How micro-brands will be the future business model for designers
Last Thursday, Roger Ball came to speak at Art Center on "how to start your own micro-brand." He is currently a professor of industrial design at Hong Kong Polytechnic University School of Design and is also a leader in 3D anthropometric research for "China-fit" products. It was certainly empowering to hear him speak about the opportunities for designers today in creating their own brands.
Big brick-and-mortar retailers like Best Buy have suffered in recent years due to online competition from sites such as Amazon, which have lower overhead and offer broader product choices.
THE BRICK-AND-MORTAR BUSINESS MODEL
Entrepreneurship is something that has always been in the back of my mind. For most people like me, the startup capital needed to invest in a new business is the single greatest barrier to entry. Today's business models have largely been driven by the existence of big brick-and-mortar distribution chains like Wal-Mart or Target. In order to get your own product into market, you would usually need enough capital to mass produce your product. Often, you might seek out investors who would effectively own the majority of your company and product. And at this level of investment, the level of risk and cost of failure can be catastrophic.
What does this mean for us designers? Most of my talented friends working in the product design industry fall into 2 categories: in-house design, or consultancy. Meaning, to get a product idea to market we will usually either be designing from within a corporation, or be in a business that offers design services to multiple corporations. In either case, the final product will be branded with names like Samsung, Nike, or Cobra PUMA Golf. We really have no ownership of the products we create.
THE INTERNET DISRUPTING THE SHOPPING PARADIGM
Today the internet continues to evolve the world and create new ways to connect customers with businesses. Citing the success of Amazon, online shopping has already transformed the way people buy and look for products. In the online shopping world, there are no physical space limitations that a brick-and-mortar would have.
More importantly, selling online there is no reason for minimum quantity or mass production. You can literally sell a single quantity item on Etsy. The emergence of crowd-funding sites like Kickstarter has also created new opportunities for entrepreneurs. I'm happy to know several friends and colleagues have already successfully crowd-funded their own products. Even those who weren't funded, I truly admire for trying.
Taobao.com is the Amazon of China. They were the ones who manufactured the new holiday, Singles Day, when people in China born under the one-child policy (aka everyone) should buy a special gift online for themselves on 11/11.
Roger Ball gave us an interesting fact, that previously the record for online sales was on Cyber Monday with $2B in sales. A couple weeks ago, China's new manufactured holiday, Singles Day, shattered that record with $5B in sales. Undoubtedly, online shopping will continue to grow in the near future. Even without a big online marketplace, blogs and websites these days curate and bring attention to great designs, and connect customers directly with the products that fit their taste.
NICHE IS NOT A BAD WORD
Many times, clients I design for try to avoid niche markets. Because they are selling mass-produced products, they try to target what they often call a "mass consumer" for the least risk. In reality, there is no such person, unless you are truly the average of the collective tastes and mindsets of every consumer out there. And at the same time, all of your competitors are thinking the exact same thing. As Roger Ball put it, there are all these flavors of ice cream, but if everybody based their decisions on focus groups, everybody would just make vanilla.
No offense, vanilla. You're actually my favorite flavor. But I also love having lots of choices to pick from depending on my mood.
Manufacturing and technology for product development have evolved, and today many factories are willing to produce parts at low-volume quantities. This is great news, because the initial cost of manufacture can potentially be low enough that even someone like me might be able to afford a first run production.
Rather than the business model of high-quantity sales on paper-thin margins for the "mass consumer", micro-brands compete for low-quantity sales in niche markets with potentially larger profit margins. Of course the risk of failure still remains, but avoiding mass production the stakes are lowered, and we can at least avoid those catastrophic, life-ruining levels of risk. At the same time, the lower the quantities, the simpler the logistics of running the business as an individual or a tiny company.
MICRO-BRANDS AND DESIGNERS
For creative professionals, our ideas are our assets. We can create value from nothing. Product designers are especially well-equipped to start our own businesses. We have the experience and know-how to create a new product, as well as the taste and understanding of consumers to create a brand. The potential to create our own brand is there. Perhaps what we lack is money, with our meager designer salaries, and courage to step forward and invest in our own ideas.
I think about how little time I myself would need to get a product ready for manufacture. I can probably sketch a cool concept in as little as an hour or two, turn it into a 3D model over a weekend, and send it out to a 3D printer to get a prototype made. If I had no budget I could even make my own logo, website, and branding elements for the product with relative ease. More time spent would really be about getting my product up to my own high standards. After hearing Roger Ball talk about his students making their own products and brands for his class, I now feel that I would be lazy and unambitious if I didn't give it a shot. So, perhaps you may see me with my own brand and products to sell online in the near future. If so, please run out and buy it ;)
I encourage any designers and creative professionals to start their own ventures. The more of us who are able to successfully make our own brands and businesses, the better the situation will be for designers in general. I'd especially love to see more product designers who are CEOs of their own brands, because I believe it will be commonplace in the future. As Roger Ball said, micro-brands are just baby brands. Louis Vuitton was once a micro-brand in the 1800s. Just about every designer I know has dreamt of having their own products and brands become the next Apple or Louis Vuitton. Perhaps many of us have the potential, we just need to start it.
You can read more about how to start your own micro-brand in Roger Ball's book, Design Direct.