The Brilliant Idea
When the Stockroom launched just a few short months ago, it was a natural instinct for us to sell shipping supplies. After all, the Stockroom is a store that provides the essential tools entrepreneurs will need to launch and grow their ecommerce stores, and what’s more important than the boxes and envelopes merchants need to fulfill their orders?
There are literally hundreds of options when it comes to box sizes and materials. Since we were new business owners, we didn’t want to get bogged down with a ton of inventory taking up a lot of space in our warehouse.
This is where we benefited from being part of Shopify. The Shopify Shipping team has access to data on what Shopify merchants are shipping and the size of their average orders. In order to buy only a small variety of packaging supplies, we used this data to stock only the most common box sizes shipped by ecommerce entrepreneurs.
We were also lucky to have a corrugate (the stuff that’s used to make boxes) factory right next door to our warehouse. This allowed us to source the shipping supplies directly from the manufacturer, cutting out the middleman and giving us competitive low pricing. It seemed like a recipe for success. Little did we know what would happen next...
No surprise, the shipping supplies were a runaway success when the Stockroom launched. We soon were flooded for orders for shipping supplies, and not just coming from the US, but internationally.
It wasn’t until we got our first bill from our warehouse that we noticed just how expensive it was to ship these bulky boxes. Although we had done some rough calculations and adjusted our shipping price for heavy goods to be higher than normal, we did not account for just how much it ended up costing to ship these orders.
Jane began to meet with big businesses that specialize in selling shipping supplies. During these conversations, it became clear how closely tied logistics and shipping supplies are. Companies that specialize in selling boxes invest heavily in warehousing, setting up multiple warehouses on different coasts to shorten the shipping distance between customers and the product.
The Other Problem
On top of the escalating shipping bill that was eating away at our profitability, we were also facing problems with customs and duties. So many of our orders were coming from Canada, since this is where the Shopify employees (some of our most loyal customers) are located. Every time an order would arrive, our customers were getting dinged with crazy-high duty charges.
After some deliberation we decided it would be best for us to move our products to a warehouse in Canada. Not only would this solve the duties issue, but it would put us much closer to our fulfillment center, providing peace of mind and easy access to our products for impromptu selling events.
What This Means For You
So now that we’re packing up our products and moving them over the border to our new Canadian warehouse, we are tasked with deciding what to bring with us. Of course, the shipping supplies are too heavy and bulky to ship across the country, and we already know that they are not profitable for us right now.
Therefore, we’re liquidating our shipping supply inventory with a 20% off sale. We’re basically selling these products at cost, which makes it an amazing deal for any ecommerce entrepreneur in need to boxes, envelopes or packing tape.
We learned a lot from this experience. To some, it may seem like a failed attempt. To others who have started their own business, I think you will understand that this is just one of many learning experiences you will undergo on your entrepreneurial journey.