Some of the most successful ecommerce entrepreneurs spent years working in their industry before branching out and starting their own business, using everything they learned.
In this episode from the Shopify Masters podcast, you’ll learn from an entrepreneur that spent years marketing for Redbull and Monster Energy Drink and has now started his own beverage company.
Vipe Desai launched HDX Hydration Mix in 2011, a brand that sells healthy hydration drink mixes with a perfectly balanced blend of the essential minerals and nutrients your body needs to stay hydrated.
In this episode you’ll learn:
- How to convince customers to buy a product online that requires the sense of taste.
- Why you should not build a customer base from scratch and instead how to partner with complementary companies.
- How to get free samples to potential customers for pennies on the dollar
- And why you shouldn’t focus on volume, but instead on margin—this company has 80% margins.
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Felix: Today I’m joined by Vipe Desai from HDX at hdxmix.com. That’s hdxmix.com. HDX sells healthy hydration drink mixes with a perfectly balanced blend of the essential minerals and nutrients your body needs to stay hydrated. It was started in 2011, and is based out of Huntington Beach California. Welcome, Vipe.
Vipe: Good morning, Felix. Thanks for having me on.
Felix: Cool, so tell us a little bit more about your store, and what is the most popular product that you sell?
Vipe: Yeah, so as you said we launched in 2011. Our goal was to create a hydration mix. I’ve worked with a lot of athletes in the past and a lot of them were talking about hydration being critical. These athletes also traveled, so I wanted to create something that one, would be beneficial to them, but also something that they could take with them wherever they went. Obviously, we didn’t invent powder. Powder drinks have been around for a long time, but what we did do was take special attention to the ingredients that were in there. We wanted to create something that tasted good, was healthy for people, but they could take it anywhere they traveled to. You could get on an airplane with your reusable water bottle, get through security, and stay hydrated wherever you went.
That was the original plan. Also we wanted to create a brand as well, so we put a lot of time and energy into the design, the logo, the packaging, the product itself when we came out. Low and behold, a little over five years later, we’re still here kicking. A lot of exciting things have happened a long the way.
Felix: Awesome. Yeah, so tell us a little bit more about your background, because it sounds like you said that you were working with athletes before. How were you working with them? Did you have experience in creating these products, like drink mixes, or any kind of I guess food type of product before?
Vipe: Yeah, yeah. Wow, Felix, I don’t know if this hour long podcast is going to be long enough for my background, unfortunately. To give the audience and the listeners a quick glimpse, I grew up in the action sports industry. I’ve been a life long surfer. After I graduated from college I got the opportunity to open up a surf shop, and I did so with a couple of my buddies. I had no business opening up a retail store, but I knew that I didn’t want to go work for somebody. I wanted to try something on my own. I had worked at surf shops growing up too, so I knew a little bit about the business. Man, it’s a different story when you start your own business and you’re actually responsible for all the day to day activities.
I learned a lot at retail. That’s where I started to hone my marketing and branding chops. I just had a natural knack for it, but marketing my retail store, we created events. Those events got put on TV with ESPN. That event helped inspire what everybody now knows at the X Games, but also the Warped Tour as well. Our little retail store just caused all these great exciting things to happen and I honed my marketing skills. After my retail time, I got a little burned out on it but I helped start a marketing agency. One of our first clients was a little company out of Austria, called Red Bull. We were tasked with helping to launch them here in the United States, in 1998. That was my first stint in the beverage world. That was exciting.
We worked with them for several years with their marketing strategy, and deploying their relationships with athletes. Worked with a number of brands through the agency along the way. Then, towards the end of my time at the agency I was really looking for something a little bit different. I got the opportunity to go work for Monster Energy. I became their Director of Global Marketing and managed all the athletes, events, the digital platform, anything that had to do with marketing and branding at Monster Energy. It was really my first job out of college. It really wasn’t for me. I really didn’t enjoy working for other people so I took a step back, left the brand, and set off on starting my own company.
By that time I’d made so many great contacts with athletes from all over the world, in almost every sport and category, that I had a good knowledge of people around me, helping to guide where this evolution of HDX was going to go. That’s what’s brought me here today, is just that experience of marketing, and branding, and retail, and consulting for brands along the way, in all different categories.
Felix: That’s awesome. I think a lot of listeners out there, or at least a good amount of listeners out there, are also selling food or beverage based products or brand, as well. If you could pinpoint to one key to success for marketing a food or beverage based product, like based on your experience at Red Bull, Monster Energy, and now HDX, what would you say is the key to really successfully marketing a product like that?
Vipe: Look, that’s a great question, Felix. I think food and beverage is a very difficult product to market. Because really it’s based on taste. How do you have an eCommerce platform when people have to try something? Taste is a really important factor. When you’re what they call a ready to drink product that comes in a can, or a bottle, or a packaged food, you go to events and you sample your product and everything, and you get people to try. You hope they like it. If they like it enough they find a place close to them like a gas station, or a grocery store, or convenience store, where they can readily access it.
That also costs a lot of money, Felix. I think that is a barrier. That was one of the first things that I understood about creating the beverage brand, is that with HDX I knew that with powder it would drop the barrier of getting our product into the market. Because we wouldn’t have to rely on distributors, or grocery stores, or refrigeration, heavy sampling to get the product out there. Because when it’s dry like ours, it’s easy to ship. That’s been the biggest factor for us, is the convenience and the ease of getting it into the hands of the consumer. That’s one thing is understanding that taste is an important factor in a food and beverage product. How do you get that out there? How do you get your product out there and how do you drop the barrier?
For us sampling was important. One of the things that we did was we started posting up on our website and through our Facebook. If you wanted to try a sample you could send in three dollars, and we’d send you some samples. Really, it was just paying for the postage. We got quite a few people that were interested in it, because we also put a lot of information up on our website to make people feel comfortable about the product. I think that’s really important is painting the picture, what the product feels like and tastes like. You got to do that with photography, you got to do that with imagery, and with also word play. I mean word play in a good way. Not being deceiving or anything, but you have to have a good story for people to want to dive into your brand.
The other things is that we also were required to get creative. Because we weren’t going after traditional retail later on, later on we weren’t going after traditional retail, but we had to get the product out there. We started looking at other brands that we could co-op with. One brand, for example, is a brand called Clean Bottle. They make a really cool sport bottle that unscrews from the bottom so you can clean out the bottom with whatever you put inside of it. We contacted them and said, “Hey, we love your bottle. Can we send you some samples and can you use those samples to put one inside each of your online orders with a postcard?” They loved the idea, because it was added value for their customers. Instantly, we were able to sample pennies on the dollar to a consumer that was buying a product where our product would go hand in hand with.
Felix: Wow, that’s a lot of great information that I want to dive into a little bit. I like how you were saying that with products that do require taste, or even a product that requires touch, or even to be able to see it up close, you need to make it easy for the customers to try it out at a low risk for them, or make it very easy for them to get a sample, like what you eventually did by just charging three dollars for a sample. Then, when you made the distribution problems for yourself you minimized by selling a mix. It makes it even easier for you to again offer a low risk way for the customers to try your product for a first.
I really like that you took that approach and saw that that was a way to get to your customers, to try to offer a first time when you have a product that relies on taste so much. When you’re saying that you found companies to partner with, can you tell us a little bit more about that? How do you even begin that process of partnering with a product that makes sense for your business, and what is it like to begin going down that route of finding a partnership?
Vipe: Yeah. You know, I think my background in marketing and branding has lent that knack for really problem solving. That’s what I was really looking to do, is problem solve. It was like, okay. Here are my barriers. I outlined them all on a whiteboard. What are the barriers for us to getting the customers, and what would help us get to customers? In talking to people, you start identifying a few things of how to get out there, you have to get creative. You can’t be afraid to reach out to people and just introduce them to the product. If it works, it works. If it doesn’t, hopefully you learn something from it, to try something different to get to where you need to do it.
For us, it was always about problem solving. Everyday, that’s the mindset that I wake up with is how do I solve the problem of getting my product into the hands of the consumer as quickly, and easily, and efficiently as possible to create a lifelong partnership with that individual? The other thing that we did too, and using Shopify, we started on the platform last year so it was a quick learning curve for us, but the platform is great. It’s super easy to use. I love all the apps and the plug ins, and just the resources that are there for small businesses. I think the single most important app that I came across was YOPO. It was a review app. I didn’t really understand the importance of reviews until we started to implement it. It made sense. We thought we had enough information on our website, but really we needed the reviews.
As soon as we put that up and we’ve got reviews, we instantly saw our traffic and our sales increase. More importantly, our sales increase because people were now hearing testimonials from other people. We didn’t have to tell people how awesome our product was because customers are just like, “Oh, this company is blowing smoke up my ass,” but when they hear it from other customers, they read the different reviews of people coming from different walks of life using the product in a different way, and that the buyers were verified, that’s really what we saw was a huge difference for us.
Felix: I think that that goes back to what you were saying earlier, about how it’s a product that requires taste, right? If you are the company, they’re obviously, like you’re saying, they’re not going to be as believable right as a customer that has purchased it, and has tasted it, and can talk about how great a taste, and how great it helps them with their performance. I do agree. I do understand why you were saying that the reviews really changed things for you.
Going back to the whole idea of partnerships, how do you position yourself so that another company wants to work with you, right? Because if you are reaching out to these other companies that to partner with them, they have all their own problems, and all their own plans, and everything. It’s sometimes hard to get in there, because it’s a little bit disruptive right for the company to all of a sudden take on the project, or take on the ideas that you have, and all the potential problems that might come out of it. How do you work with a company maybe for the first time, when you’re starting to talk to them to get them to at least buy into the idea initially? What do you say to them? How do you position it?
Vipe: Before I answer the question, let me give a little bit of background on an approach. One of the things that I’ve found is that the bigger the company, the harder it is for them to be approached. Because they’re caught up in their minutia, and their daily operations and activities, and the grind. I find that the larger the company, the more difficult it is to break into that conversation. When I find smaller companies and other entrepreneurs, they’re hungry to succeed. They love the fact that somebody is reaching out to them and is interested in working together. I think that partnership is what helps both companies. What we did with Clean Bottle was two fold. One, I love their product. I told them how I loved their product, and how our product made their bottle viable and valuable. What we also wanted to do was see if we could do a co-branded bottle, which we could then sell on our website.
Instantaneously, there was a mutual benefit. We wanted to introduce their product to our customers, and we wanted to introduce our products to their customers. They saw the value, they wanted to work with us, we wanted to work with them. It’s those types of things. You have to find people where your product fits their goals and objectives. With Clean Bottle, they solved a problem. It was a reusable bottle that cyclists used on their bikes. Most cyclists put some sort of supplement in their bottle, but what happens is after a day or two they forget about the supplement, or cleaning out the bottle. All this gunk is lodged and wedged into the bottom. It’s impossible to clean. They solved it by creating a bottom that unscrewed so you can clean out the bottom. What a perfect way for us to plug in. Also, it’s also delighting the customers and everything. Now for them they were like, “Wow. Somebody is buying our bottle, and they’re getting something inside of it as an added perk that doesn’t cost us anything.” We’re giving our athletes the Clean Bottle, so our athletes are using it.
When it comes to partnerships, what you got to do is you got to find like minded brands that will fit with your product, that are complimentary to each other, but also what can you reciprocate to them? Some brands are okay just promoting you, but other brands, if you come to them with a win win situation where they can benefit, I think it’s going to be small entrepreneurs will find much more success. That’s a better way to reach more people organically rather than just relying on SEO, or advertising, or promotions, or anything. If you have a good product, you find the people, and the groups, and the companies, that will align with your brand. Pick up the phone, call them, communicate with them and see if you can create some sort of partnership. That’s where it’s like your marketing dollars are combined with their marketing efforts and dollars. Now, it doesn’t matter. It’s like if I put a dollar on the table and they put a dollar on the table, that means my marketing just got doubled by two dollars and theirs got doubled by two dollars, too.
Felix: Yeah, that’s awesome. I say this a lot too to other entrepreneurs, you don’t want to build a customer base, or an audience, or potential customer base from scratch, right? You want to be able to partner with somebody that already has a customer base. You can also bring yours, as well. That just cuts down on all that time that it takes to build and of course all of the money, like you were saying, that goes into all the advertising that you would normally have to pay for if you weren’t partnering. I think that that’s a really good point to make. You were saying that you look for companies that are small enough where you can maybe talk directly to the CEO, or to the founder, rather than going through somebody like a large company than go through, start from the bottom and work your way up. I think that that’s an important point that you make there, too.
One thing you were saying about how when you approach a partnership, the way I asked the question was a little backwards right, because the way that you approach the partnership is not how can they help me, it’s how can I help you? That opens up the conversation to begin with. Then you can begin finding a mutual way to help each other. I think that that’s a great point to make. I want to move on to move back actually to the very beginning of HDX, and how you came up with the idea and everything. You said that you already worked with a lot of athletes, so you already had a group of people that you could maybe test your products with. What did you do to figure out that it was the right product to sell? How did you test the market to make sure that you weren’t going to invest a lot of money into producing the mixes, and not have anybody to buy it?
Vipe: Yeah. I looked at it in the sense that I was the consumer that was looking for a new product. I looked at everything that was out there and I said, “Nothing on the market appeals to me.” It’s either loaded with sugar, loaded with caffeine, it’s not environmentally friendly, or it doesn’t emote the lifestyle that I want to portray. I really looked at it in the sense that there was nothing out there that was really speaking to me and the people that I knew as well, because I was hearing their challenges also. I was like, okay. Why are these people telling me something? Is there really that big of a hole out there in the hydration space?
As I looked into it, I saw that there was. Look, we can say that the leading sports drink is out there, which we already know who they are, but that’s not what people wanted. A lot of the athletes I was talking to and working with weren’t drinking those products. I looked at it and went, okay. Well, what do I need to do? Well, let me start looking at it. I started breaking down everything going, okay. A ready to drink product was not where I wanted to go. I started looking at all the barriers and I go, putting a product, a liquid, in a bottle or a can is really, really going to be expensive. It’s going to be time consuming. It’s going to really just challenge me to no end. What could I do? That’s when I looked at just what I was doing. I always carried around a reusable water bottle. I always filled it up with water. I was always looking to add some flavor to it. The things that I could add to it were really just sugary flavored powders. Nothing was really branded, either. It looked very either kiddie, or feminine, or pharmaceutical looking. I was like, that’s not who I am. That’s not who the people that I associate with are looking for.
I worked with a couple guys out of San Diego, they were beverage engineers. I approached them and I said, “Hey, here’s what I want to do. Is this possible?” They said, “Absolutely.” We started working on the formula, and nine months later we had finalized our product and our powder. We determined that our powder with a small pouch, convenient, that was the way to go. We had some samples built up. We handed them out to people and people were blown away. Right out of the gate, people could not believe how good it tasted, how convenient it was to take with them and use in their reusable bottles. Even just bottled water. We instantly saw that once we put the sample products out there, people took to it.
Felix: When you first produced the initial recipe, or the ingredients for the original mix, did you have to go back and forth? Was there taste testing, or what’s the process behind that to refine the mix down to something that you knew that your customers would want to buy?
Vipe: Yeah, I think that comes down to experience in that world. Since I had a little bit of experience already, I knew what I was looking for. I went in to these guys knowing exactly what I wanted. I had also done some research on some ingredients. I’d spoken to some athletes and some trainers. I’d gone to the nutrition stores to see what was on the shelves. I did my own research, as well. I talked to experts. By talking to a number of experts I came across a list of ingredients that would be beneficial, that weren’t available in other products, especially in a combined way. When I approached the beverage engineers I already had an idea of what were the benefits that I wanted. I gave them the rules, and the guidelines of where they had to stay within, and they had to work within those.
It had to taste good. It had to be low sugar. Low calories, no caffeine. Had to be the best hydration product out on the market, and they got it. They knew exactly what I was looking at. I gave them some ingredients. They went to work on it and they said, “Based on what you’re asking for, this is what we recommend. There’s no other product on the market like this and you’ll love it.” It worked out good. I would say that we probably cut our development time probably in half. Normally, it takes two years to develop a product just because there’s so much back and forth. With us, we got it done in less than nine months. We were very happy with even the first sample that we got within three months was really good, and all we did was improve upon it.
Felix: Yeah, so you have obviously a lot of experience in this industry already, and a lot of intuition. Maybe just based on what you have seen in the marketplace you knew what you wanted basically, what the mass market also wants. For someone out there who maybe doesn’t have that kind of experience and wants to, or is in a process of creating a food or beverage product, how should they begin to make sure that it tastes good, and actually delivers the benefits that they want to target?
Vipe: Yeah. First thing that I would recommend is understand what is the competitive landscape of the product category that you are looking to enter. You have to understand what the competition is like in that space. That’s first and foremost. If you find that in that competition space there is some point of differentiation for what you’re thinking about, then that’s the first step. It can’t be five percent better. It has to be disruptive. I don’t believe that products that are five percent better or different do anything. I think you’ve really got to be disruptive. You have to look at what’s the competition, and is your product really that much better and different than what is out there?
Once you find out what’s the differentiator and if that is the case, then you have to start putting together the pieces, and the rules, and the guidelines of what your product is and isn’t, so when you do approach a manufacturer you can tell them where you want them to stay. Manufacturers will make anything you want them to, but what you want to do is really tell them what you want. You don’t want them telling you what they can make. You want to tell them what you want because that’s what differentiates you, but you have to understand the competition. It’s got to be much better than what’s out there.
I think the other thing too is you have to be open to looking at other products. I get inspired by other categories, as well. I look and see what’s going on in the tech world, and just in the brand world, when I created our product. It wasn’t just the beverage lens that I was looking through. I was looking at everything going, “It’s like, yeah. Right now we have a beverage drink mix, but in the future, who knows what we’re going to make? Does our story and our product lend to us being able to evolve into other categories?” I think that’s one thing that sometimes entrepreneurs miss, is that they just get this tunnel vision and they get locked in on one thing. It’s hard for them to really look at what’s going on outside of the category.
Felix: I think that’s a good point you make, because if you look outside of your industry, that’s where you’ll really find differentiation. Because everyone else, like you were saying, is just so focused on the industry that they almost parrot or echo what already exists. Once you step outside, that’s the opportunity for you to find out what other industries are doing, and then bring that into yours. I like that point.
Vipe: One thing that I did Felix, I’ll add to it, is on our 12 pack boxes, when we listen to people about our product, when we handed it to them, we would listen for the questions. What questions are people asking us? If you lined up 12 people in a room and you gave them our product, each one would come back with a different first question of what was concerning to them. First person might say, how much sugar is in it? The second person, how many calories? Third person, is there any caffeine? Fourth person, what does it do for me? You have to really look at how do you easily communicate what your product does in an entertaining and informative way.
One of the things that we did Felix, was we listened to what people were asking. We’re like, okay. Well, how do we make this as intuitive as possible? We created little icons that look like app icons. Everybody has a smartphone that has apps on it. They can look at that little app icon and instantly know what app they’re going to open up. We put those small little app diagrams on the side of our 12 pack box that were colorful, bright, fun, and engaging. It was quickly for people to look at them and go, five grams of sugar. 25 calories. Six grams of carbs. Oh, it’s hydration. Oh, it’s for athletes. We got so many compliments from people who were like, “That is such an easier way for me to read about your product,” rather than trying to go through a supplement fact chart on the back of a product.
Felix: Yeah, it’s awesome. I’m looking at the packaging now. It basically looks like an iPhone screen right that’s on the side of your packaging, which breaks it all down. I like that strategy, where you let a potential customer, or a customer, try your product for the first time. Then, you ask them what’s the first question they have. You take those questions and you answer them on the packaging, or on the website. I really like that approach. Is that something that you can pretty much do with any products or any industry, or is it very specific to your industry?
Vipe: No, I think you can do it in any industry. I think the challenge sometimes is what you have to do is you have to have a starting point. For us, we had a good product. We knew that it tasted good. We knew what it could do. We had a basic overall way of communicating our product, but until you put it into the hands of the end user, you really don’t know what their questions are going to be, or their concerns, or what. Is there going to be a different barrier? How do I use this? When do I use it? What’s it for? Once you start hearing those questions, that’s when you get better at updating your communications on your website.
Our website has gone through numerous updates. Because when you hear a question, you want to make sure that you communicate that. Perfect example, and I’m embarrassed to even say this and bring out this, but we totally did something totally wrong. It took a survey from our customers to tell us what we did wrong, and it was so obvious that we totally blew it. We didn’t communicate the flavor of our product properly on our website. Can you imagine that? I cannot believe that we did not do that. We thought that there was enough information there but people said, “I really don’t know what flavor this product is. Is there any way to tell me what the flavor is?” I didn’t even realize it, so once again we had to make that little insertion on our website clearly that it was a grape/berry mix. Just something small, but we didn’t realize it. Because sometimes you’re so close to the storytelling and the marketing that those small little oversights can just be overlooked.
Listening to your customers is the most important thing that you can do. You have to listen to them. The other thing that I found that is also interesting is that when I gave the product to people that I knew, I felt that I always got a good answer. It was always like, “Hey, thanks. I appreciate you telling me that you love my product, that you like the packaging and you love everything that we’re doing, but I really need the constructive criticism. What are we doing wrong? What could we do better?” People that I knew, maybe they loved our product without question, maybe they just wanted to be nice and not say anything bad or whatnot, but it’s when you put your product in the hands of people that don’t know you is when you get the really good stuff.
Felix: That’s a great point. Because whenever anybody comes up to you that’s your friend, or family, and asks you anything about something that they’ve created or something that they worked on, you’re pretty much never going to give them the constructive criticism, like you were saying, that you’re never going to say anything bad about it. When you go and approach your friends and family, and ask them to critique your product or your store, you’re not going to get not necessarily the right answers, but you’re going to hear the good things and not the bad things that you need to improve on. Like you were saying, that kind of feedback only comes from people that don’t know you, and even ideally people that are giving you their money for it. Because then they’re really incentivized to really give you their piece of mind right, about your product.
Felix: You said something earlier that I’ve never heard before. You said that you worked with beverage engineers. I had no idea that this job, or this kind of role existed. If you can tell us a little bit more about what is a beverage engineer? How do you work with one? Yeah, we’ll start there. How do you find one? How do you work with a beverage engineer?
Vipe: Yeah, well look. Beverage engineers are readily available. I would probably say that maybe I made up that term. I don’t know if they’re called beverage engineers.
Felix: I like it, though.
Vipe: They’re manufacturers. Their job is to make beverages, whether it’s a powder, or some sort of supplement, or a ready to drink product; a tea, an energy drink, a soda. Anything. I like to call our guys beverage engineers because they really, really were great to work with. They are still working with us today. Really great guys. I just consider them to be engineers, because they went to town on our product. They’re readily available across the country. You can Google anybody. If you want to start a food or a beverage product, you can look online. That’s how I started. I just Googled stuff online just to find people all across the country.
I started talking to them, started learning about how to go about getting it going and everything, and who I might want to talk with. We talked to people all across the Midwest and northern California. Luckily for us we found a great group of people here in southern California, right in our backyard. We hit it off the bat right with them, right out of the gate. Finding that right engineer in, I would say, beverage or food engineer, whatever product you’re making, I think is really important to a brand. Because this is a person that is going to help make your product taste good and be beneficial to people. You want to have the right team together. I’m glad that we have the right team. We’ve got the same team that we’ve been working with since we started.
Felix: That’s awesome. I think that a concern that a lot of entrepreneurs have in other industries, but maybe in particularly in your industry, is the competition. Are you ever worried about competitors coming in and offering the exact same product as yours? Because something like taste right, I feel this way I’m not sure if this is true across the board, but it feels like it’s a little bit harder to differentiate something, a product, based on taste. You really have to make a huge shift. Like you were saying, you can’t be five percent. It has to be disruptive. I think that’s particularly the case with food or drinks. Because as a consumer it’s a little bit harder to tell the difference between Product A and Product B. I guess, what are your thoughts about the competition coming in, and how to you deal with competitors coming into the space?
Vipe: Yeah, wow. Competition, it is very competitive in this space. I believe almost every industry is competitive, in some way shape or form. The thing about competition is that it’s always going to be there. What you want to do is understand what your competitions, strengths, and weaknesses are and where they might be headed, and make sure that you stay the hell out of their way. You don’t want to get in the crosshairs of your competition in all honesty, especially the big guys. It’s just something you don’t want to worry yourself with. We refused from the get go to compete with the big guys. You can’t beat the big guys. There’s such a big engine, you cannot deal with it. The idea is to really just compete with yourself. It’s you and the customer. Your job is to win more customers, that’s it. There’s a scoreboard up. On one side is customers won, on the other side is customers lost. You want to make sure that the customers won is where the numbers are going.
Here’s what’s happened over the last five years, Felix. Competition within our product category has grown immensely. I did not see it growing as fast as it has. We are getting so many copycat products coming out copying our product, but also trying to copy the way that we communicate our product. One of the things is is people can copy products. Anything is copyable. Really, it’s your story telling and your branding that is a differentiation to everything. I’ll give you an example. What we have done is, regardless of how many competitive products enter our market, my role is to help ensure that we have a different product and brand story that differentiates us from everybody else. It’s like you could put three products on a table. You could say, “Yeah, they might taste the same.” They might be similar or whatnot. Some may have a preference over one or the other, because of taste, or price, or friendship or whatnot, but you really have to add a lot more depth to the brand to differentiate it. If it’s just that one product, I think you’re in for trouble. You cannot rely on one product to be your only differentiator in competitive product.
What we’ve done Felix, is we’ve looked at ourselves as a brand first, and a hydration mix second. We just happen to make a hydration mix, because that is our core product. Now what’s happening is, because of our wanting to become a brand, we are looking at other ways of telling our story. One, we also do custom branded reusable water bottles. Something that we didn’t do before, but having a drink mix like ours with a custom reusable bottle like ours, is a differentiator. People tell us all the time they love our bottles. We didn’t invent the reusable bottle, all we’re doing is putting our logo on the bottle. It’s a matte black bottle with a blue flame on it, with our HDX lettering in silver. People love the bottle. That’s one other thing.
The biggest thing that I think that we have done is, two years ago one of our retailers approached us with an idea. They were doing great with our products, selling a boatload of it out of their gyms. They own three gyms here in Orange Country. One in Long Beach, Huntington, and Santa Ana. They approached us one day and they said, “You know, we really like your brand. Would you guys ever license your name and logo to us to rename our gyms?” Okay. Think about that for a second. We’re a beverage company with a drink mix, but we also have reusable bottles. Now somebody wants to license our name and logo to rename their gym?
We loved the idea. We instantly gained 450 new ambassadors out of these gyms. Our gyms are growing. There’s three of them, but they’re called HDX Fit now. They use our flame. If you go on our website you’ll see a link that takes you to the gym page. That’s been a huge differentiator for us. How many other products like ours can claim that they have gyms?
Felix: Yeah, that’s definitely a testament to your branding effort. I really like that. I agree with you. I think what you’re saying is basically that when someone buys from you, they’re buying more than just a product, right? They’re buying the brand story behind it, like you were saying. Then, almost like the right to claim that lifestyle that you represent within the brand. For someone out there that has a brand, or beginning a brand, or trying to build one, or they have a store already but they don’t have a way to really tie it all together, other than just some kind of story like you have, how do they start to create one? How do you start creating a brand story?
Vipe: Yeah, you know that’s always the toughest thing because stories take a long time to develop. What you have to do is you have to start with your values. You have to understand what do you stand for and what do you stand against? It’s not just our product is better for price or whatever. It’s like you really have to open up to people and tell them what you stand for and what you stand against. If you look at our website, you’ll see that my values are rampant through the website. I have a deep care for health and the environment and this isn’t something that just started overnight when I started the brand. This is something that I’ve been doing for 15 to 20 years. It’s part of the DNA of what I’m building in to the brand.
Everybody that’s an entrepreneur should add that to their mix. You can’t just say, "Hey I’m launching a new food product or a new beverage product or a new apparel collection or whatever you’re going to launch. You have to understand what is going to differentiate you from your competition? That story is the most important thing. Understand what your values are. Once you understand what your values are and what values you want to integrate into your brand, then think of what other brands integrate within your brands story. For us, we have a healthy product that’s also environmentally friendly. We would not align with a brand that did not at least touch on one of those two points. It would not make sense to us. If there was a brand that believed in either or both of those two values, then that would work for us.
The values I think is where you have to start with your story, you have to integrate it, and you have to find ways to tell it by example. I think entrepreneurs, sometimes when I see some websites out there, they become very vague. What I mean by vague is there’s no personality behind them. They feel as if this is just the Dilbert Mission Statement Generator ‘About Us’ page. I don’t really need that. What I want to know is that is there a human being behind this product, that I think I like. Because it’s not just the product that I want to fall in love with. If the founder has a story, or the people behind it have a story, it might make me fall in love with this brand even more, and actually become more fired up to want to support them and share it with other people.
Felix: I can see that on your site, where the very first link in navigation is about your story, the founder’s story. I definitely see the emphasis on making sure that people not just recognize that there’s a story, but recognize that there are people that run this business, that are behind it, and that are building this brand. I think that’s an important point to make. You even show your face, right? The very first picture that you see when you click on ‘Our Founder’s Stories’ is you with and, I believe, your son. It just shows them, hey, this is a real life person behind here. You started this in 2011. It looks like you’re about into your fifth year soon. How successful is the business today? How much have you grown? Give us an idea of where you started, and where you’ve come to now over the last four or five years.
Vipe: Yeah. You know, I wish we were little bit further along. One of the challenges that we face is that we’ve had to pivot a couple of times. When we first started out, we were focused on opening up retail stores. We were really heads down on building relationships with retailers. Getting our product into the retail stores, and servicing them and just expanding, but we found that retailers are challenged, as well. It’s challenging for small brands. We’ve talked to retailers that would order very little of our product. They’d want terms and we wouldn’t get paid for 30, 60, 90 days. For a small business, that’s very difficult. We’d spend a lot of time trying to chase down the retailer, trying to chase down the order, and then try to chase down the reorder, and then try and chase down the money.
After a while it was just like, you know, we need to put more focus on our online business. Because it’s doing good, but it could do better if we put more effort into it. 18, maybe 24 months ago I decided that we were going to put less focus on retail, and put more focus on eComm. We took about six months to try to figure out which eComm platform we were going to go on. Talked to a lot of small entrepreneurs that I knew; all of them said Shopify was the way to go. We got on Shopify, played with it, loved it, and last year we launched on Shopify. I believe it was last September, or October.
Since then we transitioned away from retail and focused more on eComm. It’s been slowly growing. I would say over the course of our existence, we’ve done about 500 grand in sales since we started. Which isn’t a lot, but we haven’t been focused too much on sales growth, but more on margin. Margin is really an important way to win the eComm business. It’s not always about volume, because volume requires a lot of funding, but also you might miss out on margin. For us, it’s always been about maintaining good, healthy margins. We’re hovering at about 80 percent margins right now, so that’s a pretty good place for us to be.
Felix: Yeah, that’s great. I think that’s an important point to make, that you make, that I haven’t heard that on this podcast yet. Which is that you’re not focused on volume, you’re focused on margin. Can you tell us what you do on a day to day basis, or maybe when you plan out your month, or your year, to make sure that the focus is on margin and not on volume?
Vipe: Yeah, yeah. You know, for us it’s always about the product. What is our product going to cost, and how much are we going to sell? It’s a bit of a dance, and managing it on a weekly, and monthly, and quarterly basis. It’s not rocket science, but you want to watch your margins. Making sure that your costs are remaining low, but that you’re margins are also remaining high. You’re not overly discounting your product, but you’re also getting the sales, as well. The other thing too is complementing your overall sales plan, too. For us, we introduce other products to sell, as well. Whether it’s our reusable bottles, where we get healthy margins to add to our overall revenue growth, but also the margins overall.
The new thing is that we’re starting to introduce apparel, as well. We’re starting to do t shirts, sweatshirts, and hats, and maintaining the margins on that as well. Making sure that product is good, quality is good, costs are in line, but that the margins are in line too. Sometimes I think people miss out on that. Because they’re chasing volume, and they’re having to discount their product, or they’re not taking into account the free shipping or other added costs. That could really erode the margin quickly. It’s like, “Oh. It looks like they did a lot of sales, but the margins weren’t there at the end of the year.”
I talked to brands that do two, three million dollars a year in business online. Great that the volume is great, but their margins are horrible. It’s like they’re barely surviving. Looking at the margins, and what you need to maintain for your particular product or category, is really important to look at. If you can’t make the margins work online and provide sustainability, you have to figure out how you can increase those margins through other products.
Felix: Yeah, I was going to ask that next. If a store owner out there is looking at the margins and they’re starting to slip, what do you recommend that he start looking first to improve? Is it cutting cost or is it, like you were saying, expanding into new product lines? What would you recommend as the first step?
Vipe: I think you got to look at, are there ways internally to reduce costs? I’m also not a fan of just reducing cost to reduce cost. I think that’s the initial thing to do. If you’re an entrepreneur, hopefully you’re already being efficient with your spending and not just spending money recklessly. I think that’s one of the most important things to look at, is hopefully you’re in line with your spending. If you can cut some costs, try and find where you can do that to keep your margins healthy. Other than that, try and find other products that might be complimentary that can help increase those products. I would do that second. I would look at internally first, what you can do. Second, what can you do with other product categories? Also, the other thing is is there something you can do with your own product, that can help you to increase those margins, as well?
Sometimes those extra percentage points are right under our nose. They may not be completely visible, because we’re looking for the obvious. It might just be as simple as changing one or two steps within the life cycle of your product, before it’s ready to go out the door. We found that several times, where it was easier for us to increase our margin by packaging our product ourselves when the order was placed, rather than having all the product prepackaged before it got to us.
Felix: That sounds like a pretty big discovery. Did you go through some kind of exercise to identify this, or you noticed it out of the blue? What did you do to recognize that you change the way that you guys handled the supply chain and improved your margins?
Vipe: Yeah, you know it was just really taking a hard look at everything. I think for us it was just scrutinizing everything that we possibly could at the early stages. What could we do to hold the best margins possible? Instead of just saying, “Okay. That’s the cost, and this is the end cost. This is what we got to sell it at, that’s what we have to deal with.” Our whole thing is, you know what? That’s not good enough. What else can we do? Let’s really think of what we can do.
That was just a plain discovery when we went to our manufacturers and we looked at the price breakdown of what it cost of manufacturing our product each step along the way. We said, “You know, this is a small area that we can probably do in house.” We played with it and said, “Could we do this in house without adding any extra overhead, or cost, or grief, or anything?” We realized that we could. We were like, “You know what? It’s a little bit more work, but it saves us money.” It’s not work that’s going to put us out of business, so we took that step. We always look at where can we improve, and we look at everything. Everything is on the table at that point.
Felix: Awesome, so thanks so much Vipe. Hdxmix.com is the website. Again, it’s hdxmix.com. Where else do you recommend that the listeners check out to follow along with your brand, and just your journey?
Vipe: Yeah. You know, look. I’m online at hdxmix.com, but I tweet a lot, too. I’m at @VipeDesai. I work with a lot of young entrepreneurs. I love hearing young entrepreneurs stories, so I try and blog a little bit and provide some insight through Twitter, and also through my LinkedIn profile. If there’s any young entrepreneurs out there that want to connect, I’d be happy to. I’d love to hear your story, and share any insights that I might have.
Felix: Cool, and that’s Vipe Desai, also include it in the show notes that the listeners can check it out when they want to follow you, so cool. Again, thanks so much Vipe.
Vipe: Thank you, Felix. Appreciate being on your show.
Felix: Thanks for listening to Shopify Masters, the eCommerce marketing podcast for ambitious entrepreneurs. To start your store today, visit Shopify.com for a free 3 day trial.
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About The Author
Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs, and founder of TrafficAndSales.com where you can get actionable tips to grow your store’s traffic and sales.