Should this Exist? A short guide to evaluating your idea’s worth

Should this Exist? A short guide to evaluating your idea’s worth

Should this exist?

In our past two decades of helping our clients launch new brands and build upon existing ones, we’ve observed some factors that increase the likelihood of an idea being adopted in the marketplace. If taking note from our clients wasn’t enough, we’ve even decided to introduce a few products of our own. What’s written here is not meant to be a comprehensive guide to launching your new idea but, rather, aims to help you explore the reality of your ah-ha! moment:

Should this exist beyond my imagination?

We don’t mean “should this exist” as a thought-provoking moral dilemma as is often the case on the popular new podcast sharing the title. No, what we’re asking here is, why is this idea worth pursuing? Is it worth the grueling hours that will need to get it off the ground? Is it worth sacrificing the time you could be doing something else? Is it worth the injected plastic that will, one day, end up in a landfill? Whenever we’re going through the process of launching something new, we always start by asking ourselves two important questions:

    1. Why should this be brought into the world?
    2. Is there an existing alternative that is already solving the problem we’re aiming to?

FABRIQ Speaker design sketches

Why should this be brought into the world?

Rather than proposing elaborate new financial models to evaluate the revenue potential of your idea, our objective is simply to prompt you to think about a few key questions prior to committing your energy to chase after your new idea. For most people, the light bulb goes off when a personal need for something arises but, to be viable beyond a personal prototype, you’ll need more than one customer.

Fortunately, there’s never been a better time to launch an idea that connects with small, specialized audiences across the globe. The continual increase in free-flowing information paired with more efficient logistics infrastructure has made niche groups of consumers more accessible than ever. While specialized audiences may be spread thin geographically, they can often be found in tightknit groups online and generally like to share their experiences with the rest of the community. The caveat to this is that specialized groups of category enthusiasts tend to have stronger pre-existing brand loyalty, higher quality expectations, and are very quick to spot imposters who are just stopping by to make a quick buck. If your idea is meant to address the needs of a specialized niche group, authenticity had better be in your game plan.

Communities exist globally where people will buy niche products online

Whether your idea is specialized or has mass market appeal, to introduce a new product and urge your customers to trade it for their hard earned cash, you’d better have a very compelling story. How is your idea going to contribute to the lives of those who use it? Like a new CRM tool for sales teams, does it help people do more with less? Or, like the output from the entertainment industry, is it based on making people feel good? If your idea doesn’t remove pain points or make a positive contribution to someone’s day, it’s probably time to head back to the drawing board. Unless you have a huge marketing budget to help introduce your idea to the world, you’ll need early support of advocates and this is only made possible by providing a remarkable customer experience. Why not do some preliminary exploration with a sample of your target market before launching headlong after your idea?. When we receive a slow nod and an “I might be interested in that” we know we’re in trouble. While presenting new ideas, we’re looking for jaw-dropping genuine excitement. During the early stages of whatever we’re working on, we refer back to the teachings of Seth Godin and ask ourselves the very basic; is this really worth talking about?

Competition – Do alternatives already exist?

After concluding that an idea has merit and is worth bringing into the world, it’s important to understand the alternatives that are already available. A quick google search is insightful and can help you understand if your new idea isn’t so new, but we advise you go beyond that and identify if there’s anything out there that solves the same problem you’re aiming to.

Access to sourcing websites like Alibaba, intuitive e-commerce platforms like Shopify and the speed at which we can now connect with freelancers on Upwork have made it easy to lay the groundwork of introducing something new to the world. A business can now be started in a local public library and requires little to no mastery. It’s important to remember that, as these barriers are eliminated for you, they’re also being eliminated for your potential competitors. As we continue to build platforms and tools that amplify noise, why is your idea going to stand out from the rest? Remember that long before you compete for sales, you will need to compete for your customer’s attention. Publishing an e-commerce website is one thing, but finding the people to visit it is where the required mastery has now shifted to.

Person making online purchase of product

In our years helping introduce new brands and ideas, we’ve realized that there is a major misconception that being better is enough. Does your new knife stay sharp 15% longer than the leading brand at Target? Unfortunately, 15% is not worth a consumer’s cost of switching or the inconvenience it will cause the buyer to move something else off the shelf. Better is only enough when the odds are already in your favor and this isn’t likely to be the case. Often, you’ll find yourself up against brands that have been spending decades building retail relationships, reliable supplier networks, and international brand awareness. Whether it’s a consumer, buyer or investor, the gatekeepers you need to impress with your idea are already busy doing something else and you’ll need to find a way to get their attention. Once you have their attention, you will then need to convince them that your idea is worth the cost of switching. When it comes to launching new ideas in a crowded space, we advise innovators to aim to launch an idea that provides at least a 10X benefit over the next best thing.

 

Why 10X?

In his work, Understanding the Psychology of New-Product Adoption, John T. Gourville notes that consumers tend to overvalue products they already own by a factor of three while companies tend to overvalue their new products by a factor of three. As a result, there is a 9X mismatch about what developers think consumers want and what consumers actually want. This model uses only psychological biases and doesn’t take into consideration the market advantages possessed by pre-existing competition so we feel it’s safer to strive for a 10X improvement.

Understanding the Psychology of New-Product Adoption 9x effect model

With this disconnect in mind, new ideas are likely to fall flat if they’re only 2 or 3X better than the entrenched market players. In order to negate the upper hand the existing competition holds and give an idea a chance to succeed, it needs to deliver substantial benefits. Bookstores already existed when Jeff Bezos decided to start one but he figured out a model that would allow Amazon to have 10x the offering. Dollar Shave Club may not have reinvented the razor, but the sum of experiences it offered consumers certainly hit the 10X marker and rattled the chains of major CPG (Consumer Packaged Goods) companies. How can you build upon your idea to ensure your competitors’ customers will look beyond the psychological costs of switching from what they’re already invested in?

Take a breath

The spark of a new idea is intoxicating and helps power entrepreneurs through the grueling early stages of development but these early stages require the discipline and humility to slow down and ask the tough questions. Whether you’re creating an entirely new category or diving into an older area filled with competition, in order to make it off the ground, new ideas need to be compelling and worth talking about. At this stage, it’s important to remember that we are all biased and are likely overweighing our idea’s benefits by a factor of three. Prior to taking on a new project, we work with our clients to dig deep and help answer two fundamental questions: Should this be brought into the world? And how can we make it at least 10X better than the next best alternative?

Rather than getting discouraged if your idea can’t pass this test, take a breath, head back to the drawing board and work on creating an idea for your users to love. Day in and day out, we work with brands to help them increase the likelihood that their ideas gain traction. If you’re in the early stages of ideation and need some fresh eyes, we’re here to help.

Your competition already has the upper hand. How are you going to take that from them?


Tariffs on importing products from China

List 4 of Section 301 Tariffs

Return to Tension

As trade relations between the U.S and China seem to be further deteriorating, importers are now at risk of facing a 25 percent tariff on over 3,700 products.

On May 13, the U.S Trade Representative (USTR) published its fourth list of proposed Section 301 tariffs on Chinese products imported into the U.S. The list covers $300 billion worth of Chinese imports. Prior to List 4, the Trump administration had tried to make the tariffs less painful to American shoppers by shielding consumer electronics but that is no longer the case. The newest list proposes a 25% tariff on daily use products like cellphones, televisions, clothing, housewares, pens, and strollers.

List 4 can be viewed here and includes most remaining U.S imports which have not been previously assessed Section 301 tariffs.

Tariffs proposed for products manufactured and imported from China

Tariff summary as of May 16, 2019


Warehousing - Receiving, storing, and shipping your inventory

Warehousing - Receiving, storing, and shipping your inventory

Warehouse, 3PL, distribution center, what’s the difference? Which one do you need?

If you’re planning on shipping a physical product to customers, you’re going to need a location to store your inventory. The type of location you choose will vary depending on the types of customers you need to ship to, but before we get into that, let’s define some of the different terms you may have come across so far:

Warehouse: A warehouse is a building that is used to store commercial merchandise. A warehouse generally acts as a longer-term storage solution and are used by importers, exporters, and wholesalers/distributors. They’re equipped with loading docks so products can be shipped or received by transport trucks. Warehouses can be owned directly by a wholesaler or operated by a Third Party Logistics provider.

Third Party Logistics Facility (3PL): 3PL facilities are outsourced warehousing options used by the majority of Fortune 500 companies. These facilities can receive, hold and transport product, but they never take possession (ownership) of the goods.

Distribution Center (DC): A distribution center is a specialized warehouse used for temporary storage and redistribution of goods. Mass retailers use a network of distribution centers as a storage center for retail locations to pull inventory from.

Warehousing - Receiving, storing, and shipping your inventory
Warehousing - Receiving, storing, and shipping your inventory

Key Warehouse Considerations

So, your product design is nailed down and your supplier is about to begin production but needs to know where it will be shipping the finished product. What’s next?

Shipment Volume

First, you will need to consider the volume of product you will be receiving. If you have a small business and only plan on receiving a few boxes of product at a time, a local storage facility or your parent’s garage might do just fine. If you plan on receiving pallets, containers, or truckloads, you will need to have access to a loading dock in a warehouse. Fortunately for small businesses, in North America, there are large networks of third-party logistics facilities that can receive, store, pack and ship your product for you. With these 3PL providers, you will pay a monthly storage fee (usually per pallet) while incurring variable charges for receiving and shipping your product. Many of these service providers work with all sorts of different small business and can provide a helping hand along the way.

Identifying key customers

The second variable you need to consider is who your customers are. Online sellers who are are shipping directly to consumers can often operate cost-effectively right out of their garages until the volume becomes too much to handle, Small businesses working with mass retailers, on the other hand, are often required to ship product on pallets which means they will need to have access to a shipping door at an owned warehouse or 3PL facility. To make your life easier, it will be important to select a 3PL provider that already has experience working with the retailers you will be shipping to. This can save time while avoiding financial penalties of improperly shipped product.  

In the early stages of your business, it’s important not to overextend yourself while planning for future growth. If you don’t yet need the services provided by a 3PL, there’s no harm in starting small in the space you already have (spare room, garage, ect). As the volume starts to pick up and you find yourself in a time crunch, it might be wise to consider moving your inventory to a 3PL facility or even moving into an office with warehousing space and loading docks while bringing on experienced personnel to manage the logistics side of your business.

Inventory and forklift in shipping container

Choosing a Storage Location

If you’ve decided that working with a 3PL facility is the best option for your business, the next step is determining the best location for your inventory to be stored. This requires a balance between proximity to supply and proximity to demand. Warehousing in the Los Angeles area can be a great option as it’s close to the shipping ports and provides a cost-effective option for receiving inventory from Asia, however, if the majority of your customers are on the East Coast, your FedEx bills will quickly erase any gains in freight savings. For our consumer brands with higher volume, we usually activate a 3PL facility on the East Coast and one on the West Coast. The price to get a container to the east is more expensive but we make up for it very quickly in savings on direct-to-consumer shipments.

Warehouse and product

Understand Your Costs

Every business has different needs and there are many factors to take into consideration when determining how to store and ship your products. Spend the time building out different models to give yourself a full understanding of where your costs will be coming from and where there are opportunities for increased efficiency. While it’s important to choose a solution that allows you to scale, remember not to overburden yourself so much early on that you don’t have the resources to invest in growing your business.


The U.S - China Trade Conflict Timeline

The U.S - China Trade Conflict Timeline

A few months ago, we wrote a piece on what was the escalating trade tensions between China and the United States. The conflict is an ongoing topic of debate so we’ve decided to reformat in order to make sure you have the most up to date information for your business. Because you likely don’t have hours to mull over all of the threats and drama between Xi and Trump, we’ve condensed the timeline into, what we consider to be, the most important developments.

Many import businesses already have teams in place and are optimized for working with China so switching manufacturing to other countries can be a huge headache. While these trade disputes have generated very little good news for importers, fortunately, most of your competitors are experiencing similar issues and the new tariffs likely haven’t given you a competitive disadvantage. We’re optimistic that some face-to-face time at the G20 will help settle some tensions between Trump and Xi but these past few months have served as a great reminder of just how fickle major economic relationships can be. This fragile nature of trade has exposed the dangers of an overly concentrated manufacturing network and has taught us that there is really no such thing as a status quo.

As of this writing, the United States has imposed tariffs on $250 billion worth of Chinese exports. The complete lists of affected goods can be found below:

List 1

List 2

List 3

The Timeline

October 25

Trade talks resumed between the two countries. Trump and Xi are reported to be planning discussions to take place during November’s G20 summit in Argentina.

September 24

The US instated tariffs on List 3, affecting $200b worth of Chinese goods. As of September 24, the total value of goods affected by these new tariffs was $250b.

China responded by instating its proposed tariffs on $60b worth of US goods.

September 17 2018

USTR announced that there would be a 10% tariff on the $200b worth of Chinese exports that will go into effect on from Sept 24- Dec 31. Starting early 2019, the tariff rate on that list was proposed to increase to 25%. Immediately afterwards, China announced that it would impose tariffs on an additional $60b of US goods that would go into effect at the same time.

August 23

The US and China go forward and implement tariffs on $16b worth of goods in List 2.

August 3

In retaliation to the United States’ proposed List 3, China proposed a range of tariffs that would affect $60 billion in US products

August 2

President Trump begins considering a 25 percent tariff on $200 billion worth of goods on List 3 as opposed to the original proposed 10 percent.This list included consumer products, construction materials, tools, agricultural products and commercial electronics equipment.

July 6 2018

As promised, the US and China both move forward with tariffs on the  initial $34 billion in imports (List1). During this time, a second round of tariffs to impact $16b in goods on each side is under review (List 2).

June 18 2018

President Trump threatened a 10% tariff on an additional $200 billion in Chinese products. He also stated that another $200 billion would be imposed if China retaliated further. At this stage, the threats pretty much covered all of the United States annual $505.47 billion in Chinese imports.

May 29 2018

The United States announced that it would be moving ahead with its proposed tariffs on $50 billion of imports while also announcing a plan to limit visas for Chinese citizens in an attempt to protect intellectual property.

May 20 2018

The United States and China appear to reach an agreement after China offered to significantly increase purchases goods of U.S origin.

May 3 2018

The United States and China began engaging in trade talks in Beijing. Here, the U.S demanded a trade gap reduction of US$200 billion within the next two years. No agreement was reached.

April 4 2018

In response to the U.S government’s tariff implementation, the Chinese government announced a list of US origin products that will be subject to an addition 25% tariff which would also come into play on July 6 2018. The list covers $34 billion in Chinese imports from the US and can be viewed (in Mandarin) here.

April 3 2018

The U.S Trade Representative (USTR) announced the first list of products that would be impacted. That list contained 818 product lines comprised mostly of non-consumer products and included industries such as aerospace, technology, robotics, industrial machinery, medical equipment, and automobiles. The complete first list represented $34 billion in products and was set to be in effect as of July 6, 2018.

March 22, 2018

President Trump first announced  that the United States would be imposing a 25% tariff hike that would impact $50 billion in Chinese goods imported into the U.S annually.


Bringing a Product to Market: Found Method Podcast

Bringing a Product to Market: Found Method Podcast

Shape’s Director of Marketing, Jordon Sansom, recently had the opportunity to sit down with the guys at Found Method to explore what it takes to bring a product to market. Found Method is a partnership between Cohub and Platoon Studio that looks at the decisions and strategy that go into building, running and growing a business.

On the episode, Zach, Elliot, Charles and Jordon cover product design, brand launch and modern retail while going back and forth on finding a balance between the pursuit of perfection and getting ideas out there.

Listen to the episode on Spotify.

The episode is also available on iTunes and Stitcher.

 

Featured as a top product design agency by DesignRush.


U.S - China Tariffs Explained

Trade Tensions

No matter which outlets you subscribe to, your newsfeed is undoubtedly filled with talk of the increasing economic tensions between the United States and China. Given that this is a resource for entrepreneurs and I’m not here to debate who the long-term economic winners and losers or predict the impact on international trade as a whole. The purpose of the post is simply to review what has been said, what has been put in motion and help you identify if there will be any immediate impacts on your business.

President Trump first announced on March 22, 2018, that the United States would be imposing a 25% tariff hike that would impact $50 billion in Chinese goods imported into the U.S annually. On April 3rd the U.S Trade Representative (USTR) announced the first list of products that would be impacted. That list contains 818 product lines comprised mostly of non-consumer products and includes industries such as aerospace, technology, robotics, industrial machinery, medical equipment, and automobiles. The complete first list represents $34 billion in products and will be effective as of July 6, 2018. You can see the full list of product lines here.

The second list covers 284 lines worth $16Billion in annual imports is currently under further review and does not yet have an effective date. The second list can be found here.

Will your product be affected? Visit the links below to find out:

LIST 1

LIST 2

More threats

In response to the U.S government’s tariff implementation, the Chinese government has announced a list of US origin products that will be subject to an addition 25% tariff which will also come into play on July 6 2018. The list covers $34 billion in Chinese imports from the US and can be viewed (in Mandarin) here.

In response (yes, again) to the Chinese government’s tariff implementation, on June 18th President Trump threatened a 10% tariff on an additional $200 billion in Chinese products. He also stated that another $200 billion would be imposed if China retaliates further. These threats pretty much cover all over the United States annual $505.47 billion in Chinese imports. As of this writing, no product lines or official documentation have been released pertaining to these threats.

The trade landscape between China and the United States is changing very quickly so be sure to stay in the loop and monitor how these changes will affect your business.