Artisanal Manufacturing and Marketing

One day in April of 2008, I was having lunch in a transit lounge in the Singapore airport. A news story on the TV over the bar showed me the Jerome (AZ) Grand Hotel and a number of visiting politicos. By April of 2008, Senator McCain was the presumptive Republican candidate for President. McCain has a property near Jerome. The politicos were VP candidate – wannabes visiting with the Senator.

Seeing little Jerome on TV news a half a world away strikes me as a strange story. But there a lot of strange stories in Jerome. One of those is about a Jerome shop that has become a global artisanal marketing focal point. That story is worth retelling here.

… C.H.


Artisanal Manufacturing and the Power of Stories

Were it not for a mesquite tree, Jerome would be readily visible from my bedroom window. The town of Jerome clings to the steep slopes of Cleopatra Mountain, a mile high – about half way between the Verde River and the mountain’s summit. As the 19th century turned into the 20th, in the twilight of the Wild West, rich copper mines made Jerome one of the largest settlements in Arizona Territory. Ores dwindled until the mines closed in 1953. Today, Jerome is home to about 450 souls, largely artisans and artists. A modest but growing tourist trade keeps them occupied.

Today, Jerome provides a rather remarkable story for artisanal manufacturers – a story about stories. Among the shops, restaurants and such that clutch the mountainside, two ladies run the largest kaleidoscope store in the world. It is fair to say that Nellie Bly (the store’s name) is the focal point of the kaleidoscope world.

Being a curious fellow, I wondered how a retail shop in an off-the-beaten-path tourist town had become central to a niche market like kaleidoscopes. So I drove up the mountain and asked. Mary Wills, one of Nellie Bly’s owners, said that she didn’t know. But she did kindly make time to show me around her busy shop and to chat with me for a while. I drew my own conclusions.

The Stories

Mary Wills and Sally Dryer, her partner, do not make kaleidoscopes. Their shop does provide an interface linking those who make kaleidoscopes with the collectors and retail customers who buy them. I think that the necessary network of contacts came to be largely by word of mouth, likely aided by several stories that serve to “break the ice” and promote pass-it-along conversations. Here are a few of such stories:

> Kaleidoscopes: Most of us remember kaleidoscopes as toys – paperboard tubes that display pretty geometric patterns. The kaleidoscopes that Nellie Bly sells are certainly not toys. Rather, they are artistic or artisanal creations. The juxtaposition of the familiar toy kaleidoscopes with their unfamiliar Nellie Bly counterparts fuels conversation.

Nellie Bly> Nellie Bly – Take 1: Mary Wills is a Nellie Bly fan. Nellie Bly was the pen name of an intrepid woman reporter with Joseph Pulitzer’s New York World who achieved considerable celebrity in the later decades of the 19th century. She visited northern Arizona in 1890 as part of her around the world race against time. (She beat Jules Verne’s fictional Around the World in 80 Days record by about 6 days). Her celebrity in the mining community resulted in her name being associated with several Jerome mining claims. This remarkable woman spurred conversation in 19th century. She still does.

> Lucy van Pelt: Mary’s partner Sally Dryer has her own story. As a child, she was the voice of crabby Lucy van Pelt in a number of Peanuts animated TV specials. Everybody remembers Lucy, Charley Brown and the Great Pumpkin. Again, a story to talk about and to pass along. Throw in the kaleidoscopes.

> Belgian Jennie: Nellie Bly – the store – is built on the foundation of an earlier structure that burned in the late 1800’s. That building housed one of Belgian Jennie’s Jerome establishments. Belgian Jennie was easily the most prominent Madame in the Arizona mining camps. She was also generally regarded as the wealthiest woman in Arizona at the time of her murder in 1905. Yet again, a remarkable character to talk about, then by-the-way into discussion about kaleidoscopes.

Nellie Bly – Take 2

Stories offer one means to open doors toward building relationship with prospective customers and with prospective suppliers. Once a door is opened, however it is opened, it is still necessary to build lasting relationships that generate repeat and referral business. Nellie Bly — the store – helps do this in several ways. For example, customers are actually encouraged to touch, hence experience, the kaleidoscopes, even though many are priced in the hundreds or thousands of dollars. Take a minute to check out what Trip Advisor has to say about the store:  http://www.tripadvisor.com/Attraction_Review-g31253-d5209037-Reviews-Nellie_Bly_Kaleidoscopes-Jerome_Arizona.html

Relationships with suppliers are fostered by an annual weekend of kaleidoscope workshops, experience sharing and social events. Sally and Mary, the owners, also take deep personal interest, especially in those who make the kaleidoscopes. Its about relationships.

For Smaller Manufacturers

For many smaller manufacturers, artisanal or otherwise, accessing markets and building sales is the primary constraint to sustainability, let alone growth. Smaller manufacturers face a big world and well heeled competition. Getting the word out in a cost – effective manner is tough, but not impossible. Stories like Nellie Bly’s offer one inexpensive approach that some businesses may find useful.

Quick BS check: Suppose that you are one of the four million plus people who visit Sedona AZ this year. Now that you have heard the stories, would you be more likely to take a short side trip to Jerome? If you did, would you be more likely to visit Nellie Bly? If you did, would you be more likely to buy a kaleidoscope as a gift or for yourself?

Chuck - SedonaThoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome.

Artisanal Manufacturing – Etsy and the Matter of Scale

Artisanal Manufacturing

This essay is continues a series on Artisanal Manufacturing. For the purposes of this series of essays, “Artisanal Manufacturing” refers to businesses that produce tangible products, usually employing 10 or fewer people, counting everybody involved. Artisanal manufacturers often differentiate their product offerings on qualities such as “custom”, “designer”, “uniqueness”, “handmade”, “local” or “natural”. [1]

Etsy’s Contribution

Etsy.com provides a global on-line marketplace especially for artisanal manufacturers. Etsy’s website provides some interesting figures on an important and rapidly growing group of artisanal manufacturers:

Number of Sellers (2013):                                     1.3 million

Number of Products Offered (2013):                     26 million

Gross Revenues from Products Sold (2013):        US$ 1.35 billion

Revenues Increase (2012 > 2013):                        About 50% (from US$ 895 million)

Most Etsy sellers are female (~ 88%). About 83% of Etsy sellers consist of one person businesses. Almost all operate from their homes. Only about 18% operate their business as their primary livelihood. Mean revenues per seller (business entity) are close to $1,000 annually (US$ 1.35 billion / 1.3 million sellers). Revenues per seller likely approximate Pareto’s 80:20 rule — a few sellers generate nearly US$ 1 million, while many produce a few hundred, at best. Of course, many Etsy sellers also sell through other channels, digital and otherwise. [2]

Growing the Business

91% of Etsy sellers say that they want their revenues to grow in the future. For almost any business, growth involves confronting a continuing series of constraints to growth:

Time | Talent | Suppliers | Production | Distribution | Sales | Money

 For most Etsy sellers, there are several steps on their growth ladder:

Step #1: Increase supplemental income:

For very small businesses with access to global markets, as Etsy sellers are, on-line sales can be expected to increase with time due to repeat business and referrals. Additional products can be introduced and other sales channels can be utilized (e.g. craft shows, Amazon, private website).

Over time, the constraint to growth will shift. Perhaps the constraint to further growth becomes access to enough t money to finance growing working capital needs. Or the personal time necessary to work in the business and on the business as it grows becomes limiting. Or the production capacity needed to reliably produce enough goods in a timely manner.

Step #2: Confront the vast chasm between a supplemental income business and a livelihood – [3]

Quitting one’s day job is a very big deal. In doing so, revenues from the business must grow quickly enough to cover living expenses, as well as to provide the cash needed to meet the increase in working capital and production capabilities that the increased revenues require. In most cases, careful planning and contingency resources are necessary.

Step #3: Grow from a one person business to a Company of two or more, and/or relocation to a designated place of business.

To become a stand – alone business that provides two or more livelihoods usually requires a well thought out business model and a formal business plan. The business model should be scalable, meaning that aggregate costs should grow at a slower rate than throughput (revenues), without meaningful upper limit.

In preparing the business plan, leverage through outsourcing, partnering with other firms or outside financing should be considered. Fixed costs become much more significant, so contingency resources are even more important. Unless the principals in the business are very experienced, it is prudent to make use of outside expertise when preparing the business plan. [4]

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Chuck - France 2012-4Thoughtful comments and experience reports are always appreciated.

…  Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

P.S: Contact me when your organization is serious about growing and prospering in the 21st century. … CH

This blog and associated website (www.JeraSustainableDevelopment.com) are intended as a resource for smaller manufacturers in the pursuit of Sustainability. While editorial focus is on smaller manufacturers, all interested readers are welcome. New blog posts are published weekly.


[1] There are other groups of artisanal manufacturers, such custom molders, custom machine shops, make to measure cabinet makers and many more.

[2] The figures quoted in this paragraph are from Etsy’s website, especially from Redefining Entrepreneurship: Etsy Seller’s Economic Impact, one of several reports available at www.etsy.com/press

[3] For an example of Step #2 planning, see Green Soul – Confronting the Chasm, this blog, http://jerasustainabledevelopment.com/2014/09/04/green-soul-confronting-the-chasm/

[4] Here in the U.S., your local office of the Small Business Administration (SBA) can provide serious assistance. To  learn more, see Why Not Take Advantage?, this blog, http://jerasustainabledevelopment.com/2013/11/27/why-not-take-advantage-2/

 

Artisanal Manufacturing – Approaching the Market

The Second Chapter of the Green Soul Chronicles

Green Soul Botanicals is an emerging artisanal manufacturer. Artisanal manufacturers, for the purposes of this blog, means manufacturers with less than 10 employees, usually including the owners. These very small firms — there were about 164,000 of them in the U.S. in 2011 — comprise about 55% of all American manufacturing facilities. And new ones are constantly emerging.

There is plenty of information available for those who decide to go into business for themselves. But most of that is, understandably, rather general in nature. Since I happen to have an emerging artisanal manufacturing firm in my family, perhaps a series of posts on that firm’s actions and experiences will provide a useful example for others taking the plunge.

Chapter 1 discussed Green Soul’s mission statement. This post — the second chapter of the Green Soul Chronicles — outlines the market Green Soul serves and how Green Soul approaches that market.

Green Soul, its Products and the Markets it Serves

Green Soul Botanicals is firmly rooted in the very Green world of herbs. There is a clear understanding and appreciation of the herbs, of their properties and of the life force they possess.

At the same time, Green Soul is equally rooted in Spa and the worldview Spa guests embrace. Spa and the lifestyle Spa offers is a rapidly growing part of today’s culture. That lifestyle is one of tranquility, relaxation, clean, pure and natural — certainly Green. Make that a Zen, yet pampered shade of Green. Green Soul’s products bring the full natural power of herbs into the Spa.
Spa is a lifestyle phenomenon that a rapidly growing number of people are choosing and are willing to pay for — so, there is a substantial and growing market for Spa products. Here are some statistics for the U.S. Spa industry. Keep in mind that Spa is a global lifestyle phenomenon in which the U.S. is almost certainly not the volume leader.

U.S. Spa Industry Statistics

  2012 1999 Change
Locations 19,960 4,140 +382%
Guests 160 million 90.7 million +76%
Revenues $14 billion $5 billion +180%
Revenues / Location $700,000 $1.2 million -42%
Revenues / Guest $87.50 $55.13 +59%
Source: International Spa Association (iSpa)

Marketing

Green Soul’s approach to marketing follows, as it should, from Green Soul’s Mission Statement:

Green Soul Botanicals’ mission is to provide Spas, wellness professionals and fellow travelers on the Path with unique herbal products that are effective, luxurious and natural without artifice. In doing so, Green Soul Botanicals operates in an ethical and responsible manner, while providing right livelihood for those associated.

As you can see, Green Soul’s mission statement suggests three customer groupings: Spas, wellness professionals and fellow travelers on the Path (individuals that value the Spa lifestyle). Each of these groupings overlap and interact.

Spas >> There are almost 20,000 Spas in the U.S. alone. All of them are potential customers for Green Soul. Spas typically offer a menu of services, each of which consist of several steps, each step requiring an appropriate Spa product. Green Soul currently offers five treatment packages, each of which consists of a coordinated suite of products, along with protocols that specify which product to apply at each step in the treatment. Equipment and supplies requirements are also spelled out. Green Soul’s Wildflower West product range and its associated protocol constitutes a treatment package based in southwestern herbs. Spas also buy and resell retail quantities of the products used in the treatment package.

Wellness Professionals >> These are the people who actually treat Spa guests. They are typically licensed massage therapists or other holistic practitioners. Their opinions regarding choice of Spa products are based in experience, hence are usually influential. Wellness professionals often have private practices, along with engagement at the Spa. These professionals constitute a market for Spa products for their private practices. They are also of critical importance in selling to Spas.

Travelers on the Path >> These are the people growing legion who value the Spa lifestyle and share the Spa worldview. The experience they receive from Spa and Spa products makes them Green Soul’s ultimate customer. It also makes them candidates for retail quantities of Spa products for home use.

Green Soul’s Products

The mission statement describes Green Soul’s products in general terms: unique herbal products that are effective, luxurious and natural without artifice. They are tangible products — herbal creams, lotions and powders — which, in the hands of skilled Spa therapists, create the intangible, ineffable experience that Spa goers seek (and expect).

Unlike a chemist, an herbalist views herbs as living things, rather than as collections of molecules. Green Soul’s products are differentiated by the herbalist’s ability to bring the vital qualities of the herbs into the Spa. By analogy, most people recognize the distinction between vitamins conveyed by fresh, natural foods and those conveyed through vitamin tablets.

Green Soul’s products are further differentiated by artisanal production processes. With such processes, small quantities are produced with the full attention and intention of a master artisan. Consider, for example, the vinting of a fine wine. Art meets manufacturing technology. The results are unmistakable.

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Jera Logo white with caption centeredThe Green Soul Chronicles are intended to serve as an example — how one emerging artisanal manufacturer is approaching the problems of start-up and growth. Of course, all businesses are different: one size certainly doesn’t fit all. Use that which works for your situation.

Contact me when your firm confronts manufacturing in the 21st century,

… Chuck Harrington (Chuck@JeraSustainableDevelopment.com)

For more on Green Soul and its products, see www.TheSpaHerbalist.com

For more on Artisanal Manufacturing, see this blog: Artisanal Manufacturing, www.JeraSustainableDevelopment.com/2014/03/12/artisanal-manufacturing-2/ and The Green in Green Soul, the first chapter of the Green Soul Chronicles, at www.JeraSustainableDevelopment.com/2014/05/21/the-green-in-green-soul/