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Tune in below to learn how Organifi grew into a $150m+ Ecom business.

Nathan:

Hey, welcome back to Product Sourcing Stories, today we have Djamel with Organifi. This is one of my all time favorite entrepreneurs in the world. I mean this guy just is a rock star. Djamel, thanks for joining us. Do you mind giving us a quick 30 second introduction?

Djamel:

Yeah, sure. So I’m CEO and co-founder of Organifi. We are a super food self-made company. I like to say we’re actually a transformation company that sells super foods because we really focus on developing our team as well as developing our customers. We’ve scaled really fast over the past five years, done over 150 million sales, over a hundred employees, and we’re still growing, so.

Nathan:

Wow, that’s incredible. I want to learn, what was the first product you ever manufactured?

Djamel:

Oh man. Yeah, so the first product I actually manufactured was a foldable shoe, a foldable ballet slipper. And it came up because I was out partying one day in Spain and one of my friends, she had it on these heels and at the end of the night she pulled out another pair of shoes and she had been carrying those shoes for the whole night. And I realize there’s got to be a better way. So went on alibaba.com, this was probably over 12 years ago or [crosstalk 00:01:25], and yeah, so I went on Alibaba and I realized that there was these massive minimums, you have to order 500 units at a time. I was in business school and I didn’t have $15,000 just to buy some random shoes. So I found out about AliExpress and instead of manufacturing the shoes, what I did was I just bought ones that were already made and I stuck my little sticker on it.

Nathan:

That’s smart.

Djamel:

That was my manufacturing method. I bought 10 pairs of shoes and I just stuck a label on it.

Nathan:

That’s awesome. So how did that go? I mean, what ended up happening? Did you ever place your own order with those products and walk us through the process.

Djamel:

I did, man. It was insane. So I first got those 10 units and I started selling and then I had this event I was going to go to, so I needed to actually have my brand on labels on the shoes [inaudible 00:02:23]. So I had to do full production run of 3000 shoes, which was about $10,000. so I didn’t have the money and I called up my dad and I was 22 or something like that and I was like, “Hey, I want to start this shoe company, can I borrow…” Oh no, actually I didn’t even see him. I was like, “Oh, but I don’t have the money…” He was like, “You know what? I’m going to lend you the money.”

Djamel:

So he actually lent me $10,000 and I went to the bank to… I was communicating with China by email, not knowing who the hell was on the other side. I went to the bank to send the wire transfer of $10,000 and they looked at the account number and it was like 0781234567 and we were like, “Wait, that number looks kind of weird.” It was pretty nerve wracking to send that. And I said, “Whatever, I’m going to have to make a leap anyway, send $10,000 to somebody I met through the internet in China.”

Djamel:

And weeks later, or I think it was about 45 days, the shipment is coming on a ship and I didn’t know anything about ships. So I’m here in San Diego and they’re like, “Oh yeah, it’s going to be on the [inaudible 00:03:38] in the LA Port, can you give us the customs fees and dah, dah, dah.” I’m like, “Wait, I already sent you $10,000.” So it was another thousand dollars for these customs fees and I get there and I was like, “Oh my God, how are you going to deliver it to me?” They’re like, “No, no, it’s delivered at the port in LA.”

Nathan:

You literally had to go to the port to pick it up?

Djamel:

Yeah, I had to go to the port to pick it up. I was early 20s, I had a minivan that I use for surfing, so I was like, “All right…” I wish I had the picture but like I jumped in my minivan, I cleared out all the seats. I get to the dock in LA, I’m like, “What the fuck?” There’s containers, boats, ships, I have no idea what’s… So I’m asking people, “Where is this boat? Where is this shipment?” I’m with a paper, I finally find the… And they’re like, “Oh yeah, there’s a gate fee of $600.” I was like, “What?”

Nathan:

What, geez.

Djamel:

So I was like, “Oh.” And they’re like, “Where’s your truck? Pull it up to the loading dock.” I’m like, “I got a minivan.” They’re like, “We’ve got pallets for you [inaudible 00:04:42].”

Nathan:

Oh my gosh.

Djamel:

Oh my God, so luckily this really nice gentleman, he saw me just floundering and he helped me unpack the pallet, cut the pallets open. Unpack, load up inside my van. And it was not even half the shipment. So I started stacking it on the top of my van, got some ropes, it was like in third world country where you’d see a van [inaudible 00:05:11] packages. So I finally get my stuff and I drive down from LA to San Diego with my van full, my van stacked up top and I finally get to my house and I’m like, “Oh my God, this is crazy.” Now I’ve got to figure out how to ship all this stuff.

Nathan:

Right, that’s incredible. That’s such a [crosstalk 00:05:30] story. That’s quite the experience. So I got to ask, what ended up happening with the shoes? I mean you went to the trade show, they sold out or do you still got some in your house right now?

Djamel:

No man, I think I sold the three pairs at the trade show. So I had all this inventory, but the amazing thing is I actually had a partnership with a website called KGB Deals and they were kind of like Groupon and I didn’t know anything about marketing at that time. I kind of did SEO, I did some Google Ads, so I was generating some sales here and there, but they were like, “We want to do an email drop for you.” So they did a email drop, and I was sitting at my desk and all of a sudden a hundred sales come through. And I was like, “Holy shit, that’s amazing.” And I hit the refresh button and it was 200 sales [inaudible 00:06:22], 300 sales. And I was like, “What? Oh my God.” And I think in that day I made $20,000 [crosstalk 00:06:30], 1400 pairs of shoes. I forgot what the math was, but it was like $20,000 and I was a young, early 20 year old kid and I was blown away. I was like, “Okay-”

Nathan:

“Yeah, I’m rich now.”

Djamel:

[crosstalk 00:06:43], I’m rich, I’m rich, I’m rich, yeah. And then I called up all my buddies because I didn’t know how to ship any, my girlfriend at the time, my friends, I was like, “I’ll buy all you guys pizza’s, can you help me box this stuff?” I was literally copy and pasting, shipping using PayPal and copy and pasting [inaudible 00:07:02] number into the software and it was a nightmare, nightmare, nightmare. Oh my God, me and my girlfriend almost broke up that week. Just fighting about how to package it and… Yeah man, so yeah, I realized at that point I needed to get a fulfillment center. Then that was a whole nother [crosstalk 00:00:07:24].

Nathan:

Right, right, so let’s flash forward a bit, I want to learn more about Organifi and what you’re up to, but before we get to the 150 plus million dollars in sales and just the incredible growth and success you’ve had, I want to learn what was the first manufacturing experience with Organifi, what was that like? Because a lot of people always wonder, how do I produce supplements and vitamins and there’s so many details and certificates that you need to have. I mean that’s a whole nother world.

Djamel:

Oh yeah man, it was way more complicated with supplements because ingestible there was a whole bunch of FDA guidelines, supplement facts, supplement facts versus nutrition facts. Organic certification versus USDA versus non-GMO. Yeah, it was a whole ordeal. So the first round, I went to Expo West, which is a massive manufacturing convention in Anaheim. And I met like 50 different manufacturers and I started just hustling, getting samples going. We looked at our data and analyzed what ingredients would be the most optimal in terms of health, but also in terms of what the market wants, what ingredients are hot, right?

Djamel:

So then we took all those 11 ingredients, put them into one formula, and then we went to different manufacturers and said, “Can you make this taste good?”

Nathan:

Got it.

Djamel:

Because now it’s all this amazing stuff, but it tastes like green sludge [crosstalk 00:00:09:00].

Nathan:

You’re mixing it in your kitchen, you’re like, “All right, I need to figure this out.”

Djamel:

Yeah, actually we were doing that in the beginning, just mixing stuff together and oh my God, it was a disaster. And realizing that you can’t just mix stuff and have it taste good, you have to blend it, and pulverize it, and then spray the flavors on while it’s mid-air and it’s the whole process to make algae taste like…

Djamel:

So I talked to 50 different manufacturers, looked at different private labeling, realized that custom formulation was the only way we could ever go to make it what we wanted. And then placed that first PO, went through a whole bunch of certifications. It probably took about a year and a half actually for that first formula. First [inaudible 00:09:55] a year and a half. Yeah, all the USDA organic certifications, all the micro testing, all the… It’s just crazy. A year and a half of that first one.

Djamel:

And then when we launched it, it was a similar experience, we had only ordered about 3000 units and we had a community already built. So the audience absolutely loved it and we sold out in three days.

Nathan:

Wow, wow.

Djamel:

Yeah, we had no expectation.

Nathan:

Wow, [crosstalk 00:10:27] did you have the shipping set up this time or did you have to pack the boxes in the house again?

Djamel:

Oh my God. Yeah, so luckily I had the shipping set up, I had the shipping set up… Well, actually with the same fulfillment center that I had used for my shoe company.

Nathan:

Oh, there you go.

Djamel:

And so I had that relationship already and I knew how to integrate it. And I previously used a software called ShipZOOM or ship…

Nathan:

Okay, [crosstalk 00:10:55]. It’s just a software to print the labels and track stuff [crosstalk 00:10:58].

Djamel:

Yeah, and then now it’s all automated, so it will upload everything and it was all clean.

Nathan:

Right, that’s great. [crosstalk 00:11:04] So it was fortunate that you learned through the shoe company that you needed a fulfillment center.

Djamel:

Yeah, oh my God, imagine selling and shipping 3000 units it’s like [crosstalk 00:11:11].

Nathan:

Yeah, three days, that’s a whole lot.

Djamel:

[crosstalk 00:11:16] we were using Amazon at first, they wouldn’t ship international. Anyway, so much chaos.

Nathan:

Right, right. So I’m curious too, I mean now you’ve expanded your product line with so many different supplements and products. Walk me through that process of, how do you and your team now validate an idea? You come up with a concept, how do you go through the process of validating an idea before you go scale out the production run to hundreds of thousands of units?

Djamel:

Totally, so we use… to prove out an idea, first we… I mean the basic level is surveys. So now we have a existing customer base. So we survey the customers, we do focus groups and then we use a lot of actually just industry data, not necessarily what we’ve realized. So one time we made a turmeric product, a turmeric capsule and we’ve got the launch ready, we’re getting ready to blow this thing out. We had a YouTube video that got 7 million views in one [crosstalk 00:12:19] turmeric, and that’s where we’re like, “Okay, data says, this is a winner.” We launched it, $6,000 in sales. It was just a absolute dud, absolute dude.

Djamel:

And what we realize now is that everything is a test and at the level that we’re at we’re actually willing to make massive bets. So now how we test, we do the surveys because it’s still intuition, it’s still not how we test, we actually do a launch and we launch multiple products throughout the year and then we cancel out the losers and we keep the winner. And so we’re actually really heavily investing in R&D and new product development and we’ll go into a full production and risk everything.

Nathan:

Wow, wow, that’s amazing. Yeah, so I’m curious now that you have so many customers around the world a lot of questions come up around fulfillment, are you fulfilling out of one location, do you have international fulfillment centers? I mean, walk us through the process of how you’ve really organized fulfillment to be efficient and cost effective and of course have a great customer experience.

Djamel:

Yeah, totally. So, first and foremost is the customer experience. Speed right now, everybody expects two day shipping. We are at about 3.5 and that that has taken an amazing effort on a [inaudible 00:13:53] part. Hitting two day shipping it’s just, it’s a whole other level of… I think Amazon actually has their own trucks and stuff like that. So we have one fulfillment center in Boise, Idaho and then one in Kentucky. And so we have kind of East and West that allows us to really shave off at least one or two days. Because it takes about one or two days to go across the United States.

Djamel:

And then what we did is, it’s actually called the, I forgot what it’s called, it’s a spaghetti diagram of the life cycle of a product. So from the moment it’s manufactured, where does it go to get packaged and then where does it go to the fulfillment center? We had to optimize all that time, so that we also have basically just in time manufacturing. So right [crosstalk 00:14:47] stock, the new production run is already timed to be delivered at the moment it’s out of stock. So then our warehouses aren’t holding hundreds or millions of dollars worth of inventory, we want to keep that super, super low so that we can use that capital to run advertising instead.

Nathan:

Got it, that makes a lot of sense. Because I think a lot of eCommerce companies, they play this dance between having too much money in inventory or too little to spend on marketing, it’s this really fine balance. It’s, it’s amazing to see how you guys have really solved this and figured it out. I got to ask, what’s one tool that your supply chain could not live without or your business in general could not live without?

Djamel:

Excel.

Nathan:

Okay, Excel, a little old school?

Djamel:

Yeah.

Nathan:

A lot of people rely on Excel. And then tell us, this is one of the final questions here, but you did tell us about one amazing… Or I don’t know if it’s amazing, but one a very interesting manufacturing experience you had. Can you tell us about one, either manufacturing disaster you’ve had or if a disaster doesn’t come to mind, a really success story where your vendors came in for your company?

Djamel:

Yeah, I mean, so I didn’t get to that part of the story, but after our first launch we sold out, so we were selling presales and we needed to do another production run. So the manufacturer was like, “It’s going to be eight to 10 weeks.” And we were like, “Oh my God. Okay.” So we switched to preorders and we told all of our customers, “It’s going to be eight, 10 weeks.” Eight, 10 weeks goes by and we’re like, “Where’s the greens powder?” They’re like, “Oh, actually you got stuck here. And the ingredients [inaudible 00:16:31] another eight, 10 weeks.” And we’re like, “Holy shit.” We had half a million dollars in preorders waiting, PayPal’s holding our money, merchants are holding our money. Then we’re like, “Okay, we tell our customers it’s going to be eight to 10 more weeks.” Eight to 10 more weeks go by, manufacturer is like, “It’s going to be another 10 weeks.”

Djamel:

So basically we had no inventory for six months and we got preorders and air for six months because manufacturers could not… We were a new company, we work with a new company, they can’t come up with that level of inventory [crosstalk 00:17:09]. So in essence, that turned out to be a blessing because we didn’t have the capital anyway. We accidentally crowdfunded an entire six months worth of inventory.

Nathan:

Wow, yeah. That’s amazing, that’s a great story. I mean, a lot of people wonder what happens when I run out of inventory and I can’t get more for a few months. I mean, you literally didn’t have inventory for six months, and…

Djamel:

[inaudible 00:17:36].

Nathan:

Yeah, that’s amazing.

Djamel:

Yeah and actually we recently, we had a manufacturer snafu because of coronavirus, right?

Nathan:

Of course.

Djamel:

And when you’re listening to this children, if it’s in 10 years from now you know there was a coronavirus thing that happened…

Nathan:

Right, right.

Djamel:

Our immunity products, we had four months worth of inventory and we sold out in four days. So another whole extravaganza [crosstalk 00:18:00].

Nathan:

Well, hopefully now you’re getting more preorders, right?

Djamel:

Yeah, yeah.

Nathan:

There you go. Well that’s amazing, really appreciate you coming on. Where can everyone find you and Organifi?

Djamel:

So you can check out organifi.com, Organifi with an I .com and I’m on Instagram, DjamelB [crosstalk 00:18:17].

Nathan:

Thanks so much for coming on Product Sourcing Stories.

Djamel:

Thanks, Nathan.