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Taking Our Products Off of Retail Shelves in Favor of Profits Shipping your products off to retailers is sexy and easy, but it could have a substantial financial impact on your business.

By Jason Lucash

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

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Imagine working for months trying to get a product you developed into the hands of consumers. As the co-founder of OrigAudio, a consumer audio company, we had our fair share of rejection before we hit the jackpot. Or at least we thought.

After hundreds of noes, Bed Bath & Beyond and QVC gave us a huge fat yes. They wanted to order well over 5,000 units each. I couldn't say yes fast enough but that proved to be an expensive answer -- and the wrong one.

Related: Finding a Top-Notch Manufacturer for Your Startup

Instead of our retail dreams coming true, the result was paying for retailers to test colors and designs of our products. These were very expensive tests. A couple of styles and colors would sell out and several designs went completely untouched -- creating a surplus of unwanted products we were forced to buy back from the retailers. Our warehouse soon filled up with pallets of crappy designs of quality speakers that nobody wanted to buy.

We learned the hard way that the traditional model of placing our OrigAudio speakers into retail stores is completely broken. After having to find unique ways to get rid of thousands of unwanted products, we began to test other models to overhaul our sales and distribution strategy.

In the end, we turned from mass production to mass customization, which allows us to tailor products internally after they sold without increasing production costs. This means we have to be flexible enough to create 10 speakers at a time for Pepsi or just two for a seller on Etsy.

Image credit: OrigAudio

Related: Why Landing at a Big Retailer Wasn't Our Golden Goose

To show customers the products before they are actually made, we create digital product demonstrations and mock-ups, which, with today's technology, are almost as detailed as actual photographs.

Customers can see designs virtually and designers can create unique versions of our products without us having to physically make any beforehand.

By going down this route, we notices a few benefits:

  • Gross revenue nearly doubled
  • Because no product is made until it's ordered, we aren't playing guessing games that could cost us thousands of dollars.
  • We get to build relationships with online entrepreneurs and artists who use our products to put their designs on. The people that buy their designs get a chance to use our speakers or accessories without us having to make the direct sale or take a risk by manufacturing thousands of units of one design.

Shipping your products off to retailers is sexy and easy, but it could have a substantial financial impact on your business. Instead, focusing on online retail and partnerships will allow you to print or create on-demand products, which can create the highest return and lowest risk.

Related: How This Startup Turned an Inventory Nightmare into a Customer Gold Mine

Jason Lucash

Co-founder of OrigAudio

Jason Lucash launched his first business as a third-grader in the San Francisco suburb of Danville, California and has had the same entrepreneurial spirit since then. Most recently Jason launched OrigAudio which makes unique portable audio products in 2009 and has received numerous accolades and awards such as Entrepreneur Magazine's "Emerging Entrepreneur of the Year", Time Magazine's "50 Best Inventions of the Year", and Season 2 winner of ABC's hit show "Shark Tank".

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