Custom products with Jake from Procuremint

#034 - In this episode, Julie chats with one of Sparkle Hustle Grow's vendors Jake Panavas of Procuremint to talk about custom products.

Jake is a co-founder of Procuremint Inc, which is a business that helps curate and source products for subscription boxes as well as other eCommerce brands.

Links:

Sparkle Hustle Grow
Procuremint

Transcript

Julie: 0:01

So you want to launch a subscription box and don't know where to start? Girl, you are in the right place. I'm Julie Ball, a subscription box coach and your host here at Subscription Box Basics, a podcast for new and aspiring subscription box entrepreneurs that want to avoid overwhelm. So grab a coffee, some pen and paper and let's have some fun! Hey everybody and thanks for tuning into another episode of Subscription Box Basics. I'm your host Julie Ball and today I'm chatting with one of my product vendors Jake Panavas from Procuremint. Jake is co-founder of Procuremint Inc, which is a business that helps curate and source products for subscription boxes like you and me, as well as other eCommerce brands. Welcome to the podcast, Jake, thanks so much for being here.

Jake: 0:50

Thank you so much for having me, Julie. I appreciate it.

Julie: 0:53

Yeah, good because a lot of people ask me a lot of questions about product sourcing. So rather than me give the information, I'd rather it come from someone like you, who is an expert in it. So a lot of people will be meeting you for the first time. So why don't we start with a little introduction, a little background about you, Jake.

Jake: 1:12

Sure. So you, you hit the, you hit the nail on the head there with, I am the c o-f ounder o f Procuremint Inc which we do help curate and source products for various subscription boxes and eCommerce brands. y o u know, our whole mantra is that, you know, we believe in, in lo ng te rm partnerships and our goal really in all of this is to save, y o u know, entrepreneurs and, a nd curators both time and money on curation. So, o n a discretionary basis as well, we also look to hedge out certain risks that may impact the value of your business. So not only saving time saving money, but also, th a t, you k no w, directly helps increase the value of your business as well. and so we have a really, we have a vast list of established manufacturing contacts across the globe, through w hi ch we've achieved pretty sign ifican t economies of scale over the four or fiv e, t h re e or four years, I guess, that we've been doing this for, which all o w s for really favorable pricing for our clients and the partners that we work with.

Julie: 2:07

So you make it easy for us. You are more or less the middleman, so we don't have to do the back and forth and back and forth. And you help us navigate through some of those risks of you don't know what you don't know, like as a, as a subscription box business owner. There's a lot of things that I don't know about product sourcing, especially when it comes to custom stuff. And so that's why I lean on, on guys like you. So how did you get into this business, Jake?

Jake: 2:35

So we started at...I used to work in finance years ago, a nd I started a clothing line with, a c olleague of mine who was working at, i n f inance with me and we kind of morphed into a subscription boxes. You know, we got back fully in l in e int o a subscription box and we realized some of the pain points that a su b scription box owners were really facing, which on product curation is that they were generally paying too much. They were, you know, having a lot of risks put onto them and, an d there wasn't a lot of control or power into, into the, into the box itself. It was more for the brands. So we wanted to switch that dynamic around a little bit and really, yo u k now, give full creative control to, the b r and or probably the boxes and really help them streamline that process as best we can. And, you k n o w, stopped also i s as I m entioned before to save t ime and save money on that whole process as well. So, but y e a h, that's kinda how we g ot into that kind of weird, you know, se g ue i nto, int o th e subs c rip tion box world, but we've been in it for a few years now. We love it. Like it's a very interesting industry. so...

Julie: 3:40

And I know a lot of my, sev eral of my colleagues use you guys as well in different sourcing ways for their business, whether they need, y o u k now, small items or whether they need hero items. And so I think that's one of our challenges as subscription box business owners is finding that good mix of items and it just takes a long time when we're doing it ourselves. That's one of the things I love to do cause it's fun, but it takes up a huge chunk of time. Okay. So let's dive into how this actually works because a lot of people are going to be tempted to just go on a website or an online portal to buy goods directly from China. So Jake, in your experience, what are some of the pitfalls in doing this? I know that I have a few stories of my own, but from, fro m your perspective, what are some of the pitfalls of buying online from China?

Jake: 4:30

Yeah, so, I think t here's, there's quite a few pitfalls, so I mean, it's very tempting to go o nto one of those portals and you know, you see some great pricing a nd y ou s ay,"Oh wow, this looks great. You know, minimum order quantity, a hundred units, wow. Look at t his unbelievable, right.?" And gold star supplier or any of these k ind of, y o u know, verifications that they may have, which is a whole other story, but really there's a lot of pitfalls. So one is when you go into a relationship with a new supplier or you want to buy a one off item from somebody an d y ou don't have an established relationship with them, there's quality control issues. So, you know, when you're looking at, yo u've g o t t o r eally know what their quality control system is. Do they have one in place? Where do they check, y o u know, do they check the raw materials suppliers? Do they just do a, if it's an assembly plant or they just do the quality control and the assembly plant. So at what level of quality control and if they even have quality control in general. And then also looking at if you want to bring out, bring in an outside, you know, Q C f irm, to do your own, your own audit or your own check. anot he r big one as well, which is really on the onus is on the importer, which is the regulation knowledge and labeling. So this is a huge one. I can give some specific examples, but basically, when y o u're importing a product into the United United States or Canada or Europe or wherever you're importing to, there' s regulated like reg ulat ions required for specific products, there' s la beling requirements, you know, the textile labeling act, for instance, it requires you to label, you know, th e contents of, of, textiles, y o u know, what the fiber contents are, where are the y man u fac t ured? The country of origin, di fferent products ha ve d ifferent regulations like sunglasses for instance, is regulated by the FDA to import into the U S s o yo u g o tta m ake sure that you you're adhering to th eir g uidelines and policies, which can be a little bit strenuous. So, t h a t's a lot of the things that are on you as the importer, not necessarily manufacturer, they might not be, you kn o w, u pf ront wi th everything on that, because they're trying to get the order and it's on to be able to import it and understand that. the y also I'll add as well. They also have some regulations that they need to adhere to in order to export to the U S so th ey need to be for sun gla sses, for example, that FDA pro duc t, they need to be registered with the FDA. So, you know, another one, is ho w m uch of their supply chain are they aware of? You know, like I said before, are they, do they have full control over their raw materials? Do they have control over, y ou know, t heir, their labor force? Or is it kind of, you know, what does that look like? T heir, their assembly plants, like where, where are they actually manufacturing? Are they a trading company? Are they a factory? So a lot of things to take into consideration there as well. Another one would be a declaring the v alues on import, you know, if y ou're shipping DDP essentially. So that's d uties, delivery paid, meaning that the shipper in China w ill ship you the goods and they're responsible for everything getting into your door. Well, there can be a bit of a conflict there because they're trying to get it as cheap as they can to you and you want to get the product. So there may be some uncompliant imports that are, t ha t are happening without you knowing, and it could be, y o u know, you might get the product and have no problem. However, you know, product can get held up in customs and they can get held up for indefinite period of time. y ou know, they might want to check to see if it really did cost the amount that the s hipper i s claiming they costed. They may ship it back to China. They may destroy the goods. There's a lot of things they can do if they, if they want, y ou k now, i f they really want to dive deep. And it's not really a risk specifically in the subscription box industry that you want to take on because of the tight timelines that, t ha t are often accompanied with subscription boxes. So just another one, just to kind of take into consideration, which if you go the other route, you're going to have to find a logistics company. You're going to have to do the customs broker. You're going to have to do all this on your own, which can be cumbersome as well. And it's som etimes quite costly.

Julie: 8:24

So wait, before you go on with that, it's, that would be in the case where it gets to the United States, but then it's your job then to get it to your warehouse, right? Or to your, your office. S o for people who haven't done this in the past, there's a couple different ways to do this, right? So DDP is what you explained previously and that, and that means that they're going to get it directly to where you need it, right? Y our, your office or your warehouse or whatever. Correct.

Jake: 8:51

And they're going to pay any, you'll pay a fixed cost for everything, and they'll get it to you for that price, ideally.

Julie: 8:56

Okay. And then what is it called when they just get it to the United States? And then it's your job to pick it up or to contact a logistics team to get it to where you need it to be

Jake: 9:06

Often they do one where it's a, they do FOB from Shenzen or Shanghai where they'll get it to the port and they'll say, okay, these are yours now. You ship them to the U S and deal with everything else yourself. So then you've got to get some either shipping by air, shipping by sea, and then do the customs clearance and all that. So that's generally your responsibility and that's usually the most common way to do shipments. The other way is a little bit it's for less experienced buyers, in my opinion. I mean, that's just my opinion. There might be other reasons as well, but, th e DDP approach is a little bit more, y o u k now, I guess risky in so me, in some ways, I w a s d o ing it with, Chin a. So, you k n o w, the other big thing as well is, you kno w, w hat else is my partner doing for me? So if you've got a manufacturing partner overseas, or maybe one of the States, you know, what else are they doing for, for you? You know, are they buying back units? Are they providing options on how to lower costs, you know, changing products slightly to lower, l ower, or to get better tariff rates? y ou kn o w, i f you change a specific, you know, fiber in a, in a textile, let's say you might get a better, better tariff rate than you would otherwise. jus t as an example. So things like that. so ju st, you know, there's a few pitfalls that people kind of fall into when you go into on e of those, one of those portals and you, you know, you see all these products, it can be quite overwhelming and exciting and, you k n o w, really until you get into it, you can see some of the, the is sues and some of the headaches for the company that's s o.

Julie: 10:38

Yeah, and they make it really easy because it is just like a website where you're browsing through products and you're like,"Oh, click buy". And, you know, everyone could probably hear it in my voice that I'm learning from what you're saying too. B ecause I didn't, you don't know what you don't know. So a lot of times we're not g oing t o know about all those regulations that need to be taken into consideration. For me, when I was looking at stuff like that, I was thinking of quality, you know, is this going to be a cheap product? Is this g oing t o be a high quality product? I look at packaging, does the packaging, is it going to show up the way it's shown in this picture? i s there a lot of, l a n gu age on there that's in another language, but w e o nly shipp ed to t he United States. So we would want things that are obviously packaged with English on them. we, y ou know, think o ther cosmetic things are what I was looking at, but from the sounds of it, it's much deeper than that as far as these pitfalls, and m a k in g sure that you're not kinda goi ng to get y o ur self in some t ro uble.

Jake: 11:39

Yeah, exactly. Yeah. And there's, there's tons of them, right. I mean, I'm not trying to scare people off from doing it. It's just, you want to be really careful in going with that approach. And, yo u know, there's just a lot of things to consider when you're, when you're going down that road. So,

Julie: 11:52

So do your homework. ok ay. So let's talk about planning out the cr eation o f products for your box. What are some best practices for that?

Jake: 11:59

Yeah, so, you know, being in this business for a few years, working with a lot of different subscription boxes, we've seen everything, every timeframe you can imagine. So, f rom being in their current month, like if they're in, you know, they're shipping out for the month of June, let's say, and it's June 1st, they might still have a product hole they need to fill. s o, and up to things where the y're to, y ou kn o w, t he ir pl an two years out in advance. So, you know, I think planning is really important when it comes to curation and planning six to 12 months out as, as kind of a baseline fro m, f rom our experience being a b e st practice allows for three things. It really allows for red uced ri sk. So, you know, you have a lot more options if something which is out of your control goes wrong, for instance, customs. So they can take us, you know, generally it takes a week or two or something, but it can take longer for no reason. You could have a completely compliant shipment and they just want to hold it for whatever reason, and then they'll release it. But if you plan out further in advance and get ahead of schedule, you can, y ou can kind of budget in some more time for that t o, to lower the risk on that front. The other one i s, is cost. Generally speaking, if you're planning out further in advance, you can take more affordable shipping methods, t h at we re m ore affordable shipping options that are available to you, you know. se a versus air or whatever. So there's different things like that as well. And then, s amples i terations, which I think is really important for a lot of curators, you know, o u r best practice is five months out. You get a first sample. So five months before you need the product, you get that first sample. And then you say, Hey, I want to change this, this and this. It looks good rather than a couple of things that we want to change. Maybe it's a color or something. And then at four months before you need it, we can gi ve y ou another sample. So now you've gotten two iterations. Yo u're p robably pretty good and pretty comfortable with what it's going to look like. And now three, three and a half months out, we're starting to manufacture the product and it should arrive to you about two weeks before you need it. That's the ideal scenario that we kind of im plement w i th, with most of our box partners. And it's just a guideline. I mean, it can change based on different things, but it's just kind of a baseline what you should kind of be looking at. an d, an d wha t we like to do just to lower risk, lower cost s and keep things as, as s t reamlined as possible. but y ea h, that's kind of some of the best practices on, on sc heduling a curat i on that I, that I see across a lot of boxes. So...

Julie: 14:16

I think that's really, really good advice. And a lot of our listeners are newer to the subscription box industry. And so they're going to be planning out maybe one or two boxes out at a time. And as you continue to grow, and as you continue to scale your numbers, you will start to naturally look further out so that you can take advantage of things like this, where you can custom curate products. You can get better deals on things. And I remember a conversation Jake, that you and I had that was really, really eye-opening for me. And I don't know why I couldn't think of this on my own, but sometimes someone just has to tell you something. When you look at the entire year, just say, I'm looking at 2020 and you know, this is pre 2020, and I know that I'm going to have certain categories. So in Sparkle Hustle Grow, I know I always need a book. I know I want a tech gadget. I want a piece of stationery and I want an office supply. And you said, well, when you look at the, when you look at the year, that means you need 12 books, 12 tech items, 12 pieces of stationery and 12 office supplies. So that is one really easy way to look at it. And, th at's a really good way to plan things out. And I use a lot of different ways to plan out my boxes, including sticky notes, including samples of things that you send me. And we mock them up in b oxes, but I would encourage our listeners to think about what those categories are before they start planning out for the six or 12 months, figure out what categories you want to fulfill and know that you'll need six of those for the next six months, and then start brainstorming all those ideas and start talking to someone like you that can bring those ideas to life.

Jake: 15:51

Yeah, hundred percent. And I think that's, that's really important. You can kind of, especially if it's, yo u've g ot that, that secret eq uations, so to speak, where you know exactly what you want to have in each bo x, like you were mentioning, right? Th e, the one stationery item, et cetera. yo u know, you can really plan that out, even easier doing it that way, as opposed to where it changes every month. Like some box es th ey change every month and it can be a little bit more challenging, still doable and still a best practice. But it definitely is a lot easier in circumstances like yours, where you have a k i nd of a preset box that you send out more or less where you can have those categories and pl an out, you kn o w, e xactly what you want to put in there. So,

Julie: 16:26

Yeah. And then I have my open category, which could be filled in with very, you know, a variety of different things, whether that might be a snack or it might be a lifestyle items. So we do have that open category, but the four core categories looking at it like that has really helped me in my planning.

Jake: 16:43

Hundred percent. Yep.

Julie: 16:43

Okay. So tell me about margin builder products and why they're important.

Jake: 16:49

Yeah. So margin builders are, a re products that have a high selling price and a low overall cost. Now there's few things that go into the overall c ost. W e k ind o f touched on this, but it's tariffs a re one of them, s h ipping costs an d t h e m anufacturing price. Now, all these things change depending on the product, obviously many sh ops s h ift m a nufacturing p rices is the obvious one, but tariff rates can range anywhere from zero to, you know, I don't know what the highest is, bu t, yo u k n ow, we've seen fr om a round 40% even plus on that. So, and that ca n b e pretty detrimental to, to you calculating what you think might be the cost of a product, w h en jus t loo king at that, without taking that into consideration and the shipping cost as well, you know, how big is the item, if you're going by s ea, ho w heavy is it and how big is it if you're going by air, you know, things that you need to consider. So margin builders are generally things that have lowe r ove rall costs. anyt hi ng that's, you know, has low tariffs and that's light and small, it's u sual ly a safe bet. So, you know, makeup is a good one.

Julie: 17:48

I was just going to ask you, you had any examples of, of these kind of margin builders?

Jake: 17:51

Yeah. So makeup is a really good one, a small electronic electronic accessories. So your phone's charging cables, things like that, s maller textiles. So be socks, headbands, y ou know, jewelry is a big one. So that's a huge margin builder for both male and female. wat c hes is just another example. So there's a few of them out there that we, that we kind of work with boxes and kind of steer them in, in certain directions if it kind of m ak es sense. Caus e you know, they're looking for that wow item. Well, it's better to always pick it o bv iously to pick a wow item that has, th a t' s a margin builder, if yo u can. Cause it's just going to be also pretty cost effective for you to put in there. and a ls o still have that well factor. So

Julie: 18:35

No, that's really good advice. le t's talk about doing this on your own versus using a manufacturing partner like you guys. Wh at, what are some of the advantages to using a company such as Procuremint in, you know, building out your six to 12 months of boxes and, you know, I think you're probably go nna s ay, y o u know, saving on costs and doing a lot of the legw ork tha t we just aren't kind of trained to do,

Jake: 19:04

Right. So, you know, we handle everything on the backend, si de of the business while still giving, y o u know, curators or box owners or eCommerce entrepreneurs, f u l l creative inpu t. So you'll find that with our clients, not much has changed from a curation side of things, except they hav e sav ed a lot more time just cause they're not going through a lot of the different vendors that they may previously have gone through or, you know, going back and forth with peo ple. they' ve, the y've saved quite a bit of costs and lowered, lowered risk, whi ch is really important as well, sub s t an tially on their business, which increases the value. So kind of a, a th r eefold benefit there, but, you k n o w, this only leads to really less headaches, but it also increases the value of their bu sines s as I mentioned. And, we oft e n get asked, you know, this is a question that we get asked a lot as well. How do you guys make money? How does procurement make money? I get that. I'm probably 60, 70% of my calls that I do with new boxes or new new entrepreneurs or whatever and, and the relationship. Yeah, it's a great question. And the relationships that we like to get into with our box partners are win-win, you know, where, where we can leverage our vast economies of scale. Like we built out a really good network of suppliers overseas, across many different categories, sa ve the box money and still put a small margin on there for us. So we take care of all that backend. We got better pricing than you may, may have gotten if you went direct yourself. And it s till makes sense for us as well. So, and we ensure that the imports are compliant, that you have a sustainable business model and th at t he value of your business is increasing every day. That's, that's one of our goal on that front. an d you know, the big one is we will ensure that your, your imports are compliant, w h i ch again is super important here. I can't tell you how many stories I've heard of noncompliant imports. and I'll admit that some of these stories, wh e r e the goods have arrived with no problem on, li ke, they, you know, they'r e uncom pliant, but they still arrived. Right. But it could lead to issues later down the road. you kn ow, and you don't want things to get sent back or get held up beca u se of, of, you know, regulations or, or just not looking at something, you kn o w, maybe a little bit closer than that than you s houl d hav e. So, so y eah,

Julie: 21:12

So a couple of things that I really love about working with you guys is, if I see something a lot of times, yo u k n ow, I'll be out at a store and I see an item that I'm like,"Oh, that would be a great item for my box". I'll snap a picture of it, share that picture with you. And then we'll talk about what that item is. And you're like, yeah, we ca n m ake that. And immediately you move into action. I' m t rying to find a manufacturer getting quotes, m o ck ups. An d it's just, it just seems like a very seamless process for someone like me. And the other thing that I really can appreciate, and this goes along with how you were saying, how do you make, how does Procuremint make money, be c a us e the cost of your services is built into the product. I think of it as part of the cost of the product. Whereas I've worked with some other people in really good, good business experiences, but where they're sourcing for us, as far as finding brands that align with us, like already existing brands. And those are, you know, I'm either paying them an hourly rate or a flat fee for getting a certain amount of product. and fo r, for me looking at the cost of each box and the items in each box, it's easier for me to get my head around it when it's already built into the cost of the product, if that makes sense to you.

Jake: 22:30

Yep. A hundred percent.

Julie: 22:31

Yeah. Cause I, I want to say I have X amount. This is my budget for the box and I can't go over that. And when it's already built into the cost of the product, for whatever reason, it's just easier for me to get my head around than if I have, you know, this flat fee or this other percent that I'm paying somebody else. So, th at's another thing that I like working with you guys. We've, we've created several products at this point. We've got several in the works. And, w h at if, if someone listening is like, okay, this is exactly who I need. This is the, exactly what I'm looking for. What are some ways that they can get in touch with you or learn more about your business?

Jake: 23:08

Yeah. So you can send me an email, j ake@y ourprocuremint. com. And, you know, we really look at, y ou kn o w, m ost things, anything over a couple hundred units, so to speak. So, y o u k now, at that level we can kind of help out. Usually if it's under that, it can be a little bit difficult, but, any t h i ng over a couple of hundred units we can usually take on and we do that anywhere up to, you know, a hundred thousand or 200,000 units we've done. So it really depends on, on, on the, on what it is that you're looking for, but, you know, send us an email and be like,"Hey, you know, I want t o le a rn more about it or, or s ee how you can help me specifically with some of these ideas or products we have". And, you k n o w, that we can hop on a call or go back and forth and ema il and kind of get, get s o m e more information about your business and then see what types of products you want to source and then get you some samples and quotes and you don't get the whole kind of ball rolling, so to speak. So...

Julie: 23:57

Love it. You guys make it so easy. One more question. I didn't prepare you for this one, but what's one of your favorite things about working in the subscription box industry.

Jake: 24:07

I like seeing the various types of boxes. Like we work with a lot of different types of boxes, so, you know, you name it. We probably work with it. Yeah, exactly. So, you know, you see a lot of interesting products, you know, some of which, yo u really, really want. Yo u're l ike, wow, I' ve n ever even seen this before. And I want one so bad. You know, there's something we're working on right now. That's like,"Wow, I want one of these when th ey're d one, I'm go ing t o o rder one fr om m yself or whatever". So, y o u know, you see a lot of cool stuff out there, which is, whi ch is ki n d of fu n too, t o kind of wrap your head around. And like I said, a lot of different categories. So...

Julie: 24:38

Awesome. So to wrap it up, Jake, I just wanted to thank you so much for your time today. This is a big conversation for a lot of people because they just don't know what they don't know. They don't know the industry, they don't know how to even start. So I hope this conversation really helps guide the listeners about that big question of creating custom products. And I have a feeling that there's going to be quite a few people looking you guys up. Listeners, if you are loving these interviews and want more of them, be sure to subscribe to this podcast and leave me a review. And that really helps get that content out in front of more people. And as always, thanks for listening everybody. And we'll see you in the next episode. Thanks Jake.

Jake: 25:20

Thanks so much.

Speaker 3: 25:31

[inaudible].