Rickshaw Bagworks was born in 2007 and Mark Dwight has poured his money, heart and soul into it. When they started he had the sub-assemblies for his bags made in China and then assembled them in the Rickshaw mini-factory. He had one color (black) only as to ensure that he did not have to carry too much inventory. But as time went on Mark had a dramatic change of heart. They were already making custom colored bags from scratch in the mini-factory, but the more bags they made in SF, the more that he felt he needed to make everything locally. After all, he is the founding board member of SFMade. He admits that they have lost lost an estimated $100k in business this year due to their decision to make it locally but still feels confident that weathering the storm will be worth it.
In the first years they spent a lot of money trying to sell to retailers by attending expensive trade-shows. They found out that making high quality bags and selling them to retailers at 50% off what not a good distribution strategy. Instead they focus on building their brand and selling online. They still sell to some retailers but see that as more of a marketing strategy. However, what they learned in the end, was that business to business was where it was at. Businesses are willing to take much smaller discounts for huge orders and really like the fact that they can co-brand a locally produced bag. Take Google for instance.
When I was touring everyone was working on a huge bag order for Google. It was Tylers first huge deal since joining Rickshaw as head of Corporate Sales about six months ago. But get this: he sold them a bag that had not been developed yet! I was floored by this idea. “What about the margin”, I asked, “surely you can’t get any margin on selling a product that you still have to develop?” Trust me when I say that this is any manufacturer’s nightmare! Tyler told me that Google agreed to pay full MSRP on the entire order and that the order was big enough to give them a little margin. In return Rickshaw kept their production line nice and busy, are going to get a new product to market in six weeks, will probably make a little money on it AND thousands of Google employees around the world will get a Rickshaw branded bag. Genius! Between their Kickstarter campaign (see Part 1 of this series) and the Google deal my hat goes off to Mark, Tyler and the Rickshaw team for two extraordinary product development successes.
Mark practises what he calls “artisanal manufacturing”. He believes that if we’re going to rebuild the economy, and replace what we lost by offshoring, then supporting artisanal manufacturers like Rickshaw and Plywerk is the way to go. This sounds self-serving but it’s more than that. Dollars spent at these companies go to local employees, local suppliers and local taxes to pay for local education, roads, parks etc. It’s really that simple.
To support artisanal manufacturing we need economic development initiatives like SFMade and Portland Made, but in the end all of it is for nothing if we don’t have consumers interested in buying products from these companies. Click here and here to start being part of the solution today.