backstage passes, it's kinda giving you guys a little bit of an insight into what happens in the backstage of Wave Tribe and to hopefully help you understand other brands. And maybe when you're purchasing things, you'll start to become a more conscious customer or just a smarter customer. So you're able to pick the products and the brands that you're really stoked on, and that would be awesome for everyone.
So, one of the things that I'm working on right now is production. I'm working on a new production because for me, what's been really hard over the years is the cash cycle. So basically what happens is I make an order of products and then those products come here and then I have to sell those products in order to get enough cash to then make another order. So as a smaller brand, you're always chasing the next order.
You're trying to get enough cash together so that you can then place the next order because as soon as you run out of product, as you guys know, you're going to go somewhere else. If you go to the Wave Tribe website, and you want a bag or a sock or you want a leash, and we only have 2 sizes there, you're going to go somewhere else. And I don't blame you, I would too. So one of the hardest things for me over the years has been to keep items in stock. That's really hard. I have one of my buddies, Bill Dodds, shout out to you, bro if you're listening to this. He always gives me a hard time. He's like, "Dude, you never have my bags in stock." And he usually rides a 9'8 longboard. He's from Long Beach. If you see him in the water, please snake him.
But it's hard. It's hard to hit all those size ranges. So when you think about most brands or most businesses, they might have, say 5 different products. And it's pretty easy to keep those products in stock. But if you look at our pioneer board bag, there are probably see, I would say 6, 7 different sizes on that bag. That means that we have to keep those 7 sizes in stock at all times to stoke you guys out.
So just do the numbers like, 7 times. I usually do 20 to 30 items at a time, so you're starting to get up there in the numbers and then there's a travel bag and then there's the sock.
And I'm not trying to give you guys a sob story. I'm just talking reality. The reality is that when you're running a product-based business that has a lot of different variations in SKUs so if you're thinking about a business, try to keep it simple. The ideal business is 1 product, just 1 or 2 products that you can just keep in stock, you can order thousands of which I've never been able to do. I order max under a hundred of each product size. And so that's one of the really hard things about Wave Tribe is keeping these sizes in stock for you guys. So that's one of the things I'm currently working on is getting a new production ready so that I have enough stock before the end of the year, to keep in stock. And that's one of the main things I've been working on.
And the other thing I've been stoked about, I have this new app called Bonjour, which, and if you have bought a product in the last probably 2 weeks to 3 weeks, I'm sending out private videos to every customer that buys an item. So I think it's super sweet because like getting an email, these days you guys, I just hate like, email just sucks.
It's not efficient. I do an email every week, which I try to make it really personable so that you guys get an idea of who's on the other end and what Wave Tribe is about. But now I've been sending out videos to customers that buy an item and I'm really stoked on them. I try to do them at the beach so I can always do them at the beach after a session.
But I send out a video and I'm talking to you. I'm sending you a video for you. It's not some marketing ploy. Your name's in the video. I know what you bought. I want to know where you're going. And that's really the way a business should be run. This is about, we're all in this together in some way. And I hope that the customers of Wave Tribe really feel like you're on my journey and I'm on your journey.
We're on this journey together. And at our deepest roots, we're all surfers and we probably all love to travel. You love to surf, you love to travel, you love surfboards, you love all the things that I love, you're interested in doing the right thing for the planet. It's hard to find bros and when I say bro, I just want you to know, I mean both female and male in there, it's hard to find bros that tick all those boxes.
I have a lot of friends, and some don't surf, some surf. But it's my bros who surf that I really feel the most connected with. That doesn't mean I can't have a friend that doesn't surf. It's just when you surf, you live a certain lifestyle that only other surfers understand. What's the famous quote? Only a surfer knows. I just love that quote because it's true.
If you surf, if you spend your whole life surfing, or most of your life surfing, like non-surfers don't get it. It's just surfing is such an incredible, intimate, dynamic, fantastic, exhilarating, I wouldn't even call it sport, man. It's a spiritual experience. It's something special. So for me to be able to make a product and for you guys to buy that product, I just like I'm so grateful.
And it's not easy. It hasn't been easy. I've been on this journey a while now and for a long time, I worked a couple other jobs. I was doing a couple other jobs and run the Wave Tribe. And now I'm all in on Wave Tribe and I just want you guys to know that, and that's why I started the podcast. That's why I'm up in the quality of the product and I'm up in the articles on the website. This journey is for you. This bud's for you.
This Wave Tribe is for you, bro!
That's funny, though.
It really is for you. It's for me, right? I mean, deep down inside it's for me. But it's also for you because if there were no customers, I would still be doing all these things. So I just wouldn't be sharing them in the way that I'm sharing them with everyone out there and I just want you guys to know that. This is also your journey.
So if there's something you want more of or if there's a product that you want me to develop, I'll do it. Send me the dems and I'll look into how to manufacture it, which I'm really good at now. And so I'm even happy to do a short run of something just to test it out. So that's kind of where I'm at on this journey.
So I hope you guys, I'm going to keep this a little bit shorter to about 20 minutes. We'll call them the backstage pass. And yeah, super stoked to have you guys along the journey. Get out there, do some surfing, send me email or ping me on social. Let me know how you like this and let's make this a great life and keep surfing and just be stoked. Alright guys, peace out.