I Bypassed the Conventional Retail Route and Haven't Looked Back

By Jason Lucash, Co-founder, OrigAudio, Chicago
When we launched OrigAudio in 2009, we thought our portable, eco-friendly speakers would do great in big retail stores like Best Buy, Target, and Wal-Mart. It was the perfect plan -- that is, until we realized that you can't just place a product on the shelves at Best Buy. It doesn't work like that.

Our first product, called Fold n' Play, was a portable, foldable speaker system. The speakers are self-powered and they're made of recycled materials, so they're ecologically sustainable. Our online sales and international sales have taken off, but getting our products into brick-and-mortar stores in the United States has proven difficult. A small company like ours faces a lot of competition and a long review process to get on the shelves of most major retailers.

It's taken us a while, but we finally realized something that has been key to our success: We can do just fine without the conventional big-box stores.

Our first big break
We produced 6,000 speakers at first, and were selling about five a day on our website -- many of those to friends and family. We are firm believers in social media and in working with the press, and that really worked to our advantage. We spent zero dollars in advertising, and word just spread organically.

Around Halloween of last year we received a call from Time magazine. They told us they were considering our speakers for their list of the 50 best inventions of the year. I thought it was a prank call -- the number one invention of the previous year was the NASA Ares rocket, so the idea of competing with a multi-billion dollar government agency was pretty insane to me. I still can't believe we were selected.

After the Time feature ran, we started selling more than 400 products a day. We moved through our first 6,000 speakers and then had our factory work 24 hours a day to meet demand for the holiday season. We were still having trouble cracking into the big-box stores, but we were having some success with smaller eco-stores and with international distributors, who initially found out about us through the press.

We also got invited to book a booth at the Consumer Electronics Show last year. Usually you have to book a booth far in advance, but they invited us because of the Time feature. Exhibiting there is expensive -- $6,000 for a booth -- but we thought it would help us get a lot more traction in U.S. retail. Instead, it helped our international business grow even more than it already had.

Succeeding nonetheless
We never thought we would grow faster internationally than we were growing here in the states. We started getting calls from international distributors that wanted to buy large quantities of speakers. Last year we worked with distributors in South Africa, Portugal, Australia, Canada, South Korea and Norway. That worked out well for us, because they buy the products from us outright and then figure out how to bring them to retail in their respective countries. About 52% of our sales have been international, which is very different from most small start-up companies like ours.

We would love to sell more in the U.S. For one thing, it's important for brand recognition. There's also a lower profit margin selling overseas because you have to deal with extra shipping costs, taxes and tariffs. But we've realized that selling more in the U.S. doesn't necessarily mean going through brick-and-mortar retailers. We've always believed that online is how people shop now -- we're all in our 20s, so we're the generation that shops online rather than at the mall.

Online sales have worked out very well for us -- in fact, we've found that our products sell best when consumers can view a video demonstration, rather than in stores where the products just sit on the shelves. We've also done well selling our products on QVC -- the home shopping channel -- because they demonstrate the product for viewers.

If Best Buy calls us today and wants to stock our products, no problem. That would be great news, but we're happy with the way things are going right now. Our gross sales in the first seven months of this year have totaled more than half a million.

The biggest thing we've learned along the way is that you don't have to take the conventional retail route succeed. We decided to do everything a little differently -- from the way we make our speakers to the way we broke into the retail market. It's worked well for us so far, and we hope that continues.

Jason Lucash came up with the idea to start OrigAudio during one of his many trips abroad. He was only 26 years old at the time, and a recent graduate of the University of California, Davis with a degree in managerial economics. He now heads business development for OrigAudio and lives in San Francisco.
-- As told to Zack Anchors

Resources:

• Learn about strategies for launching a new product.
• Check out Time Magazine's profile of the "Fold n' Play" as one of the best inventions of 2009.
• Read a book about how to sell a product to the U.S. retail market.