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- [00:00]
A
Welcome back to the operators podcast, Elaine. This is your first time on the show. You're our first. I'll tell you this. You're also the first person we talk to that is like, just in swim. Katie, I think you do a bit of swim, right?
- [00:14]
B
Yeah, yeah, we do. I'm so excited about this topic. I feel like I can be of help to you. So it's good.
- [00:20]
A
Elaine, maybe just for everybody listening, we've got a brief. They don't have one. Can you tell us who you are? A little bit of a background. A little bit of background of the brand, what you sell, all that good stuff.
- [00:32]
C
So I'm Elaine. I'm the founder and CEO of Dip and Daisies. I started off as a wholesale first, selling to boutiques, going to trade shows. I opened a wholesale store in downtown Los Angeles in the fashion district, and then I started selling D2C in 2018. And then when Covid happened, I closed my cut and sew factory. I opened my factory in Vietnam four years ago ago, and we have around 80 SES right now. Dip and Daisies is a gen Z swimwear fashion company. Just had a baby eight months ago, and I spoke five minutes at the operators webinar.
- [01:16]
A
Tell us a little bit about, like, where you're focused on the business right now, and then I'm sure that Sean and Katie have, like, a bajillion questions. I know I do.
- [01:25]
C
I feel like I don't know so much about D2C and ads and marketing. I have, like, a very strong background in production and in manufacturing. I wanted to get people's thoughts about, like, how they merchandise their. Their. Their assortment. Like, I would hear Curtis talk about how he can sell tens of thousands of units of a. A color, and he does in house manufacturing. And then I wonder, how does he do that? I have a premium brand. Like, my. My swimsuits cost $120 a set. I can't scale, like, that fast that quickly and scale the ad spend that much. I know, like, some of you guys manufacture your products in house. I know you, Matt. You manufacture your phone cases in house, and you do that for, like, a negative cash conversion cycle. I opened my own factory because I wanted to lower my cogs, but I'm finding out that the cost is just the same as buying inventory from a supplier. I have to pay fixed costs every month for my seasonal business. And in order to keep my factory busy with work, I have to keep making more inventory to the point where I'm carrying right now eight months of supply. Some years it's like a year worth of supply, and I have to make a ton of money from January to August, and then I'm doing nothing September to December. I need to find new product categories that will hit for the off season. And I know you guys always talk about going and expanding into different product categories.
- [03:14]
D
So, Elaine, I think there's four key problems we want to address and help you with today. Right. Number one is the pros and cons of owning a factory. Number two is when you own a factory, what do you do with excess inventory? Number three is merchandising and actually how to get throughput out of these designs. And then number four is how to do product expansion. I think if we could do four of those things and you come up with a good tip for each one, it'd be a great episode for you.
- [03:40]
A
Katie, how many. How often do you do drops? What's your. What's your drop schedule? Start there.
- [03:43]
B
Okay, so. Well, first. First of all, Elaine, you're a badass. Like, you just had a baby. You're cranking out this stuff. You have your own factory trying to source overseas. I think immediately you switch back. I mean, like you said with cogs. And the biggest thing, like what you mentioned about how Curtis has drops and then sells high volume like that, it's. He is not a seasonal brand like you are, and he's not dealing with women's apparel and sizes. So don't stop comparing yourself to other people. I do not do what Curtis does. And I completely. Also, I have to tell you, I told my daughter that I was talking to you today. She's 18, and she loves your swim. Oh, my gosh. Thank you. And I think you're not just one generation. I think that your whole style is amazing. And I definitely see where you're talking about, like, swim's hard. We do swim. And. And it's same thing. Like, mid June, it comes to a screeching halt.
- [04:37]
C
Really.
- [04:37]
B
And then. Oh, yeah, yeah, preseason. Yeah. So swim. She can sell swim starting in December. Correct me if I'm wrong, Elaine, but you start to see it in early December with, like, crews and people taking vacations. January, it goes crazy, which I know makes no sense because it's freezing outside, but everybody's thinking about spring break. And then she. Her best months are probably March and April, and. And then it starts to slow down. And as of July, fourth weekend in the US all, her swim goes discounted.
- [05:07]
A
Come on.
- [05:08]
C
Yes.
- [05:08]
B
Yeah.
- [05:09]
C
Exactly.
- [05:10]
B
Yeah, I. I feel your pain, girl.
- [05:13]
A
So when the weather is best Nobody's buying the thing.
- [05:17]
B
Yeah, well, I mean it's, I mean, Matt, we launched Christmas in August, so
- [05:21]
A
it's just, I know, Katie, I've always thought you were a little weird for that. But it's also, I mean, I'll tell you, like the first thing that comes to mind, like Sean, when you need a bathing suit, do you just go buy one?
- [05:32]
D
Yeah. But you know, men, men are going to be different. I mean my, my wife is straight up Planning swimsuits for 612 months in advance or whatever. But I, I, oh, I just want to on that one point, it's a reason why all the greatest swimwear brands are Australian is because they just have a longer sell season so they can stay in market longer. And it's why it's so hard to compete as an American brand is like you have this big ramp up, but they have a core base. But keep going, Katie.
- [05:59]
B
Yeah. So Elaine, I read your entire doc and the whole time I'm like, yes, girl, I feel your pain. So I think product expansion is amazing and definitely what you need to lean into. You mentioned that you did athleisure and casual wear. I think because of your audience like really kind of leaning into even match sets, like how like Daily Drills is really trendy right now. I'm sure you're familiar with those kind of. Yeah. Brands like if, I mean even for Kaden Lane, we've looked into it, but we're really just more baby focused. If you can get yourself out of a seasonal. Because even like your stores, like you said, Anthropology, Urban Outfitters, I mean I feel like if you even worked with them on exclusive designs, maybe that's opportunity for you. I also started off wholesale and then switched over to D2C. The fact that you're still cranking out wholesale and you're just trying to lean into D2C, I think you have all kinds of opportunity ahead of you. But your comment about how your black swim was like your go to and you wanted to be able to do that swim style every year and have the 8020 rule apply to you. I think there's two things working against you on that. One, you're selling to women and women don't buy the same swimsuit over and over again. Right. We like to buy, we buy that one black swimsuit that we love and then maybe when it dies three years later, we'll go try to find it again. But we always go to black swimsuits. And I think maybe a way you can think about it is it's not Necessarily that one body style. But you're trying to each season have the 8020 rule. That's how we look at it. So when we launch our swim every year, we really try to pick out what are going to be the core body styles and colors and then we order heavier on that and then the ones that are kind of like what we call like the, the sister prints to it. So like your, your cherry prints or your florals that you have that you know won't be as high a volume but that you can't just have black swimsuits on your website.
- [08:03]
C
Right.
- [08:05]
B
And it kind of leads into it and, and because you're probably really leaning into LTV and I imagine you have a strong LTV where they come back and buy a swimsuit from you every year. You've got to keep that freshness. And that's where your drops come in.
- [08:19]
C
Right.
- [08:20]
B
Um, you did mention that your ads like you're drop heavy and so you are constantly. And I looked at your creative on Meta and it's fabulous. Like I think you do a really good job with it, but I think you can like what we do when we think about creative is that we're every week we're launching new creative for our prints, but then we always make sure we lean into like what we call our bau.
- [08:48]
D
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- [09:43]
A
Let's just talk Factory. Elaine. The I think that as somebody who owns a factory, the. Those downswings suck. Right. So like how do you manage staffing and overhead when you have like the troughs in your seasonality? We have the same thing. So like we have a really sort of a decent peak up with iPhone launch. So I actually have to staff up in our factory factories ahead of Apple's iPhone launch. And then we kind of keep everybody through sort of January and then I actually have to start ramping down. So like we've actually had to build a pipeline of people. It's mostly people like the actual fixed cost of the building and energy. And that stuff is pretty low. I don't know. I don't know what it is in Vietnam, but like I'm in Canada and in Phoenix and it's still pretty low like relative to the size of the business. So that's usually not the thing that's killing you, it's the labor. Right. I suspect in cut. And so it's like much more specialized, but we can hire people. We can basically surge staffing up during those times. I don't know if you have the same capability in, in Vietnam, but that is like one solution to it is just to build a better HR function. Like we have a person on the team. Lane, that's all she does is she. Her job is nothing but staffing for the factories. She is constantly like running, recruiting. How do I find better people? Temp workers full time? What's the training programs look like? Like all that stuff. That is just her job. And the way that we justify having that person is because she saves us money.
- [11:21]
B
Do you own the factory, Elaine, in. In Vietnam?
- [11:24]
C
Yes, I do. And yes, I do staff up during peak season. I staff down in low season. And yeah, I do pay rent. The rent in Vietnam costs as much as la. Well, well, I would say like, like it was. It's a 40,000 square feet warehouse, $10,000 in rent. Okay, maybe a quarter of LA. A quarter of.
- [11:52]
D
I was gonna say we've looked at buildings in Vietnam and China and dude, real estate, it's incredibly expensive. Like you're like, oh, what does $2 million get you? And it's like basically nothing. So yeah, I, I've been there.
- [12:01]
A
I didn't know that. So Elaine is the. Is the factory and the. I guess, Sean, maybe we can connect to sort of owning a factory and then throughput on styles, right? Cause are they not the. They're. If you had better throughput on more styles, would that help you on the sort of the factory Front, like if you were just bigger, I guess would the factory be less of a concern?
- [12:25]
C
If I could move more volume and just go narrow and deep with my styles, like cutting out the, the dogs that the 20% of my, like my lower 20% of my assortment and go deeper in units, that would be a lot better.
- [12:43]
D
So let's talk about the biggest pro of owning a factory is that you control like the, the actual output of the product, like the quality. Like if you want to make a new design tomorrow, you can do that. That there's an idea that like you, you tie up less working capital because you can get things done cheaper. But the reality is like if you go to a big supplier, they're going to get better negotiations, they're going to have better freight prices. But the problem is like you're going to be lower in their totem pole, right. And then the biggest con is you have to run like the longer you run the lines, the cheaper everything gets. So like if you can run the lines 24 hours a day, 365 days a year, that's how you actually optimize the factory for output. But now, now you're in this chicken egg situation where you're trying to run the lines longer and you're making too much inventory and now you're stuck with too much inventory. And that's how brands die. So my first piece of advice is I'm not telling you to wind down your factory in Vietnam. That sounds really, really hard. And just start buying on market. Like you have to do the dev to get quality. It's like it ends up being a year plus solution to the actual factory. But could you make stuff for other people? It's like that's the other way to keep the lines running is like instead of trying to sell swimming to yourself, hey, what? Why can't we just do batch runs of swim and be a contract manufacturer for somebody else? Maybe you don't want to have those two different hats on. But like it's a great way to solve a lot of pressure in your business when you own the means of production. So what are your thoughts on that, Elena on here? Katie's take on that?
- [14:12]
C
Yeah, I do private label as well. I, I am fact, I'm a factory so I do produce for other brands. It's like my private label business. I also have like a big discounter business like the TJ Max's and the Burlingtons of the world and that's actually 25% of my business. But the problem is that they all Want it at the same time because it's somewhere.
- [14:46]
B
I think her biggest problem, guys, is seasonality. If she can solve for that, it's going to make a lot of these problems go away.
- [14:53]
A
Elaine, Katie, would you think the product expansion would also then leverage the same factory? So like you want to, you want to adjust, you want to address seasonality in Elaine maybe that's what you're thinking about already. It's like what products do I go into that are off season and can I make them in the thing that I already have with the talents I already have? So like can I actually just get more, Can I fill in the four month, whatever, five months?
- [15:17]
B
I think you need to think about it differently. Elaine. Like there's so many brands out there that are high volume in Q4 because they're gifting and they want to fill the other months. You've got six months where you're crazy. And honestly your gap should be one of the easiest ones for you to fill. You already have those customers. You've just got to think about what else they want to buy. Why do you think your athleisure was a failure?
- [15:44]
C
So I, I did try out Athleisure, I tried out Lounge clothing. They had a 10% sell through for the month. I, I don't know why they failed. My guess is that I just didn't. I'm not, I'm not very strong in launching new categories. I've never really done that outside of swimwear and, and marketing. A drop is which is a new category would take a lot of upfront capital, upfront cost, new influencers and that would, that in my experience pretty much failed. And then I get stuck with the inventory after five years and it accumulates in my warehouse.
- [16:34]
B
Elaine, can I expand on the factory thing? Cause Sean, just to kind of wrap it like just hearing you and reading that like your costs are the same manufacturing in Vietnam, but you have to have higher quantities and manufacturing in the US where you can manage it a little bit better. To me, if I was you, I would get out of the manufacturing business and come and do it in the US until you're in a better spot with higher volume. Because the other part with your seasonality and swim styles is sometimes you don't know which prints are gonna be the most popular. Right. So you're having to guess in advance. Have you ever, I know Curtis does this too, but have you ever played with pre orders on your swim to try to get a vet a better idea for volume when you first launch it?
- [17:19]
C
No, I Haven't I've. I've done only pre orders after a style sells out and then have it be restocked. Um. But yeah, but I and that hasn't been like a significant lift in my business. And it, it's basically just selling my stock which is 99% of the business is just selling the stock.
- [17:45]
A
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- [18:41]
D
I I'm glad you tried to solve this with product expansion yourself and this will tie in the fourth point about product expansion. But really the problem is you have fixed costs in a factory that have to keep running and you right now you're taking on more water with with the brand itself but buying inventory and really what I'd like to do is try to sell lounge loungewear or athleisure as a contract manufacturer to other people. Right. Like going to the TJ Maxx of the world. And even if you do it at break even at least you're not putting more inventory into the swimwear business. Right? Like that is, that is like the actual offset instead of trying to sell the loungewear yourself, just doing white label or private label or contract manufacturing as a lounge supplier and just being out there in the market doing that. I don't. That's the opposite what Katie just said. So you can go either way on that. You could either shut down manufacturing and become a spot buyer in the market for different swimwear designs that you come up with. Just be a designer. Um or keep your factory and keep the lines running with stuff that is going out the door for somebody else.
- [19:42]
B
But that's not. But it that really Shawn, if she does that, the seasonality of Lounge or the other product category she has is more year round. And so it's still gonna, it's gonna spread out her volume and fill her gap in the Q3, Q4. But I. Elaine, do you wanna do that or do you. Are you looking to. Cause, I mean, girl, I can send you stuff. You can make Lounge for us in the, in the fall for sure.
- [20:06]
C
But I think I would love to keep my factory because I like, I have this vision of having like a house of a fashion house of many different brands and then selling the brands once they get big and then do it all over again with another brand. But having like the manufacturing in house, which is my forte, it's great because my margins are great. My Cogs is like 10%. So then I can like really scale. Like I can, I can sell a lot of, a lot of units. What I, what I do is in when I. Well, another question I want to ask Sean, you said, oh, go and sell to like these discounters, even though they're break even. I make production for like this, these discounters, but they sell my brand at like an 85% discount.
- [21:05]
A
That's your brand, though. I think what Sean's hitting on is like if you go to somebody else, like it. Not a tj, but like if you were to go to Nordstrom and just say, like, I can make Lounge for you under your own private label or your own brand.
- [21:19]
E
Right.
- [21:19]
A
And just try to fill in. I mean, I don't just try to fill in the supply. The supply chained, I think is what Sean is saying, by manufacturing another category. Like, so you have a hard time launching Lounge.
- [21:33]
E
Right.
- [21:34]
A
But that doesn't.
- [21:34]
B
Anthropology would.
- [21:36]
A
Somebody else couldn't.
- [21:37]
C
Couldn't.
- [21:37]
A
Yeah, Anthropology wouldn't.
- [21:38]
E
Right?
- [21:39]
A
So like, can Anthro. Can you just make Lounge for Anthro and then that gives your factory more to do in the off seasons.
- [21:46]
C
Like my brand. Not like Anthropologies brand.
- [21:49]
A
No, no, Anthro's brand.
- [21:51]
D
Yeah. So let's, let's really dive into what we're talking about, right? Like you have a conveyor belt that is spitting off stuff, right. And you have to run it 24 or else you lose fixed costs and the conveyor build, spinning off a bunch of swimwear. And when you don't have anything else, it just makes more swimwear for your own brand. And now you have a big stockpile of years of swimwear on hand that like it's really hard to sell through. Right. And that is the scariest thing for a brand because you're seasonal. And unless you're going to shut the factory down and sell through old stock for two years, it's just like, it's. I've seen a lot of brands die doing that. So what we want to do is what can. What can the conveyor belt spit out that isn't just your own brand? And I just be like, you know, doing orders for Katie. So you're going to make Kaden Lane swimwear or lounge or whatever else now, right? On the. On the selling of TJ Maxx, that is a personal decision. If, like, you're cool with them discounting your brand. Like, one of your questions was, is it going to train my customers to go to TJ Maxx? Probably not. The person. The. The Gen Z person shopping off Instagram ads and influencers, like, is not going to TJ Maxx and doing the Discovery. That's going to be their mom, right? And you know, James Purse does, like, over $75 million a year in TJ Maxx. So, like, you can have a luxury brand. You can and you can do in TJ Maxx. It's just like, if long term, if you like them as a partner or if you think there's brand risk, you know the category, you know better than me.
- [23:12]
C
I was going to say I love them as a partner. They pay on time, they're never late. They. It's very easy to, like, ship to them. Compliance is easy. No chargebacks. They're a perfect partner.
- [23:26]
B
But do you have really tight margins with them? Like, are you making good money selling to them, or are they just helping you move excess inventory?
- [23:36]
C
We do both. They move my excess inventory. So, like, I sell them my ats and then I also sell them production, which they can order, like, a lot
- [23:48]
B
of units at the same quality of your normal D2C stuff, or are you producing a lesser quality for them?
- [23:57]
C
Same quality.
- [23:57]
B
Same quality.
- [23:58]
C
Because we use the same raw materials, same fabrics. I can't really do seconds.
- [24:03]
B
I really like Shawn's idea of considering white labels. Like, you named off some really big brands that you partner with that buy your swimwear. Have you ever gone to them and offered an opportunity at a white label where you are the manufacturer for their own lounge brand?
- [24:23]
C
Yes, I have. They are always like, a different buyer, and then, then. And then they have, like, very. They're very happy with their own vendors. But I think what my problem is that I really want a factory where I could just, like, do all of my own dip and daisies production. And I don't really like making money for other people, other brands, for them to make even more money. I just want to make money for my brand.
- [24:57]
B
So product expansion is your biggest. If you really want to keep manufacturing, you've got to find something to sell the other half of the year.
- [25:04]
A
Well, I think she already has, guys. It's. I think the. What I'm hearing is it's like, how to market another category. How does she actually make lounge work? Because lounge is big enough. Like, we know that. Right? You know, like, and so there's. I think that's a major topic here, is, like, how. How does she expand?
- [25:24]
D
And this is, look, if you go on Frankie's bikinis, if you go on Monday, swimwear, everyone. The challenge you're facing is a challenge every swimwear brand faces. Why is swimwear such an attractive category? It's because the margins are insane. It's like people will spend 120 to $200 on, like. Like, less than one foot of fabric. The less fabric, the more expensive it is for some reason. Right? So it's like, that's why people are so attracted to the category. But the downside is you can only sell for six months out of the year. So every one of these brands is trying to go into clothing, coverall, loungewear, and it's the journey everybody's on. Right? So my first question would be, is, does it have to be under the same brand? Can we just launch a loungewear brand? Because, like, one of the challenges is, like, Dippin Daisies is so swim focused. And then introducing the secondary category. Like, every swimmer brand's trying to do it. Yeah, yeah. Like, what I would recommend, if you're committed, doing the same brand. I've had to do the same thing. Like, when we had wallets and I had luggage. Now I have chains. Like, it's a lot of different stuff, and it is entirely new ads, an entirely new pixel. And it is understanding that it's going to look like for, like, six to eight months in the ad auction until you start to actually, like, train meta to find that customer for you. So I guess my question is, does it have to be the same brand, or can we launch a new loungewear brand?
- [26:50]
C
It has to be the same brand.
- [26:53]
B
Why? Why do you say why, Elaine?
- [26:56]
C
Just. Just because. Having a second brand introduces more complexity into the operations. A new label, a new website, and yes, I could probably, like, have my own employees, like, doing the same thing, but just a second brand. We would just have to have more conversations about having a second Brand.
- [27:20]
B
Elaine, I'm gonna tell you something that you don't. It doesn't have to be that complicated. You can actually launch a second brand. So. Because what Sean's saying is true about Meta. And even though you'll switch from advertising Swim to advertising Lounge, you'll want different pixels. But the signal gets complicated and it takes time, right, to. To get the signal shifting. But you could launch a second brand in your Shopify store and just have it a different experience. Like, think about how like Pottery Barn, right? Does like kids and home and family and.
- [27:57]
A
And everything like that kind of already does that though. Like, there's dip and daisies. I'm on her site now. There's like dip and daisies and there's this risk swimwear.
- [28:04]
C
That's the second brand that I have as well. But that's more of like a mature, more like, like sexier brand. It's like a different brand.
- [28:15]
B
So why couldn't you do that as a. With a third one for. For lounge?
- [28:20]
C
It takes a lot longer to scale a new brand these days because the CACs are like so high right now. And I feel like if I could just like, do existing. Do. Do an existing brand. We already have the customer, and then having them just like, naturally buy a different product with the same esthetic would be easier.
- [28:45]
A
Black Friday and Cyber Monday are coming. Are you ready? Not in the normal marketing calendar offers. Prep sense. I'm talking measurement and attribution. Are you even going to know what win and losing looks like when the big Q4 season hits? Reality is, the businesses that win set up their measurement solution when the times are slow, not the night before the big weekend. There's a reason for this. You see, with North Beam, you're getting a totally independent, completely new set of ad performance numbers with infinite look back windows. That means that the longer that the data grows, the more valuable it becomes. So when CPMs are spiking in November, you will know precisely where every dollar is coming from while your competitors are guessing the. This is important. Black Friday is one in the summer, not the day before. Book a demo with North Beam today. The link is in the description. Go check it out. Sean, you said you hit on something when you're talking about expanding categories. For Ridge, it just takes a long. It takes a long time anyway. And you said like your six to eight months of like, a new category finding its place. Can we go a little deeper there? So if. If Elaine is to re. Look at lounge. So she's got lounge. She's tried it right how should she think about actually scaling up lounge? How long should it take? How does she do the setup? Like, technically, is it if, if it's under the same brand, right? Is it separate pixel? Is it a separate buying cycle? Like all of these things is what. I've heard you talk about this dozens of times.
- [30:19]
D
Here's the problem. You're telling me lounge has to work, and the market's not telling me lounge has to work. Right? So like when, when, when we launch categories at Ridge. Like, we launch, we launch them with the assumption that they're going to go to zero and not work, right? So like if I. The famous example of a Ridge is we had watches and they totally failed. But if I told the team, no, watches have to work, keep making watches work, it would have just. I'm. I'm pushing water uphill, you know what I mean? But we launched rings. Rings did work. I'm like, okay, we're selling rings now, right? And we scale that business and rings will do over over $40 million this year in top line sales. So.
- [30:54]
A
But Sean, watches is a bad category, Lounge, isn't it?
- [30:57]
D
It's true. But I've also tried to make good categories work on my business. I try to sell T shirts, it didn't work. I try to sell socks. It didn't work.
- [31:03]
B
And she already tried it. She already tried it. Is what you're saying we should just
- [31:08]
D
be open to the idea that maybe it won't work because.
- [31:12]
A
Yeah, no, totally. I guess what I'm hitting on is like, she's already self admitted that she's not a good marketer.
- [31:17]
B
Yeah, I, yeah, I wonder.
- [31:20]
A
I mean, I'll just call it like, well, that's.
- [31:22]
B
But Elaine, maybe it wasn't product. Maybe it was just that you didn't put enough effort to it. Like, we've definitely launched product categories that we, like the team just didn't put a hundred percent into.
- [31:33]
C
Right.
- [31:34]
B
And I feel like we could have done better at it. And so now when we launch new product categories, we make sure that we're putting a hundred percent effort in, but we go into it slowly. Like, is there a space where you can. You clearly have a great customer base because you know she's gonna come back as the dip and daisies, you know, brand and buy something else from you. So what else would she maybe, I mean, have you thought of other categories that you can test and you can throw out some ads? I mean, Sean, I've heard you talk about like you, you basically post the ads and then, you know, Right away if they start to get any kind of traction or not.
- [32:13]
C
Right.
- [32:14]
B
And if they don't, you're just like,
- [32:15]
D
eh, well, yeah, look, if I was prescribing like, you know, the thing is we have an asset in that we have a customer base, we have an email list and we have the stuff already made. So it's like, how are we going to sell this stuff? I would, yeah, I would, I would make a different ad account and I would have a different pixel that is just trained on lounge cover up accessories purchases. I would build a landing page for that stuff and see if you can acquire lounge customer separately. And the answer is you should be able to. It's like you're selling cute stuff at cheap prices. You know what, women love cute stuff at cheap prices. So you should be able to move through a ton of inventory. I just don't know if the customer is going to be good or if it's going to be profitable because like it's, it, like it's a knife fight of a category. Right.
- [33:04]
C
Let me ask you this question. If you, if I spent like, I do have a lounge collection coming up out this fall, by the way. If I, if I'm spending like $500,000 on this collection at cost for this lounge collection, how much should I be spending on ads?
- [33:25]
D
Swimwear typically has like 90% margins. So you have $5 million of MSRP retail value. Let's say you have 3 point million of after discount net revenue coming into the business. If you, if you had 100% sell through on the collection. Yeah, you should spell. You should probably spend like 1 1/2 million dollars trying to sell it. Right. That would be like a really good mer for this.
- [33:45]
B
Did you place one pig, one large po? That's where you're pulling out your 500,000 and the inventory's on its way.
- [33:53]
C
Yes, yes. I like, I like front load all my inventory. Yeah, like one big po.
- [33:59]
B
Ooh, girl. Yeah.
- [34:02]
A
Why you own the factory. That's the point of the factory is
- [34:08]
D
to not do that.
- [34:09]
C
Because making one unit costs 10 times more expensive than making a thousand units.
- [34:16]
A
No, I know, but can you make a hundred thousand dollars in units that's close to the $500,000 price.
- [34:21]
B
Well, she's already done it. And I think it's, I think Sean's right. I mean Elaine, my gut is. I don't. Because Dip and daisies to me isn't like it doesn't sound like it should only be a swim brand. So if you're stuck on I really want to keep Dippin Daisies as the brand. I do think you need to have a different ux. Like, it's confusing for the customer. Right. The us you and I are your customer or the older version of her. We need to come and feel like we're not landing on a swim site that happens to sell lounge. I want to land on a page where, like, she's telling me how amazing her whole lounge collection is and the accessories of it. So maybe that's the first step. And then I think for your ads. So you're gonna have two choices here. If you're gonna keep it as Dip and Daisies. To run a separate ad account, you have to have separate socials. You can't keep. You can't run them to the same social. So you'd have to create a new Instagram and a new Facebook to be able to split that off, which maybe isn't a bad idea. I mean, we. Sean, we keep ours all in the same. The only thing we're. So we sell swim lounge gifts, personalized everything, all in the same ad account. But pet, that's launching in two weeks is the first time we'll have a separate ad account. Elaine and I, because I wanted it to have that same. That different experience, like what you're talking about.
- [35:45]
A
But I guess I don't think she has to. Like, Kate, Katie, your brand and Dip and Daisies are very. They can. You can. Basically, there's a strong analog here, right? Dip and Daisies as a brand can absolutely have multiple categories, and it's just a navigation and a user experience thing. It's also, when you're seasonal, you know what you can do? Take all the swimwear off the homepage, put the lounge stuff on.
- [36:05]
B
That's what we do. Elaine. Like, literally what Matt says, like, you just kind of transition your homepage.
- [36:11]
C
So you would actually not put your products up live, and it would just be sitting in your warehouse.
- [36:17]
D
No, I. I think. I think it's just shifting that where the spotlight is. Right. So we always start with this at Ridge, it's like, how many spotlights do you have? And I do think the problem is you don't. You don't have enough people shopping the clothing page. Because I'm looking at the clothing page, and it's like, as a product expert that you have a baby tee for $19. And I'm like, yeah, it would crush on TikTok shop. Right? Like, these are the type of things, cute things at low prices will really work on TikTok shop. The problem is you don't have people going to find those products because you have everyone showing up for swim. They're clicking the Swim banners and that's what they're shopping. So you just, you don't have any traffic that wants to shop the other stuff. And I think you solve that with it. Maybe doesn't be a different ad account, but different campaigns that highlight the other stuff and drop them on landing pages designed for the other stuff. If you're a founder using AI for analytics, you know the trap. Claude+BigQuery gets you answers that are fast and wrong or slow and right, never both. The problem isn't your analyst, your data, or your tools. It's your business context gap. Sarah's IQ fixes that. Connor, who runs my marketing, cut his reporting time from 10 days to 45 minutes. IQ answers in plain English built on your business logic, consistent, deterministic and fully transparent with the assumptions in SQL behind every answer. Same answer whether you ask, your CFO asks or your board asks. And if you're a Claude user, the IQMCP is ready to plug in today. Claude +BigQuery isn't enough. It needs your context. Get it at the link in Show Notes or go to sarasanalytics.com to learn more.
- [37:50]
A
Category expansion is a very common topic in, in D2C, right? People are always. It's, it's one of the most common questions in any media buying group is how do I structure my account for a new category?
- [38:01]
C
Right.
- [38:02]
A
So like the basics of what Sean is hitting on is you start off with like, it's going to be a new campaign. It's going to have a completely separate set of creative. It's its own contained little unit inside of Meta. That's like level one of category expansion. That's when you're saying the buyer is the same as my other products and their behavior isn't that different. Okay. Level one, above that, where it gets harder, is like, oh, we can't do a separate campaign. We need a separate ad account. Probably a separate pixel, a separate page. Like separate everything because the buyer is now different and their behavior is fundamentally different. That's why Katie's adding PET separate, because her bet is that the buyer for Pet is just going to behave wildly different than the buyer for all the other stuff. Sean did that with Rings. I think Sean Rings is just a totally different everything in Ridge. Even though it's all flying the Ridge banner, he had to up the level of difficulty and complexity in how he advertises that category.
- [39:03]
E
Right?
- [39:04]
A
With what you're talking about, what Sean's hitting on is you can just start off at level one is like, let's create a new campaign. We're going to self contain it away from Swim merchandise. The site seasonally. Also good. I think that then my. What I would say and what I've seen with lots of brands is what winning looks like when you expand a category that is different. You have to have a different set of measures and expectations for what a new category will do for your brand and how long it will take before it starts to look as good as Swim. Because, like, Swim margins are amazing. But that is like crack cocaine. Not every category is going to be as good as the one that you have as a hero. So, like maybe winning in Lounge, Elaine, is like you just sell through most of the first, that first big po and then next year you up it a little bit again.
- [39:56]
B
Your margins are the same, are they not, Elaine for Lounge and Swim for Lounge.
- [40:02]
A
It's not even the margin. You have to train the buyer.
- [40:04]
C
Yeah. Lounge requires more fabric.
- [40:07]
D
Yeah. And Swim is like one of one in terms of the apparel categories. Look, I agree with everything Matt's saying. I want to talk about the merchandising piece. If just. I have a lot of thoughts on your website right now. One, I think risque is a mistake. This is. Look, I don't know your business very well, but it's really confusing. Do you have a cookie banner over it? So I didn't. When you're talking about risk, you couldn't even see it. But then I click into the cookie banner, I'm like, oh, there's already a bifurcation of the website. And I bet nobody is clicking between the two. And it's like you should either shut it down or just roll it into the main website as a separate function. And then the biggest lesson I've learned this year, if I could just impart something into you, is that, like this, the answer to all your problems is throughput. It's like right now you have a small amount of peanut butter and you're spreading it as far as possible across 20,000 styles or whatever, right? Across Lounge, across all these different things. And your team is going to tell you that they can't cut things because we'd lose that revenue. The revenue flows back up to whatever the actual core styles are. If, like you have a thousand different styles for sale right now, you would do the exact same revenue if you had a hundred. Right. And maybe it falls down when you get to like five. Like, you need, you need some variety for sure. But like Ridge lost a lot of money making all of these styles for all these different people. And you have hired merchandisers being like, we need this, we need this, we need this. When throughput is the answer. Right. You've already seen this with your, your black. It's the best seller. I think you said it does 20% of your revenue and there's 50 other styles that do nothing. It's really trimming the long T. And newness is important because newness works in the ad account. Right? Like newness is incremental. It's like you, you want to make outlandish crazy stuff that people click on an ad and then they go to your website and they buy the black one anyway. So it's like the, the smallest.
- [42:03]
A
We talked about that, right? Katie. Like that's what Kate. That's like. And Curtis does that too. Elaine. It's like he'll Sean's 100 bang on. It's like you actually design the style. You don't even need to actually have it in inventory. And that's where the whole pre order function comes in is you should consider what comfort used to do or maybe they still do where like you have an add to cart and then you have a pre order and at a lower price. So like you can actually give your customer an option to wait for things. So you could do a straight pre order or you could do a dual add to cart.
- [42:35]
B
So short guys, right? So remember if she's.
- [42:38]
A
I get it. But you can advertise that long in advance. Katie. Like you can get a sense for like, is this style going to pop off when it actually starts?
- [42:45]
C
Yeah, that pre order would be amazing. But it operationally that is a nightmare. And, and so like when you launch a collection, typically like when I have, when I have a collection drop, I have 40 styles, three prints, three solids and the top six styles will drive 80% of the revenue. And half of the time I'm shocked by what the top sellers are. And it's unpredictable. I'm guessing every single time what the best sellers will be.
- [43:19]
A
You don't test with the, with your customer base way ahead of time. Which ones you think it's going to be?
- [43:23]
C
No, because when we tease it, we don't sell it on our website live. We like tease it on socials.
- [43:31]
B
He's saying like, if you, if you have like a VIP group, you could maybe poll them on what their favorite ones were. Like, do you like this floral or this floral?
- [43:41]
A
Yeah, like insiders group On Facebook or, like, where you actually survey and show them?
- [43:46]
C
No, I don't do that. So how do you guys know what are your bestsellers going to be?
- [43:51]
B
I mean, we do that. Like, post on VIP and ask them what their favorite print is going to be. But, I mean, I'm listening to you and what you just said about the six prints in your drops. I think that's a really big collection to be dropping at one time, and I'm wondering if you should spread that out. We do a drop every week, and so does Curtis, and I think you might see a better return rate with your customers. So think about it as a shopper, right? Like, you send me an email and it's all your new swim collections. I'm more than likely because your swim's expensive. I'm gonna just buy one or maybe two. But if you take all those SKU styles and. And break them out into two or three drops, you might be able to get me because I'm going to come by the first print, right, that you launch in January, but then you launch another one in February, and I might like that one too. And I've already spent the money, so I might spend it again. Like, I wonder, have you tested breaking out? Because that's a big drop. Six. Three prints, three solids, you said, and with multiple sizes. And that's a lot.
- [44:59]
A
You're asking the customer to do a lot with that many styles on one drop.
- [45:03]
D
So what Kate.
- [45:04]
A
Katie's hitting on Elaine is actually really is. If. Have you tested that before? Have you tried moving to a weekly.
- [45:09]
C
Yes, this June I did. I did six drops. No, I did four drops in six weeks. That was a nightmare. It was.
- [45:20]
A
But, hey, I have a nightmare for you.
- [45:22]
C
Or the numbers were not that great. Unfortunately, we're having, like, a. A meta problem right now. So this year is a little bit tough.
- [45:32]
A
Oh, June was really bad for most people. Elaine, Like, June was not a great. It was great for Sean because Father's Day is in June. Crush.
- [45:41]
C
June is my peak peak month, so I try to drop as many styles and more collections in June. Tried to capitalize on all the. The. The traffic coming in, and it did not do good because I do feel like the customer doesn't buy a swimsuit every week.
- [45:59]
D
On the VIP group, you should look at Kitsch. Jeremy and Cassandra from Kitsch have an amazing VIP group. Portland Leather Goods is an amazing VIP group on Facebook. Join both of them and you'll see thousands of customers posting and engaging with each other every single day. And like, maybe you're, you know, what's the Gen Z version of that? Maybe. Maybe it's. Maybe it's still Facebook. Yeah, totally. So you should get all those people together, give them a free swimsuit, and then just like, poll them. Be like, hey, do you guys like this one or this one? On the more frequent drops. You know, Ridge used to do weekly wallet releases, and now we do like once every two to three weeks. We're doing, you know, bash wallet releases a couple at a time. And there is, there is a happy medium there. I do think you. I would pair like two or two styles together probably into your drops and tell people, hey, this is Limited, only 50 pieces, right? Like, put that in the email and drive that sort of awareness showing up. And then it just gives your ideas, like, a very clear idea of what to shoot for ads and then try to run those as separate ad campaigns. So, like, you have newness. And every two to three weeks, there's, you know, just two or three sets being put in there. Right. And really focus on that one product
- [47:11]
C
specifically, how early do you post it in the VIP group so that you can get your production order in?
- [47:18]
B
I had an idea, though, guys, if she doesn't have a vip, Elaine, if you don't have a VIP group right now, it's going to take you time to, to kind of build that up. I just saw the brand loopy, which is the phone cases, sent an email out to all their customers and it had a poll in it. And I'm like a sucker for that. I clicked on it and it had me vote on next year's prints for them.
- [47:42]
A
Well, that's just because they suck. The. The. That's my competitor.
- [47:46]
B
Tell me how you really feel, Matt. But she doesn't have a VIP group
- [47:49]
C
and she's, well, like, what are you
- [47:50]
A
doing a year in advance?
- [47:52]
B
All you guys that don't have to do with apparel and seasonality need to shut. This is hard.
- [47:58]
A
You just, you just raised my competitor. I can tell you. You don't have to do that. You can test, like, so, so much sooner. Also, she's got a down season.
- [48:08]
B
I know, but she just asks the question of how can she. How early in advance can she test for print? You know, asking the VIP group, right? Elaine, like, you're. Because you have to. You're working on next season swim right now.
- [48:22]
C
Yeah.
- [48:22]
B
Yeah. So are we. So. And I, I mean, I think you can ask now. I think you can ask your customers now.
- [48:30]
E
Most AI tools and software don't give you direct ROI every month. But PostScript does. I run two PostScript AI products at Ridge. Both show up on our P and L Infinity testing runs, continuous AB tests on our SMS automations. Completely in the background. It's driven $446,000 in incremental revenue. Not just attributed incremental, that's a 32x incremental ROAS with click through rates up 43%. Then there's Shopper, an AI sales agent that answers every inbound text in under 40 seconds. We're running 23x ROI on messaging costs alone. If you want SMS software that gives a proven ROI, go to Postscript IO and book a free demo.
- [49:09]
D
We've done the poll emails. The poll emails are good also. Just post on Insta Story, just be like hey ds, like this one or this one. Just so you could have people vote and engage and you could do that every day for a week or whatever and just get some sort of insights. But going back to your actual question is how do you know what the winners are are and you don't? Like a lot of it is it's going to be your gut instinct. Like we just launched a collection, it's called Tiger Stripe and Neon Tiger. And you can go to our website, you can see this, right? And Tiger stripe is like classic, like you know, camo basically. And then Neon Tiger is like a Call of Duty skin. Like it's like a neon print. And I was so confident, like, dude, Neon Tiger is going to rip. We're going to make so much money. Nobody wants classic camo. Totally inverse, right? The Tiger stripe one did hundreds of thousands of dollars more. And yeah, you're still guessing, right? Like your best guess is putting out what you think is best in the market.
- [49:58]
A
But Sean, you still had. I think what we're hitting on is some data is better than no data. When you're making your yes.
- [50:05]
D
And you are your customer, you should always be the customer of your product. But I do want to going back to merchandising, more is less, right? There is diminishing returns. You have hit that level of diminishing returns. Especially you have so much cute stuff on your website. But I do not think it gets surfaced correctly. Right. Like your lounge business, your, your clothing business basically could be a whole section on anthropology that girls would love to shop but like it's buried three menus down on your website. So it's. Yeah, it's not going to be successful because nobody's looking at it. It's an attention game. You have to get eyeballs on that Somehow it's going to be ad campaigns for it. So you're drowning in too much good stuff.
- [50:46]
A
Have you ever looked at how the drop shippers or how like people test brands before they launch them? Like they basically fire up ads long in advance even though they're, they don't ever. They're never gonna ship the damn thing. So they actually just like run ads to get signal on which ones get clicks, which ones are actually gonna get people to buy and then they just refund the order. So like there's lots of ways to get signal before you ever have to make the thing. I'm not saying go do that by the way. I'm just saying like people do this all the time. They test the market with products using ads just to get some data before they do it.
- [51:22]
B
Also maybe like I'm really clicking. First of all, your swimsuits are so cute. I want.
- [51:26]
C
Thank you.
- [51:27]
B
Yeah, they're so good. Like I'm. Her photography is gorgeous.
- [51:32]
A
Like she said she's a product person. Guys, it's a great thing to be like Elaine, I think have you huge advantage.
- [51:37]
B
Have you time to move some of your inventory. Have you ever reshot like so you know how you, you create ad and then there's always one ad that just runs it, right? And you sell out of that style and it's too late for you to reorder and then you're like, okay, now I got to try to push these others. I mean I will say like with AI now you could take like the body and the woman of your top selling swim style and then just have it switch out into one of these other cute. Have you tried that yet with ads?
- [52:05]
C
No, my marketing team is totally against.
- [52:08]
B
Well you need a new marketing team sweetheart, because that is a no brainer. And I'll tell you, we even had on one of our swim styles because it's really hard to find hot dads and serious guys. And we had, we, we had a swim style on a guy in ads that was like a daddy.
- [52:29]
C
And, and you know, daddy and me,
- [52:32]
B
Daddy and me basically. And we kept looking at and we were like, we think it's because he's a little pudgy. We fixed him in AI and that ad started ripping. So yeah, you need to tell your marketing team to either like get on or get off because I think you could take some of your top. Like I'm looking at your ads and the images, I can tell which ones are probably your top performers. And your prints are all so good. Like you don't have a lot of duds but you're sold out on some of your best sellers.
- [53:01]
A
That's an interesting take. Katie. The how much does the model impact the sell through huge on swim too? Like Elaine, would you agree with that with the model? Do you think the model that you put the suit on has an impact on how much you sell?
- [53:19]
C
I, I, I always recruit the best models and LA has very expensive models so I, I, I don't, I have never compared like an A plus model to like a, a C minus model.
- [53:38]
B
Elaine, stop paying excessive money for models in la. Like our every model on our website is our customer and I think you could send out an email to like there's so many ways you could save and LA's filled with gorgeous women. I mean you should be. I'm not wrong. Like if you're spending crazy money. But I do, to answer Matt's question and looking at your ads like, like I think women want to see themselves but also they want to see a better version of themselves. Right? Like they want to picture themselves in that. And I just, you should just try it because you're still in the season. It's still swim season. Take your top performing. However that model was posed and the whole thing put a different, have AI put a different swimsuit on. I, the, the way I understand meta and the way it works for us is it's going to push spin to it and it's going to work. I would bet money on it.
- [54:30]
D
I 100% agree with Katie that you should be swapping out swimsuits on top performing ads and AI like your marketing team's against it. It's three clicks. You want me to do it for you? It's like, guys, H and M is doing this. You have to do it too. One more tip on merchandising. I want to talk about the idea of site merchandising, right? So I'm going through your site right now. You sell kids swimwear, you sell maternity swimwear and you even have the Ken shorts you have swim trunks for guys. It is so hidden and so hard to find. If you want to sell more lounge, just put it in like every fourth slot in your bestseller collection. Just like drop in a piece of, you know, the, the, the bikini tops or whatever it was like the baby tee. Just like put that randomly throughout the collection so it's inside of every single collection. More eyeballs on it. You'll sell more of it. And even if it's small wins like might sell one baby tea a week. We could probably get it to 10 baby tees a week. But the exact same like no marketing dollar spent on it. Just surfacing it more places. Right. And it's like that cross shop.
- [55:37]
A
Sean on that. Elaine, do you. Which I agree with people Sean's saying. But do you. Are your best sellers collection on your page? Are those actually your best sellers?
- [55:45]
C
Those are my best sellers, yeah.
- [55:46]
A
Oh yeah, yeah. You gotta start lying.
- [55:49]
B
It doesn't work like that. It does not work like that.
- [55:53]
C
Yeah. When I, when I design a core collection or a bestsellers collection, it doesn't sell. I, I found out that I have to get like the top unit sold styles and put it in my best sellers collection. That's how I.
- [56:06]
A
No, no, I get it. The. Okay, so I'll give you two things. Like obviously it doesn't work like that. People want the best sellers. So we actually broke out of best sellers and then a trending and we do what Sean does in our best sellers we will absolutely merch in products that we want people to even be aware that we have. They don't, we don't know. They don't even know that we sell them. So like we'll put in a new category in there even though it's not a bestseller. And I won't do that everywhere because it's not a bestseller but it's good real estate and that page gets a lot of traffic. So when you want to introduce a new category, it's not a bad idea.
- [56:38]
C
Right.
- [56:39]
A
But we created a trending sort. So like people go to our best sellers page and then we have like a trending. Trending is where we put in all the weird that we try and we have found new best sellers. We find a new bestseller every month by just calling it trending and showing people stuff that we think should be better. Like it should sell better. The people just when you have a lot of styles, they can't find the damn things.
- [57:10]
F
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- [57:54]
B
I would bet that an ad drives your best sellers. I think you have a print and an ad that takes off every time you do a launch and that's what drives it. But Matt's right. Like you're. If you get on a heat map on your site, Elaine and you on mobile, not on desktop. And everybody the first two things are gonna click on is either new arrivals or Bestsellers. And you should break it out like your bestseller. First of all, your new arrivals doesn't have lounge on it anywhere. And Sean's right, you need to add. You could even just have a dropdown that says new arrival swim, new arrivals lounge. And then for your best sellers have break that into more categories too. It will, it will give you natural eyeballs on those products. And there's a better way you can merchandise this. But your lounge is so freaking. I can't even find the kids stuff on your site. And your, your lounge is adorable. You should have, yeah, you should have this.
- [58:50]
C
The lounges last season styles, those are on markdowns right now. But because I have a lot of inventory, I go on markdowns very often. 50% of my assortment is marked down like a 50% off. So do you like. Sometimes I like I. Because I have fabric liability because I don't know what styles will sell out. I have to like front load my fabric and prints are very specific and these prints, they may not sell. And I get. Because these prints don't hit, I get stuck with the fabric inventory. So then I have to go and make like markdown products off of those leftover fabrics and then sell it in season for 50% off.
- [59:38]
B
No. And it will sell. But you're not acquiring a customer you really want probably right. She's only going to come back and shop when it's on sale. I mean I, it's like what Sean started with. I feel like your whole. It. The production, like the fact that you placed a half a million dollar PO on your lounge coming in the fall and you can't like there's, it's going to be hard for you to adjust for. It is.
- [60:03]
C
Yeah. Do, do you guys make markdown products? Like do you guys produce markdown products just to like get the customer like an acquisition cost?
- [60:13]
A
We do, but we do it a few times a year. We actually make, we call them leftover cases. So like we actually take all the leftover material and we grind it up. So it's like think of these are like tons of colors and we just mash them together and it produces these weird looking ugly ass like tie dye. Like it's just a strange collection of things. And then we sell them as our trash. Like this is our waste, right? And we sell them for like 20 bucks a case. We sell them way less. We do this. They crush people think because people, there's weird people in the world, right? There's different buyers for different things. So we actually produce these things as like a discount collection of like look, these are all the rejects that we just reformed into these new things. We can't control the colors. Every single case you're going to get is going to be unique. So none of them will, not one will look the same as the other person. Surprise when you get it. So we've done stuff like that. I know Curtis actually produces well no he doesn't. He has like he does seconds. Yeah, his seconds. Yeah.
- [61:17]
B
What about mystery boxes, Elaine?
- [61:20]
C
Oh yeah, I, I have done that and it's done great for like the pop ups and, and selling like high units but, but for like markdown products it actually drives a lot of revenue because I could sell like a swimsuit for 50 off and it's a good, yeah it's a good volume driver for me. I like making discounted products.
- [61:47]
B
Yeah, but you don't. You, you gotta be careful on if you're gonna be like a discounted brand or like because I do think like I'm shopping your lounge and it's a mix. Like if I was just merchandising it I would say you need to move all your sale to the last page and the whole first page needs to be full priced items. And right now it kind of like goes full price sale.
- [62:06]
C
Full price sale.
- [62:08]
B
So I to you have a lot of low hanging fruit that you can optimize on like truly which is a good thing, right?
- [62:15]
A
Katie and Elaine, can I ask you guys this, this is more of a how women shop thing. Would it. Has anybody ever tried just doing like I've made a hundred of this style. That's it. And I sell it for way more money. And none of your friends are going to have this at the same time spring break vacation spot. So like where you really use scarcity to your in your favor. So like we're talking about discount styles. What if you went the other way? What if it was like no, no, I'm only making like 250 of this swimsuit and it's a 200 swimsuit or 200.
- [62:50]
B
I think it's a good thing you're not doing swimsuit brands.
- [62:53]
C
Matt. There are brands.
- [62:56]
A
I don't know. I said it's a question, I'm not saying it's suggestion.
- [63:00]
C
There are brands that, that sell out limited edition. Like I'm sure you guys heard of the park, their Mocknet and that Active, their activewear. They sell out within the first 30 minutes.
- [63:13]
B
But they have a huge social TikTok following Elaine. Like that's very hard to recreate.
- [63:20]
D
Also set is not very big. It's like you're, you're getting very close to the size. Set is like, I know that business a little bit and you make way more money making stuff and selling lots of it. I think, you know, to summarize your problems as I see them, right. Let's just talk with product expansion. If you really want it to work, you have to give it a really honest try. And that comes out of site merchandising. You have to fix the discovery aspect of it and you have cute, cheap clothing that will work on TikTok shop. So like you should lean into that as a Discovery Channel, right? And this is really for the clothing side of the business. I think probably your biggest opportunity because it solves a lot of things downline. It is like, let's get scale on this, right? The second problem I see is, you know, because you own the factory, you have to keep it running to cover fixed costs. I've been, I've been here before. So you make a bunch of stuff now. I think you're over inventoried and you just get into a lot of bad habits where you end up, you know, buying and expanding, you know, selection for customers. And then when you have too much of it, you dump it on TJ Maxx. But then you have to buy more of it because TJ Maxx wants it in January too, like everybody else. And it's like if you don't, if we, if we can't actually fix this problem and actually get the new product stuff working, it just gets worse and worse and worse until I'm talking to you and you're like, yeah, I have five years of inventory on hand. I'm bankrupt. Like, I don't want that to happen to you, but it's happened to a lot of people I know. And then downline from that is, yeah, your life would be way better if you could just sell black swimsuits. So how do, how can we get all of the juice of new launches but like hyper focused on, you know, the winners, the blacks of the world. Right.
- [64:59]
B
And, well, the black swimsuits of the world need to be driving your new customer acquisition. Like, that's why you need to not forget to keep creating new creative for your black swimsuits.
- [65:12]
D
Yeah, I think that was a great tip from Katie is like, so often we forget about the winners because they're the winners, but you can get way more juice out of them. So anyway, that's probably what I would do. Focus on site merchandising and then focus on new ad campaigns with different pixels. And TikTok shop, focus on the clothing aspect of it. And it seems like launching new brands or selling or like making lounge for other people is off the table. So we'll just try. We'll just try to solve it through the ways I just described. But, Matt, Katie, what are you guys thinking?
- [65:45]
A
I think it's. She needs more, at least some data to better predict what she thinks is going to be like. She has a wicked advantage, guys, in having a factory. She doesn't need to. She doesn't have some factory saying, hey, place your PO now for nine months from now or 12 months. Like, she can actually be a lot more flexible than her competitors can. So, like, to me, that's a huge advantage. I would, I would just think, like, what data can I get that would tell me a little more about what I'm going to.
- [66:12]
B
And maybe, Elaine, I know you said you don't want to manufacture for other brands, you want to just do your own, but maybe that's how you get the data. Maybe you manufacture for other brands, see what volume they're pushing.
- [66:23]
A
Oh, that's interesting.
- [66:25]
C
They're a different customer. But yeah, that, that could be. That could be good insight. But Matt says, like, the factory is like a great advantage. Katie and Sean are saying that get rid of my factory and just place POS with a big supplier instead.
- [66:43]
B
So we've not helped. So what she's saying is we've not helped her at all.
- [66:47]
D
She says she regrets coming on her for the past hour.
- [66:49]
C
No, I'm not saying that. I still got a lot of great insight about how to be a great marketer.
- [66:54]
A
No, we don't need to agree on everything. And I obviously have my bias, Elaine. Like, in our business, the speed matters and weekly drops for us absolutely matter. When we do less drops, we make less money. Like, that's just how it works. So. And obviously, different buyer, different category, I think.
- [67:11]
B
I don't know. I feel, I feel like maybe, Elaine, you're like you have a great thing going. Maybe you just need to focus on being a better marketer for a minute. And maybe that, or maybe that's a hire you need to make. If you recognize that's not your strength, maybe it's worth the investment because your photography and your product is gorgeous. I mean, I. I'm inclined to tell you take. Lounge off. Discount. Try it again.
- [67:34]
D
Oh, sorry. On the factory piece. The factory is an asset. I own almost every factory we do business with. Or at least I, I have a JV with them. Right. But. But it can be a liability when you have to keep the lines running, when you don't have the demand to satisfy it. And so you wanna be in the position where you're always demanding more product from your factory, not the position where, oh, I have to keep the lines running. And that's like the problem, right? It's like what happened to GM Motors in 2008 is they have union contracts and they have to keep making cars. Right? Cause they have to pay these people, but nobody's buying cars. That's what you want to avoid, right? And just.
- [68:12]
C
Right.
- [68:12]
D
Right now, we. We're on the wrong side of the supply demand curve where we have too much supply. We have to generate the demand. I agree with Katie that, like, the next year of your life, you're gonna be the world's best marketer, but you gotta just figure that out.
- [68:23]
A
It's. You know, it's funny. I. I'll tell you two things that this reminds me of. Like, we actually did look at making stuff for other people in our factory, Elaine. And I think I got the same advice from Mike that, that I'll give you, which is like, it's the swan song of open. Of owning a factory is like, well, I'll just fill in all of my down cycles with, like, other people's stuff. Which then means you, like, now you're a B2B salesperson, and you're like, it's a. It's just a different business and it's very distracting. So what Katie and Sean are saying is ultimately where we landed, which is, no, I just need to sell more of my own. And that that meant being a better marketer and a better merchandiser and a better everything else. I'll tell you the thing I'm learning from this, though. So, like, this is less of advice. We get the outcomes, we invest accordingly.
- [69:08]
E
Right?
- [69:08]
A
Like, so I have, I've said, I've said this in the show before. I've never made Amazon work, but if I'm Being honest, I have never really invested in Amazon in a way that Amazon should work for us. Like, I have treated it like the redheaded stepchild. It's off in the corner. It gets. Oh, sorry, Katie. Doing it on purpose. And we've just never really plowed into it. And I would say that five or six years ago on Pela, like, it was the same thing with new products. We never really invested in them and gave them the time that they probably needed to become good new categories. Like I would. We killed them too fast or. Or we just didn't care. Like, that's the truth. Um, so I think my takeaway from this and is just invest according to the outcomes that you desire. If you want a new category to work, that category's probably gotta take over the whole site for a period of time.
- [70:06]
B
And that's okay. Like, Swim lives on our site in Q3 and Q4, but it takes. You gotta dig for it and it transitions completely.
- [70:16]
D
I also. One last line. You could throw it away. Who cares? You call it lounge. I assume it's gonna be sweatpants. It's not sweatpants. It's like cute tops and skirts and stuff. So maybe I'm not shopping your website, but it was confusing to me. I thought we're talking about doing sweatpants.
- [70:32]
B
Oh, my God, Elaine, you can keep calling it lounge. They're idiots. Don't listen to them. Sean doesn't know.
- [70:41]
C
Okay, well, thank you guys for all this advice. It's like, been amazing. Hopefully I can grow my businesses to like, your guys's size. But yeah, fully, fully bootstrapped. So I'm hoping that I can. I can make it. You guys. Thank you.