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Case Study: Profound Commerce

By May 12, 2020 August 6th, 2020 Blog, News
May 12, 2020


Building an e-commerce business as a solopreneur or with business partners is far from an easy venture. There are many moving parts, and maintaining a positive trajectory requires a sustained, full-time effort.

It’s easy for even the most well-intentioned leaders to miss some details, and let things fall through the cracks that prevent rapid growth. Austin, Texas-based Profound Commerce brings Direct to Consumer brands under their umbrella and uses proprietary experience to turbo-charge the growth of those brands.

Matt Howitt started the company in 2018 after previously working in product development and software engineering roles at major corporations. The company essentially acts as a search fund, purchasing product-focused companies with potential across a variety of industries, and providing them with the infrastructure and tools needed to scale growth rapidly.

The portfolio of Profound Commerce’s clients includes:

Amazin’ Aces – develop pickleball sets and paddles

ColorIt – manufacture premium art supplies and publish adult coloring books

Hudson Durable Goods – make aprons and bags for male creators, and

Patient Aid – produce medical scales and lift slings to move immobile patients, as well as bed pads

All these brands share one thing in common; they sell directly to consumers on Amazon and through their own websites. 

Upon acquisition of these companies, and starting to work through the logistics surrounding their growth, Profound Commerce faced a few challenges which they turned to Gembah to help address.

CHALLENGES

 There were three challenges Profound Commerce was looking to overcome:

1. A need to systematize design and manufacturing solutions

2. Reducing the cost of goods sold (COGS) to keep finances under control

3. Capacity constraints on some of their clients’ premier SKUs

Systematizing Design and Manufacturing Solutions

The company was facing resource challenges tied to the availability of capital and the ease of navigating the product creation life cycle. Howitt was getting stretched thin and needed a cost-focused partner to help.

“Finding the resources to do a project like this is very difficult. I focus more on the top line than on costs,” said Howitt. “Products all have a lifecycle, and Gembah provides a way for us to innovate without having to use our resources to hire designers.”

Finding a way to navigate the product creation process from design to manufacturing with confidence isn’t easy. There are plenty of roadblocks along the way that can stretch the timeline.

Working with Gembah helped Profound Commerce to systematize the solutions they provide to clients for design and manufacturing.

“I could have a team doing that, but I’m probably not going to hire a team to do so,” said Howitt.

Reducing the Cost of Goods Sold

Reducing the cost of goods sold is a primary goal of any DTC-focused company. Profound Commerce was facing this issue with their client brands and turned to Gembah for assistance to help decrease COGS, and accordingly, improve profit margins.

Capacity Constraints on Premier SKUs 

Howitt and his team were also facing capacity constraints on some of the premier SKUs. Lost sales happened because production wasn’t rapid enough to meet demand.
 
Lead times were also getting pushed out, making it challenging to fulfill customer orders promptly. Progress stalled, and the Profund Commerce team kept getting told, “it’ll be done in a week.”
 
Upon a visit to the factory, Howitt noticed the factory was much smaller than anticipated. At this point, he reached out to Gembah for assistance to get things back on track.

 

Beyond the functional problems of getting products manufactured, and protecting profits, it can also be easy for entrepreneurs to get addicted to browsing Alibaba for the next great opportunity to improve upon a product that’s already on the market.

Falling Down the Alibaba “Rabbit Hole”

The Chinese-owned Alibaba Group is one of the world’s largest technology companies, involved in a wide variety of holdings, but focused on e-commerce.

Many DTC and e-commerce brands use Alibaba as a sourcing marketplace to develop ideas that improve on existing products or to find products to buy cheaply and sell for a substantial profit online.

Howitt talked about how easy it is to fall down the Alibaba “rabbit hole” in our interview, saying, “I could spend my whole life falling down the Alibaba rabbit hole, and still not get done what I need to get done.”

Turning focus away from Alibaba, and toward innovation, helped to systematize the creation process and Profound Commerce’s clients.

 

 

SOLUTIONS

Partnering with Gembah opened new doors for Profound Commerce, helped to streamline their operations, led to a decrease in COGS, minimized capacity issues, and advanced the go-to-market timeline for their clients.

The variety of solutions Gembah provides for our clients, and positive word-of-mouth made the decision an easy one for Profound Commerce.

“Gembah has many value propositions as you climb the product creation ladder, for a relatively small upfront fee,” said Matt Howitt. “We consider them our strategic product development arm.”

Howitt believes research innovations that help entrepreneurs find new products to sell to a captive audience will be the next big opportunity.

“If Gembah can digitally do this, that’s a dream for someone like me. This innovation is what we’re starting to work on together.” 

RESULTS

 

According to Matt Howitt, developing a strong product line isn’t always about new ideas to add to the mix, but also “making your existing stuff better to reduce the cost of goods sold.”

Here are some of the highlights of Profound Commerce’s work with Gembah:

* The previous owner of Amazin’ Aces pickleball sourced from a supplier with whom Howitt and his team weren’t happy: “We knew there was a middleman, so we came to Gembah to find a new manufacturer.”

* Howitt and his team worked with Gembah to develop a new packaging design for Amazin’ Aces, and a pickleball backpack to make equipment for the game more portable.

* Hudson Durable Goods received a substantial tariff for aprons produced in China, so Gembah helped the team find a new factory partner in India.

* Finally, collaboration on new cases for ColorIt helped the brand take a fresh new look to market.

The future’s looking bright for Profound Commerce as they look ahead to help more clients reach the market with new, improved products ready to make an impact on a wide variety of niches while protecting COGS and the integrity of the production process.

Through working with Gembah, Profound Commerce has been able to decrease COGS by 40-50% on a SKU, partnered with new factories in China to tripe production output, and source new factories in India to diversify their supply chain and circumvent their tariff issue.

Gembah will continue to be there along the way to help Matt and his team navigate the process for even more significant successes.

How can we help your company do the same?

Gembah helps Amazon sellers, brand builders, and growing small businesses confidently navigate the product creation process. Click here to learn more about our process and how we can help you develop that next great product to take to market!

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