Hosting “Ecommerce Conversations” is a welcome respite from my day job running Beardbrand, the direct-to-consumer company I co-founded in 2012. I periodically post podcast updates on eCommerce Beardbrand’s performance, hoping the transparency helps other entrepreneurs.
Here is my 2023 recap.
It was a terrible year for me and Beardbrand. This was the first year we were in the red. We have always had margins around 15%, but not in 2023
I described the year in this week’s episode, embedded below. The transcript is condensed and edited for clarity.
Losses
Beardbrand generates revenue primarily through our website but also through wholesale accounts. Our site sales are down 53% from the peak of 2021 – our best year. They decreased slightly in 2022, but profits increased because we reduced expenses. In 2023, profits and sales continued to decline significantly. A huge tax bill last April was the downside to being so profitable in 2022. We’ve always had tax bills that we paid on time, but this time it’s been difficult with the other losses.
Then we got hit with a tax lien early last year. The State of Texas has audited us for sales tax compliance. We had to pay taxes, penalties and additional fees. They gave us 30 days. Fortunately, we run a very conservative business and have emergency savings. We paid the state and IRS simultaneously, as well as hefty holiday season bills. So all our money was spent in early 2023.
Another loss at that time was an incorrect 100% discount code. I created it about eight years ago and somehow it was accessible on our website. The information was disclosed on a Facebook group or on TikTok. We purchased approximately $30,000 worth of products with this code. None of us here understood it.
Target has been a key wholesale account for about five years. We lost that business in 2023. The staff there simply stopped responding to our emails after we proposed plans for 2023. We emailed: “If you don’t respond, we assume that you will no longer offer our products from now on. We will adjust our order forecasts.
We had purchased a lot of specialty inventory for Target that we couldn’t sell anywhere else. We destroyed approximately $500,000 of unsaleable product at the end of the year. Additionally, Target now claims we owe chargebacks for markdowns, which we strongly dispute. They refused to pay approximately $170,000 in bills because of this disagreement.
We faced more challenges. My business partner had her third baby and decided to retire from the business. It has been a challenge not having it on a daily basis. We put our entire team on half-time leave last summer, and our organic YouTube content performed worse than ever. We tried TikTok stores with the recommendation of Paul from BK Beauty, but it wasn’t effective for us. Finally, we were sued for accessibility reasons despite the site’s excellent accessibility rating.
Victories
Our biggest victory was having enough savings to cover our losses, tax bills and unsellable products. Conserving cash over the years has finally paid off.
We were fortunate not to lose any employees. Everyone we furloughed went through tough times and returned full time in August.
Since June, we have been profitable, but not at the margins that I feel comfortable with. We plugged the holes in our boat. We must now put the wind in our sails.
Part of our sales decline was due to manufacturing issues and product launches that did not meet customer expectations. We have resolved many product issues by going back to our old-school formulations and finding manufacturers who more closely align with our production needs.
Another victory was our price increase in June. Our average order went from $48 to $60. We are receiving fewer orders, but our processing and shipping costs per order are a lower percentage. It was nice. We pay less to our outsourced fulfillment provider.
Another big win is increased sales through product subscriptions. We went from around 1,100 product subscribers to around 3,000. I see this growth continuing through 2024.
For years we didn’t sell on Amazon. We launched there in 2023 and hit an annual run rate of $1 million by the end of the year. Hopefully, Amazon will become a seven-figure chain in 2024 and beyond.
A final victory was launching a new marketing strategy. After speaking with the founders of Batch Cannabis, we introduced an affiliate program. We have had good promotions and referrals from our affiliate partners, with great articles and other placements. We hope that the program will grow, not only in terms of affiliate income, but also in terms of improved organic search traffic.
Look forward to
Despite the challenges, I remain optimistic. Twelve years later, I am as motivated as the first day to deploy new products and serve our customers. Difficult times require perseverance to get through them.
We have encountered many manufacturing issues in 2023. We are excited to grow with a manufacturer that aligns with us. We’re taking it slowly, one product at a time. We learned the benefits of partnering closely with one manufacturer rather than diversifying with several.
We continue to focus on Meta for customer acquisition. We didn’t give up our organic YouTube strategy. We are planning to introduce a new video format. If that doesn’t work, we could shut down YouTube organically and focus on other avenues. We hope Amazon sales will continue to grow and eventually replace what we lost at Target.
But our top priority is to return to profitability of 15 to 20%. It would help me sleep better at night.
I want build a beard mark. For me, the destination is the journey. Creating a business in which my children can grow brings me joy and enthusiasm. I am aiming for a generational business that my children and grandchildren can run, allowing our family to live happy, healthy and functional lives. That’s why I show up every day.