Part 1: E-commerce companies
The one thing 90% of our customers have in common is that they want to focus on sales and distribution and leave the rest to us. That means for the vast majority of our customers we’re handling:
- Product formulation and testing.
- Sourcing raw materials.
- Sourcing Packaging (bottles, tops, containers, etc).
- Mixing, Filling, and labeling.
- Bundling and kitting.
- Shipping to final destination (e.g. the warehouse of a 3PL or in many cases Amazon)
Below is a picture of our 22,000-square-foot manufacturing facility in Bradenton, Florida.
By both dollars and chemical volume the majority of our business today is working with e-commerce focused companies. These customers can be further subdivided into:
- Companies selling on Amazon
- Influencers using their social media followings to sell products to their fans/niche
For these two customer groups alone The Lab Zone is currently making around 700,000 bottles per year that get sold via e-commerce channels and that figure is growing quickly.
Lots of bottles require lots of boxes!
We’re a particularly useful partner for these types of companies because of our ability to do small-batch manufacturing. When most people are starting out they don’t want to have to spend an enormous amount of money to test whether or not something is going to work. Let me give you an example.
You decide to make a product (e.g. metal polish). First, you have to pay a company to design a formulation. This can cost anywhere from hundreds of dollars if a company is just tweaking an existing formula to thousands of dollars if you need multiple samples and some specific features that don’t already exist.
Second, a metal polish could easily cost you $40 per gallon before you even pay for bottling, filling, labeling, packaging, etc. Most private label manufacturers have minimum batch requirements of around 500 gallons. This is because they use mixing tanks that are that size and it takes too much time to prepare and clean their machines for it to be worth it to make less than that. So, before even starting you are looking at a $20,000 cost just for the chemicals.
Our minimum batch sizes start at only 30 gallons, which to finish the example would cost $1,200 for the chemicals in the metal polish – a much more feasible amount to spend testing a new product unless you are already a giant company.
Here’s our smallest filling machine which we use for small batches (but don’t worry, we have a fully automated 8-head filling line too that can fill 10,000 bottles per day for after your product grows!)
I want to keep these posts short so the other important point I want to make about ecommerce is that virtually any liquid that is sold online (as opposed to in a store) needs to be packaged and kitted. 3PL companies and Amazon charge an arm and a leg for this service. For example, they’ll charge you $0.25 for each item that goes in a box, $2.25 as a base charge, $1.25 for the cardboard box, $.75 for bubble wrap, and so on…
We are able to do the bundling and kitting at a much lower cost and ship your product straight to the 3PL or Amazon in its final form so that you only need to pay the base shipping fee.
In a subsequent post, I’ll talk about other types of customers that we work with, specifically distributors who have decided to get into the business of having their own brands and cutting out the middle man (and hence pocketing that margin), and multi-channel brands.