My BIGGEST Mistake in Ecommerce | Shopify Horror Story w/Gretta Van Riel

Summary

The founder of a multi-million dollar e-commerce brand shares the biggest mistake in their business journey: placing a massive order for a year's worth of tea, worth $1.3 million, from a Chinese manufacturer through Alibaba. The tea arrived in terrible condition, smelling like garbage and containing metal bolts. The costly error led to the loss of the investment and a lesson in the importance of using Alibaba's Trade Assurance and not outsourcing orders to unknown third parties. The story emphasizes the value of resilience and learning from significant setbacks in business.

Takeaways

• 🚀 The founder started their first e-commerce brand at the age of 22 with only $24 in the bank.
• 🌿 The initial product was a detox tea blend made by hand, inspired by a personal interest in health and wellness.
• 📈 The brand gained traction quickly through word-of-mouth and the early, more intimate nature of Instagram's platform.
• 💡 The decision to quit a full-time job was influenced by the brand's rapid growth and the founder's ability to earn a weekly wage in a day.
• 🏡 The business initially operated from the founder's home, causing some disruption to personal living spaces.
• 📦 As the business scaled, the need for more space and employees became apparent, leading to a move to a townhouse and hiring additional help.
• 🌏 A significant business trip to Hong Kong led to the decision to move there and explore manufacturing options in China.
• 📉 A major mistake was made by placing a large order for a year's worth of tea with a Chinese manufacturer, which resulted in a substandard product.
• 🗑️ The poor quality of the manufactured tea led to a loss of $1.3 million and additional costs for disposal, highlighting the risks of outsourcing.
• 💼 The founder emphasizes the importance of using Alibaba's Trade Assurance for future orders to mitigate risks and the lesson learned from not ordering such a large quantity at once.

Q & A

What was the founder's initial motivation for starting Skinny Me Tea?

The founder started making detox tea blends by hand after noticing recurring herbal ingredients in chemist detoxes they and a friend, Ella, were doing.

How did the founder transition from making tea by hand to selling it?

The founder's colleagues at work started asking about the tea they were drinking, which led to them trying it out and loving it. This demand prompted the founder to create a website for the brand using Shopify.

What platform did the founder use to grow their initial customer base?

The founder used Instagram to grow their initial customer base, leveraging the early days of the platform's algorithm to easily gain followers.

Why did the founder consider quitting their full-time job?

The founder was making their weekly wage in a day through the sales of Skinny Me Tea, which indicated a potential for the business to sustain them financially.

What was the founder's experience with Alibaba when sourcing a tea manufacturer?

Initially, the founder had a positive experience with a tea manufacturer on Alibaba, as the sample orders were of good quality. However, this led to a false sense of security when placing a much larger order.

Why did the founder decide to place a large order for a year's worth of tea?

The founder was overwhelmed with the manual process of mixing and fulfilling orders and believed that a large order would alleviate this stress for a year.

What was the outcome of the large order placed with the manufacturer?

The large order resulted in a product that was of extremely poor quality, smelling like garbage and containing metal bolts, leading to the entire order being discarded.

What was the financial impact of the failed large order on the founder's business?

The failed order resulted in a loss of 1.3 million dollars for the tea, plus additional costs for customs and waste disposal, totaling around 1.4 million dollars.

What lessons did the founder learn from this experience regarding manufacturing and orders?

The founder learned not to place such large orders and to use Alibaba's Trade Assurance for future orders to mitigate risks. They also realized the importance of not paying outside of the Alibaba platform for protection.

How did the founder handle the emotional and financial setback caused by the failed order?

The founder relied on resilience, a trait they had been developing over time, to find solutions and move past the loss. They also had a significant cash reserve which helped cushion the blow.

What changes did the founder make to their business operations following this experience?

The founder returned to manufacturing the product in-house and later established a TGA-listed facility in Australia for production, improving quality control and business operations.