ARCH Report September: Post and Pre Kickstarter

Wow, it’s been a long time. I shouldn’t have left you, without a … always nice to start off a post with a little Rakim. I haven’t done an update like this since last year. Whenever I do these reports they remind me that I actually have to work at more than just the testing and designing of the brand. I have to dig into the numbers. As you know from all of the previous reports from 2009 to 2013 I lost an average of 7-10,000 a year running ARCH. In all honesty I didn’t even know this until I began looking at the numbers and writing these reports a year ago. I didn’t begin writing those reports until my online shop took a severe hit due to my own inattentiveness to my business. I was allowing myself to become a little arrogant and actually began to believe that things would always be good.

What I didn’t realize all of these years was that business was not very good. I was simply turning over a ton of money and I had not real analysis of profit margin. When I began looking back through all of the old receipts (when things got bad last year) I realized that although I was making 450,000 a year, I was barely netting 6%! When the shit hit the fan, yep that’s French, and the online business could not take on the loss of ARCH, I began to lose money at a stupid rate. Before I knew it last year I had to actually find money from where ever I could find it. By the end of 2013 ARCH (The brand) was going to be shut down completely just when it seemed I had learned how to actually sell the shoes.

Okay that’s the backstory since I haven’t written a report in a while. Here is where we are now. In December I ran a failed Kickstarter and then in February I took the Kickstarter project seriously and ran a successful campaign. After looking through all of the shoe projects on Kickstarter I discovered that I was the fastest shipped shoe project on Kickstarter. When the project ended in March, by April I was sending out shoes and by May 5th I was able to take the remaining shoes and start selling those. I made 107 pair of shoes. 13 pair were damaged and couldn’t be sold. I took those pairs and donated them to the San Diego Blessed track team, AMVETS and gave a few to family.

There were 46 pair reserved for the Kickstarter backers which left 48 pair for me to make available to the public. 8 pair went to the San Diego Blessed as a fundraiser for their AAU trip which left 40 pair total. The following numbers below will show the sales for the shoes thus far and the remaining pairs as of 9-10-14.

The Total Amount from Amazon Sales: 1301.18

Total Shoes Sold: 23 pair sold

I currently have 17 pair left in inventory (Shout Alex M. who won a pair while listening to #MentorMonday: http://www.cbpublish.com/mentormonday-s21-entrepreneur-panel-1/)

Instead of running a Facebook Ad for ARCH for the remaining pair, I allowed the Kickstarter to carry the momentum. This was the wrong thing to do. Sales were very slow. I had started my Amazon Ads campaign, but May is the beginning of a sales slowdown so my timing was not very good in going to market. Sales actually picked up through Amazon Ads about a week ago and I finally earned a good stream of sales which coincided with me joining a business collective (Shout out MA of Work Force, a fantastic socially and politically active comic series for supporting the brand – http://perfectman.wordpress.com/)

Here are the stats for Amazon Ads and the costs:

Now obviously the columns are off because of the cut and paste, but all you need to see is the Advertising Cost of the Sales: 22.91 and Sales: 149.96

Overall, Amazon Ads has had an okay effect, but the shoe cost is 32.00/pair. The only reason Amazon Ads is effective is because I ran a Kickstarter. Had I paid for the shoes our of pocket I would be losing money on every sale. In other words my biggest issue is driving traffic to the purchase. I did my best through my own website. I only sold 5 pair using Amazon Ads. It might be smarter to find a way to drive traffic to the site (If I did this, I’d rule the world! – insert sinister laughter)

Here is another chart that shows Impressions and Clicks. It’s one off so look under spend and sales for those.

What does all of this mean? As a brand, I was able to launch a successful Kickstarter, and I’ve been able to move the shoes. The problem is when I promote the shoes myself, I have a higher price per sale at between 59 and 70 dollars per pair. When I am no longer able to generate interest and I have to rely on Amazon Ads, I actually have to lower the price of the shoes to compete with the big shoe companies and I lose money.

This has led me to realize that I have to remain consistent in promotion and development of the brand. However when you need the capital to make more shoes, you can’t wait on slow sales. It just doesn’t work. I also realize my business is solely based on who I am. I am not solving a problem with my footwear. That is about to change however. My next project will be geared towards athletes and workers.

I’m developing a monochomatic series of the ARCH CG097III. The shoe will be made in all black suede and mesh. The size run will still be in whole sizes, but will extend to a size 6 to 13 in Mens. I will make a longer sock to include since the season is changing and all of this is in response to people who work in the service industry. I’ve had multiple people request something all black to work in and when the market asks, you answer. I hope this really long report helped someone better understand the business. Please write me with any questions or comments below.

Stay Motivated

Chris B.

Oh, be on the lookout for the next Kickstarter within a week. Thanks Fam!