ETHOS Grooming Essentials A New Line

So from a really simple perspective. The artisan who let’s say has a shave soap that normally sells for $20 through a vendor or their website the normal wholesale price to the vendor is Keystone  which is $10 per jar. So the vendor retail price and the artisan retail price is one and the same, $20.  In this new system the Artisan sells the middle man the soap at 25% which is $5 and the middle man in turn then sells it to the vendor at more than the $10 he was paying for it before, so they are forced to mark it up to a higher retail price or accept a lower profit margin. This will hurt the vendor and in some cases the customer. 

Don't forget the manufacturer loses too, Frank. Sure, he may make the same money by selling in bulk, But what about next month... and the months to come? Unless the market is booming with a shortage of products, he's going to stop getting orders as this new middleman has a backlog of products in their warehouse. Also, how will that soap, aftershave, etc age in their warehouse?

It just seems to me that everyone in the traditional supply chain loses in this scenario, and any soapmaker who partakes in this sort of new supply chain is asking for the grim fate they'll ultimately meet.

But... It's a free market economy. It's supposed to right itself when issues like this arise. Hopefully this is short term and all of those 'get quick fast' folks go the way of the dodo.

Frank made it clear that the producer loses half of what he normally makes while saving hardly anything all in the interest of volume. I think everybody has come to see how an unregulated free market works - only an ever decreasing few are profiting and happy. In the free market's wake has come unprecedented poverty and social unrest - that is why the current economy has been termed neofeudalism.

But... It's a free market economy. It's supposed to right itself when issues like this arise.

Unfortunately bullying, strongarming, intimidating, and short-sightedness are tools in the free market toolbox.

The problem harkens back to Hobbes (paraphrasing): in the absence of regulation people's lives become solitary, poor, nasty, brutish, and short.

When people are left to their own devices and natural inclinations, they tend towards self-interest and self-preservation, in the absence of regulation. We have discovered too late that the key flaw in free markets and unhindered self interest is that a society cannot be built nor even preserved by everybody taking as much as they can and nobody producing anything. The free market is a chaos without guardrails

So from a really simple perspective. The artisan who let’s say has a shave soap that normally sells for $20 through a vendor or their website the normal wholesale price to the vendor is Keystone  which is $10 per jar. So the vendor retail price and the artisan retail price is one and the same, $20.  In this new system the Artisan sells the middle man the soap at 25% which is $5 and the middle man in turn then sells it to the vendor at more than the $10 he was paying for it before, so they are forced to mark it up to a higher retail price or accept a lower profit margin. This will hurt the vendor and in some cases the customer. 

Don't forget the manufacturer loses too, Frank. Sure, he may make the same money by selling in bulk, But what about next month... and the months to come? Unless the market is booming with a shortage of products, he's going to stop getting orders as this new middleman has a backlog of products in their warehouse. Also, how will that soap, aftershave, etc age in their warehouse?

It just seems to me that everyone in the traditional supply chain loses in this scenario, and any soapmaker who partakes in this sort of new supply chain is asking for the grim fate they'll ultimately meet.

But... It's a free market economy. It's supposed to right itself when issues like this arise. Hopefully this is short term and all of those 'get quick fast' folks go the way of the dodo.

Frank made it clear that the producer loses half of what he normally makes while saving hardly anything all in the interest of volume. I think everybody has come to see how an unregulated free market works and inly a ever decreasing few are profiting and happy. In the free market's wake has come unprecedented poverty and social unrest - why the current economy has been termed neofeudalism.

Ahh, sorry. I focused on the summary which left the producer out.

Regardless, I think we're all on the same page ... Saddened and a bit disgusted at this. Hopefully it's a passing fad, but at least we can say with some pride that the DFS crew here has morals. That's a win.

Back of envelope financials for this model:

Biggest share of profit goes to mass wholesaler, the only one adding no value.

Artisan - from 50% to 25% but yet fully accountable for production costs. Let's say 15% profit on retail

Retailers - from 50% to 35% taking all the inventory risk plus sales cost so what, at best 25% profit on retail

Mass wholesaller - 25% of lost profit from artisan plus 15% of lost profit from retailer is 40% profit of retail, no costs, no productive work

The worst part of it - prices go up to the consumer and no value is created.

This "wholesaler" model seems unnecessary for a speciality product category, in a specialty market, where I would guess 70+% of sales are coming from 3 or 4 online retailers? But what is odd to me is that a supplier would grant exclusivity to a wholesaler for the entire market (presumably excluding direct sales from the artisan to a customer). That seems like a recipe for future channel conflict and mis-aligned incentives.  If anything, I would think a speciality distributor would be more beneficial in helping artisans managing demand forecast and discovering new retailers while advocating for the artisan. If this was a situation where artisans were in a product category that sits at 1000s of online or brick and mortar retailers, I would see more of the value or necessity for a wholesaler. And any bulk purchase from the wholesaler is likely a one time benefit in cash flow unless that is invested to bring out new products or reduce production costs.

One small benefit I see is ensuring to retailers/vendors that a product does not go out of stock. There are a number of markets and product categories where retailers will drop your line if you can't maintain consistent availability and stocking of items.

This "wholesaler" model seems unnecessary for a speciality product category, in a specialty market, where I would guess 70+% of sales are coming from 3 or 4 online retailers? But what is odd to me is that a supplier would grant exclusivity to a wholesaler for the entire market (presumably excluding direct sales from the artisan to a customer). That seems like a recipe for future channel conflict and mis-aligned incentives.  If anything, I would think a speciality distributor would be more beneficial in helping artisans managing demand forecast and discovering new retailers while advocating for the artisan. If this was a situation where artisans were in a product category that sits at 1000s of online or brick and mortar retailers, I would see more of the value or necessity for a wholesaler. And any bulk purchase from the wholesaler is likely a one time benefit in cash flow unless that is invested to bring out new products or reduce production costs.

One small benefit I see is ensuring to retailers/vendors that a product does not go out of stock. There are a number of markets and product categories where retailers will drop your line if you can't maintain consistent availability and stocking of items.

Hence what I term the uberization of artisans:

Artisans go from owners to precarious employees employed at will.

We all know that anybody foolish enough to sign on to this becomes totally dependent upon the mass wholesaler.

Also promise the contracts are going to be loaded with landmines to ensure the artisan can never leave until fired by the mass wholesaler

But... It's a free market economy. It's supposed to right itself when issues like this arise.

Unfortunately bullying, strongarming, intimidating, and short-sightedness are tools in the free market toolbox.

Unfortunately bullying, strongarming, intimidating, and short-sightedness are tools in ALL market toolboxes….REGARDLESS of economic or political system.

UPDATES:

1. Ok on to a happier subject I’ll be starting to send links out to the folks that were on the list for the Linited Edition Vanilla Safi 7.5 oz and the regular 7.5 oz. Also there’s another link for the Skin Food Spalsh. You won’t be able to use them until I get the products labeled but that should be any time now but I want everyone to have theirs.

I’ll announce very soon when the rest of the Vanilla Safi products will be released.


2.  Also today I’m making another batch of Vetivert as the last batch went very fast and it was a big batch. I think it should be available most of the year and definitely in the warm months of the year.

3. Next up are two new summer type scents and I’ll do a write up on them in the next few days. Now that the Vanilla Safi is almost completed I’m on a mission to get all the warm weather scents out in both Shave Soaps and Cremes.

Great shaves! 

Frank

Just here for my weekly check in for Colonia restock