Scrumbook – bringing an idea to life – part 3
In part 2 of this story, I wrote about finding a Designer to help me create a print ready PDF file, creating a backlog of prioritized feedback to be applied to the next version of the notebook, and lastly I talked about product market fit.
In this part, I want to focus on the business side of the process. Primarily on the drop-ship product delivery style.
I am creating this notebook because I believe that a simple product like this can solve a very interesting problem of helping people be organized and collaborate more effectively.
With this experiment I have a few goals:
- I want to see if Scrumbook can really help people.
- I want to learn more about how people work together. As a Project Manager, I want to lead teams to specific results, as this is what makes projects and teams successful.
- I want to learn the tools and techniques used in online sales, so that I can help SMB’s that I often support as a consultant.
Many different business models would be sufficient to accomplish the above stated goals, however drop-ship style has (major) key advantages.
Someone else takes care of logistics
If you are not familiar with Drop-ship business model, all you need to know for now is that as an entrepreneur are responsible for sales. Once the sale is completed, pass the order details to a manufacturer or distribution center and they fulfill the order. In my case, fulfillment center prints the notebook they package it, and they ship it directly to my customer.
Up-front investment is very small.
With paper products you can print them on demand. This leads to virtually zero up-front investment and major cost savings. The only cost I had to spend money on was labour cost of my designer, who put together a PDF matching requirements to those of the printing company.
No storage required
Since I don’t need to print 10 000 copies up front, I can avoid shipping them to my home or office, which is convenient as I simply don’t have a space suitable to store boxes full of paper.
If I did go with print before sale style, I would have to rent a dedicated, most likely climate-control warehouse which would cost me a lot of money on a monthly basis, regardless of how much I made in sales.
No hidden cost
Avoiding shipping printed notebooks to me also saves on shipping cost, as paper is heavy and would cost a fortune to ship. There is no cost for stock insurance, duty fees, no labour cost around moving, packaging, or labeling packages.
Ability to update
With print-on-demand you can change/update the design at any time, you don’t need to wait until you sell all printed copies before you introduce a change. This works well with the principles I want to use for this experiment: rapid change based on feedback gathered as often as possible.
Downsides of drop-ship business style
For all the benefits of drop-ship business models, there are a few considerations that any entrepreneur should take into account.
Cost per unit
In order to print a single notebook, a printing company needs to invest in a very specialized printing production line which is very, very expensive. Standard printing utilizes economy of scale approach. Printing company presets printers, cutting and binding machines once, then runs a batch of 10 000 copies through the process. With print-on-demand it works in a completely opposite way, and there is no economy of scale whatsoever. For that reason cost per unit tends to be 10 times higher compared to a batch printing. The end result is low operational cost at the expense of profit margins.
Delayed production and delivery time
With a product in a warehouse you can pick it up, put it into an envelope and ship it the same day as the order came in, which is not possible with drop-ship business model. In some cases, manufacturers can be very quick to fulfill orders. But for the most part, they work on a first come, first serve basis. And in some cases they also prioritize large orders first. Thus it is rare that an order passed to a fulfillment centre gets shipped in the same day.
This can lead to diminished customer satisfaction and lower overall review of the product.
The customer makes a purchase from you and not from the manufacturer or fulfillment center. If they want/need to return a product, they will have to ship it to you directly. This introduces a risk of units that will be returned but not sold. Depending on the setup, especially in fully automated order pass-through systems, it is impossible to sell an item without sending an order to the fulfillment center. Fortunately, the notebook is relatively inexpensive so in case of a few returns, I will still be able to utilize them for my own use or as part of my marketing strategy.
In addition, returning any printed notebooks to the printing company would not be cost effective, unless there is a batch of defective notebooks, but that would result is all sorts of other problems which is a topic for a separate article.
Choosing the right partner
There are a few companies specializing in printing on demand: Redbubble, Amazon Merch, and few others claim to be able to print notebooks, but there is a catch. In my research I’ve discovered that most of those companies print only the cover, and they are not printing anything inside. In fact, all they do is white label printing for small batch purchase. The use case here is notebooks for specific events, where you need maybe a 100 copies, and the notebook is included in the price of admission. Unfortunately that model won’t work with my design. In the end I found a company which prints entire books on demand.
Lulu.com is a self publishing platform, where writers can publish a book, set up an online store and sell through it. But the most important feature that Lulu.com provides is a full integration with Shopify and Amazon.
One of the main issues of opening a side business like this one, is time availability. I already have a full time job, and I am also running a consulting business alongside that.Yet another “job” is simply not feasible.
Thanks to full integration with Shopify I can set up a store, and have the orders automatically being sent to the fulfillment center. The beauty of this solution is a very hands-off approach, the workflow goes like this:
- A customer visits a website and makes a purchase,
- Shopify collects billing and shipping information, handles payments, and passes order information to Lulu.com,
- Lulu.com automatically charges my credit card through automation set up inside Shopify account,
- Lulu.com prints the notebook and ships it directly to my customer,
- Lulu.com marks the order as fulfilled and Shopify pays me for the sold item,
Notice that there is no involvement from my side in that workflow. It is fully automated and I don’t have to do anything. Shopify also offers Text and email notifications about the status of each order, so I don’t have to handle customers inquiries about the package.
There is additional automation that I am planning to introduce around accounting and marketing using zapier.com, but that for another installment of this story.
The main goal is to help people be more organized and teams collaborate more. It is not to create another job for me. Despite a few disadvantages, Drop-Ship business model will support my goal quite well. Minimum overhead allows me to put this product on the market, add value while not stressing out about the operational cost.
It is not quite “set it and forget it” though. In the setup process I’ve encountered a few challenges which I will explain in the next installment of this series.