Last Updated Mar 16, 2011 1:25 PM EDT
- Choose the right design. Pegula scoured the Internet for bags that he liked, and decided to use a standard messenger style bag as the base for his newly designed product. "I got together all the items I thought were necessary for a day with the baby, and I put them on the bag with masking tape," he says. "Then I found a small sample maker in downtown Los Angeles and I had a prototype made."
- Make tough manufacturing choices. "I wanted to make the bag affordable to everyone," says Pegula. "But when I looked into having it produced in the US, it would've cost $50 just to have the bag made." Instead, he contracted with a factory in China so that he could keep the bag at a $50 price point at retail.
- Stay the course. Initially, Pegula had to overcome a lot of resistance from retailers. "I had to convince them that this was not a joke and not a novelty, and that it was a product that people would want to use," he says. "No one really believed in my concept and a lot of the smaller mom and pop stores would laugh and tell me 'my son would never carry that.'" But Pegula didn't let that stop him. He eventually got the bag into Fred Segal in Hollywood, and then a celebrity guest on the Wayne Brady Show wore his bag on air. Parents Magazine also featured the product in a Father's Day story. He sold 500 bags in two weeks.
- Protect your trademark and design. Early on, Pegula discovered one of the dangers of manufacturing in China. One day he received an email from a factory in China soliciting his business. "They were making diaper bags," he says. "And I saw that it was my design they were pitching. So I contacted my lawyer and wrote them a letter. They took it off their site. But I learned that protecting your brand name through trademark registration is important. Now I do that in every country. But even today I get smaller companies using our name without realizing it's a registered trademark, and I constantly have to spend out letters."
- Turn lemons into lemonade. In 2004, Pegula was contacted by Oprah, who was throwing the world's biggest baby shower for military wives who were expecting. The show ran in October, and Pegula was asked to provide 700 bags for the show. "The holiday season was coming up, and it wiped me out of all of my inventory but there was no way I could say no to Oprah," he recalls. He hoped that the orders he received from exposure on the show would help grow his business exponentially. "After the show aired, I was thrilled," he says. "Then I saw that I had 95,000 hits on my website and no orders. I was using PayPal and it had gone down." But, he says, that was a blessing in disguise. Because consumers could not order the bag online, they went to retailers like Nordstrom, which drove demand at the wholesale level. "It really put us on the map," says Pegula. "It opened up a lot of distribution channels for us." Diaper Dude's products are now carried in over 600 retailers.
- Choose investors wisely. Or in Pegula's case, not at all. "It would be easy to take on investment money," he says. "Last week I had to turn down a company that was interested in investing because I was fearful of the control they wanted, and they didn't share my vision. They didn't see the need for style as much as I do. If you're going to take on a board that you're accountable to, it's got to be the right fit."
- Expand your line carefully. "I held off for a year and a half selling to Babies R Us because I was worried about the boutiques that we sell to," says Pegula. Before going into the mass market, he developed a new line of bags specifically for the smaller boutiques that had taken a chance on him when he first went into business. "I let the boutiques know that I was not giving the big retailers a discount--that the products were selling for exactly the same amount in every store." Clear communication and a little bit of product differentiation kept everyone happy.
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