R you kidding me? February 28 2014
Babies R Us seemed like a logical place for The Quick Split when I began this journey. I met a buyer at the ABC Kids Expo in October of 2011 who was interested in my product and gave me her business card. I communicated with that buyer for several months before hearing that they weren't ready to carry it in their stores, but they would definitely like to carry it on their website. So I had two options: I could either drop ship it myself for them (the customer orders, BRU sends me an email with order information, and I package and ship directly to the customer) or I could work with a distribution company to drop ship for me. Working with a distributor would mean that they order inventory from me, warehouse it, and ship directly to the BRU customer when an order is placed. While this option would obviously be easier for me (I wouldn't do any shipping), it also means the distributor would get a cut of the profits. Since I was operating on a shoestring budget, I decided to drop ship myself.
This decision set off a chain reaction of hoops I had to jump through. Since I chose to drop ship myself, I was required to become a Toys R Us / Babies R Us vendor. To be a vendor, TRU/BRU requires you to carry a $5 million insurance policy and be EDI (Electronic Data Interchange) capable. They require a lot of other things too, but these were the two biggies for me. I feverishly started researching EDI companies and getting quotes. I knew this would be an added cost, but it was one I was willing to absorb in order to do business with such a big company. This was all happening in late 2012 when I still thought my vision of success included big box retail. The other huge increase in cost was the $5 million insurance requirement. This added another $1500 onto my operating cost per year, but again – I hoped it would be worth it when I was selling with Babies R Us.
So at this point, it's December of 2012 and I had about fourteen months of my time invested in this slow process. I added the increased insurance to my plan, because I was required to submit a certificate of insurance with all of the other documentation. I had selected an EDI company and was ready to run with that. I was excited about all of this, but at the same time wondering if my sales would be high enough to cover all of these added costs.
In January of 2013 I received my "welcome" email that everything was approved. I began trudging through the mountain of information with specifics about working with them. I received information outlining their EDI requirements. What I learned (after paying the extra money for insurance and spending what was now fifteen months working out details) was this: Babies R Us requires you to communicate with them through EDI multiple times a day, every day. More specifically, I would need to be sitting at my desk every day, all day or pay someone to do this piece for me. And all I could think was: are you kidding me? Why had this information not been presented to me sooner in this process, perhaps before I shelled out the additional $1500 for insurance? Is this something I just should have known? Should have asked about? Should have researched better? I could not afford to be chained to my desk for one vendor, and I could not afford to pay anyone to do this for me. So I decided to chalk this up as a $1500, fifteen month lesson. Painful.
I was sick to my stomach over this for a bit, and then I moved on. Quickly. I found a distribution company to work with – they purchased a case of inventory from me and would drop ship directly to any Toys R Us / Babies R Us customers who ordered off of their website. I shipped that small case (only 12 units – don't think it was a bigger deal than it was!) to the distributor in May of 2013, and my product was live shortly after that on the R Us website. And here we are, nine months later, and they have never reordered. It's still on their site, but I honestly have no idea why anyone would order there. I've learned that online customers generally find a product and then check amazon to see if it's available there with free shipping. And mine is. So who would order from R Us and pay shipping if you can order from amazon and get free shipping? Apparently no one since R Us has only sold at most 12 units in the last nine months, while I sold that many on amazon during the first couple of days in January alone.
It was an expensive lesson, but I'm glad I could cut my losses and move on.
Sometimes you win, sometimes you learn.