- CROSSED Commerce
- A Lesson on Defending Your Brand, Crushing Knockoffs, and Patent Violation
A Lesson on Defending Your Brand, Crushing Knockoffs, and Patent Violation
Happy Wednesday friends!
Wherever you are reading this from, whatever time zone, I want to first start by thanking you for joining me for another week of CROSSED Commerce. The newsletter is growing fast and I’m so damn excited for what’s to come. If you’re reading this for the first time or got forwarded this, smash this subscribe button. I promise you won’t regret it.
But before we get into this week. I want to start by congratulating myself. I officially went 40 days without having chocolate.
This was HUGE for me and better than any plaque Shopify could send me. I have a sugar addiction and I also have realized over these past few months that I can’t give up chocolate forever.
So today we’re starting a compromise. Once a week I’m allowed to have some sweets. I’m going to call it Sweet Wednesday. Tonight I’m having a chocolate milkshake and I can’t wait.
My Favorite Question - How to Deal With Knockoffs
This week’s been a busy one, we’re shipping thousands of units to retail stores, preparing for a massive launch, and working on our year-end close for 2023. I got an awesome question yesterday from my friend Tyler at Bucket Golf about how to deal with knockoffs & people coming in and undercutting your product. He’s part of The Founders Club so of course I had to give him a really detailed response, but I thought it was worthy of sharing since we are ALL going to deal with knock offs, especially as we become more and more successful.
Target knocking us off with their Sun Squad line. They got the endcap before we did!
CROSSNET was selling in the market from 2019-2021 pretty much with 100% marketshare. Towards the end of the year violators started to infringe on our trademark, copyright and patent and made knockoffs. Amazon wasn’t willing to take them off easily and lawsuits could take years and years of effort plus money. The knockoffs came in at $99.99 when we were selling at $149.99.
There’s always an issue of value vs cost. We offered by far the most premium product on the market and we’re the originators of the sport. We also were the only one’s spending money on digital or any type of marketing that would create awareness for our category. However, $50 is $50 and in this economy it’s money that the average family doesn’t just have sitting on the sideline. It’s valuable. A few hours of work for some.
So What Did We Do?
We spent 18 months redesigning the CROSSNET product into what it is now. With perfect craftsmanship, working hand-in-hand with our factory, and an obsessed product team we were able to create CROSSNET 2.0 while reducing our original cost of goods by 30-40%.
Is it as good as the $150 product?
Are we happy and putting out a product that the market loves? Absolutely. That lets me sleep at night.
Product testing in our friends backyard
The Roll Out:
After we designed the final product we had to put our first time orders in. Luckily for us we had several years of data on what happens when we discounted the price from $149.99 to $99.99, but never any data on when $99.99 was the true price. Were customers going to continue to expect deeper discounts? We’re they going to order twice, three times as much? Having a product that wasn’t $100+ was a huge shit on consumer psyche, we had no idea what to expect.
So how’d we do it?
We started on January 1st, 2023. We thought it was the perfect time for a transition plan. We met with every single retailer we worked with and told them the news. They were HYPED. From their logic, a lower price would result in more turns, which would result in more sales. As long as we were keeping their wholesale margins pretty much the same they were 100% bought in.
This is why product engineering and understanding how your cost of goods works is so damn important. If we re-engineered CROSSNET to be able to sell for $99, but didn’t leave enough margin for our retailers we would be pissing off 40% of our business. Any type of marketshare we took back on Amazon, wouldn’t be worth it if we lost our biggest partners!
The new $99 version of CROSSNET also was coming in a brand new retail box and some of our retail partners had an influx of $149.99 versions. From a brand perspective, we knew we didn’t want to have two versions of CROSSNET on the market for pretty much the same SKU, so from a packaging perspective we had to work out a “Better/Best” version of the game so customers were not confused on the difference.
Some stores have 3000+ units, others had 7000+ units and we knew the only solution was time and patience. We worked with all the stores on mark down strategies on how to move the old product off the shelves and got really creative on our in-store promotions. We now have a working promotion calendar that we send to all retailers. If you email me back, I can send you an example. You should put it into play ASAP.
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The Final Results
We rolled out our new version of CROSSNET on the first of January. I’d be lying if it was a roaring success on day one. We could make the game $25, in the middle of winter most people aren’t shopping for summer items.
But come the spring damn we’re we happy. Here’s what we saw from this little experiment that we are now kind of locked in for.
Retail sales increased by nearly 30% in 2023
Amazon sales increased 100% YOY in 2023 (pricing was not the only factor tho)
We retained a majority of our Amazon market share back
Margins took a bit of a hit
Less room for error on Shopify advertising. We have to be first order profitable, no exceptions. We dropped our retail price by $50 and our COGS didn’t go down by $50, so there is less room to play with. Thankfully conversion went up, but its a careful balance.
There is much more focus on staying in stock and making sure we are not overstocked at the end of a season so we are sitting on a massive 3PL bill
Consumer psychology and pricing changes can’t be measured over night and some would argue it may take several years for us to see the full effects of reducing price on our hero SKU.
We are defending the brand more than ever and stopping market penetration. From a topline revenue perspective (that I’m growing to realize means shit if you own basically 100% of your company), we have to sell 1.5 nets for every 1 net we used to sell.
CROSSNET’s goal is mass adaption and as many nets out into the world, so if we live by that ethos then it was a great move from a company perspective.
Over & Out
I’m thinking about hosting a 45 minute workshop on this and pricing strategy later this month. Who would want to join me?
Running the hottest backyard game in the country is a hard job but somebody has to do it. Catch you on the flip side and see you next week! Massive shout out to the team at Smart Recognition for sponsoring this week’s newsletter. Go check them out!
Any questions, you know where to find me - [email protected]
Chris Meade the First