WITH THE SCENT LINEUP CHANGE WE RECENTLY ANNOUNCED, WE WANTED TO SHARE SOME CONTEXT ON WHY WE CHOSE TO PARE DOWN OUR OFFERING.
In a world where infinite product variety is accessible at the click of a mouse, you might wonder why a small business might choose to reduce its product offering by 80% overnight. The decision was the outcome of some tough lessons we learned, and we thought there was value in sharing them—whether you are running a small business yourself or just curious about what lies beyond our website. Be advised that this is a business story that goes deep into our financial and operational realities!
Let’s jump in.
The origins of our business model
Stephen and I started Keap in 2015 with the purpose of prioritizing connection and helping regenerate ourselves, our communities, and our planet.
In exploring our passion for scented candles, we came to see an opportunity to create a unique business model that would serve our purpose. That model rested on three complementary pillars.
Stephen and Harry posing for Aleya Lehmann in our old Brooklyn studio in 2018.
The first pillar of our business model:
Make our own products.
We chose to build up our own production capability for a few reasons.
Most crucially, we found that by making our own products, we could better control quality and innovate on the use of sustainable materials. We also valued creating a sense of place with our products through local manufacturing, having that tactile relationship to our products, and offering a window to it to our customers.
We also took some time to learn the constraints of making our own products. Manufacturing is not easy. The handful of contract manufacturers who make most of the candles on the market have experience to the tune of billions of candles. They have accumulated years upon years of engineering improvements to produce the highly complex variety of candle products you can find online.
How could we make a higher quality product at a reasonable price, when the industry was decades ahead of us in managing this complexity? Enter the second pillar.
The second pillar of our business model:
Keep it really simple.
Contract manufacturers are a little bit like those diners that have a 30-page menu where you can order pretty much any American meal you can imagine. There’s certainly a place for that approach, but you also know not to expect any individual dish to be amazing.
In the town where I live in NY, there is a beloved, award-winning Falafel takeout spot that is a local institution. They essentially have three items on the menu and make, hands-down, the best falafel I’ve ever had. While having a reductive menu is not the sole cause of their excellence, I doubt they would have perfected the art like they have done, if falafel was just one item on a 30-page menu.
So yes, you guessed it, we decided we wanted to be like the award-winning falafel spot. By having an extremely simple product line, we could focus on doing one thing really well. Our systems orient towards perfecting that one thing, rather than being able to deliver acceptable quality on many different things.
Besides being the only viable way we saw to achieve our high level of quality, simplicity had many other benefits. These center on the idea of paradox of choice, but that’s a topic for another post.
Aba's Falafel in Rhinebeck, NY
The third pillar of our business model:
Build long-term relationships with our customers.
When we started Keap, the dominant dogma for companies starting online was to raise millions of venture capital dollars, and then spend them all on Facebook ads, supplemented by heavy, unsustainable discounts. Gain lots of one-time customers, lose lots of money. Raise more venture capital funding and repeat the cycle.
For a number of reasons, we didn’t want to go down this route. We had a dream of creating deep connections with our customers. Stephen would talk about the idea of the “extra sausage” that the local butcher might have thrown into a longtime customer’s order. (This philosophical topic of the extra sausage could be a whole book in itself!)
In short, we wanted to focus on a smaller number of tight customers that we took really good care of, rather than lots of one-time faceless transactions.
A bit by accident, we came to discover after a couple of years in business, that our candle subscription most aligned with this idea.
There were financial benefits: mainly the predictability of cash coming in, which for an independent small business is a huge deal. More significantly, we found we were getting to know our subscribers by name and exchanging real moments of mutualism and compassion with them. Once we hit a certain volume, we found that the subscription evolved into its own artistic, experiential, communal, and seasonal journey. That journey also connected us to each other, to the seasons, and to people, places, and biomes whose stories were told through our seasonal series.
Ashley and Philip inspecting candles in our Kingston studio in 2021
In reality, it took us two or three years to completely understand what our business model was.
We came to a clarity around its three interconnected components:
Make our own products in-house to achieve the highest quality and innovate towards a vision of regeneration
Keep our operations really simple and focused; don’t spread ourselves too thin and do one thing really, really well
Build our business around a smaller group of long-term customers, primarily through our seasonal scents subscription
All was well in Keap world! That is, until we slowly loosened our hold on one of those principles, which in turn made the other two increasingly difficult to maintain.
Losing track of what we’re good at
In November 2022, we experimented briefly with selling wick trimmers on our website. Those trimmers played only a minor role in our story last year. But they illustrate well a fundamental constraint we need to deal with as a small high-end manufacturer.
To start, offering a totally new product—no matter how small or basic—means developing all sorts of new procedures: How do we package them into a candle box that wasn’t designed to also hold a wick trimmer? What do we do if we receive an item that looks damaged? What packaging do we need to order, stock, and keep track of to ship the trimmers? Where do we store them?
Each of these questions becomes an opportunity for mistakes and a page worth of new instructions that every new employee will need to be trained on.
The wick trimmers we sold briefly in 2022 (We have exciting plans for v2!)
By adding an item, you also have one more thing that needs to be watched closely to not go out of stock. When we unintentionally stock out of something, it means we need to spend time notifying (and disappointing) a customer and then figuring out how to make it right. It means a number of candles that we would otherwise have shipped are now sitting on the shelf, waiting for another item to return in stock. It also means our shipping team has to spend time sorting through shipment orders to identify which can be shipped out and which need to be put on hold.
In addition, since we’ve now placed the wick trimmers somewhere convenient in our packing area, we’ve moved other items slightly further out of reach. That means we’ve slightly increased the amount of time it takes to pack any of our orders—not just the ones with a wick trimmer.
You might be thinking: “Big whoop. So what? Are you seriously saying that taking an extra second to reach for something puts your whole business model in peril?” [OK, you’re probably not thinking that, but the grouchy troll inside my head is.]
And the answer to that is no. Of course we can handle one extra arm reach. But when you consider you experience these wastes hundreds of times a day, and when you have not just wick trimmers, but dozens of different complexities you add in, then yes. It becomes the difference between us getting your shipment out to you a day after you ordered or a week after you ordered. It creates the kind of complexity that requires sophisticated engineering systems to handle. As someone working in that space, it feels messy and draining.
Our original lineup in 2016
(Notice we didn't even have the name on them yet!)
We started with only four items for sale, but by the end of 2022 we got to a point where we had dozens. We effectively had 12 scents in stock. Each scent meant at least three different items of stock (known as “SKUs” in manufacturing jargon): subscriber candles, gift-box candles, and baby tealight candles. We had another few dozen variants of items that were added as “exceptions” over time.
The consequences of our runaway complexification were felt painfully in 2022.
Even as our team members were getting more and more skilled and our systems were improving, our costs to produce and ship a candle were going up, not down! Even with our price increase in April 2022, our margins were getting worse and worse, and our losses started to mount.
Even more distressing for me was seeing for the first time a significant number of quality complaints from Keapers—mostly related to the first launch of our own candle wax. In hindsight, this launch would have been so much easier to manage were we not carrying the burden of all this complexity.
Lastly, this complexity meant we found ourselves feeling like we continuously had to sprint just to stand in place. Expansive ideas like developing a new scent felt impossible to take on.
"In short, we had gotten to the point where we were taking on the costs of offering dozens of products very few people wanted, at the expense of our core strengths, our business model, and the ability to offer our customers what they want from us (which also happens to be what we want from us!)."
It was only towards the end of 2022 that we came to this understanding. Both Stephen and I had experienced difficult years on a personal level, and we hadn’t had the capacity to see the bigger picture of what was happening in our business.
What we were experiencing internally had to be reconciled with what you (the Keapers) have told us in conversations, surveys, emails, love letters, and even where we see dollars come in. In terms of products, our seasonal subscription is overwhelmingly our most popular offering. We also have a huge contingent of Wood Cabin fans who love receiving it month after month.
Beyond that, our customers care about and appreciate our quality, our attention to detail, our personal touch, our approach to sustainability, and our integrity.
Meanwhile, you’ve told us loud and clear what you want to see us improve and change: new scent launches, continuing to pioneer regenerative materials and practices, and ways to get better pricing.
In short, we had gotten to the point where we were taking on the costs of offering dozens of products very few people wanted, at the expense of our core strengths, our business model, and the ability to offer our customers what they want from us (which also happens to be what we want from us!).
Our vision and the possibilities this change opens up
What new doors will open up when we’ve made our systems simple again?
Firstly, the change is going to allow us to operate much more effectively and reliably. It will mean faster shipping and more consistent quality. In other words, it will make us stronger, more viable, and more resilient.
Second, it will help with costs and cash flow. One part of the story is that 2022 was a financially unsustainable year, and we need a big change to continue to exist. The other part of the story is that it opens up the real possibility of actually reducing our prices down the road. In fact, by eliminating so much complexity, we are able to add a new lower-price way to purchase our candles each month, starting in May.
"When we first discussed the idea of reducing our catalog from twelve to two scents, it seemed completely bonkers, perhaps even self-destructive. We had to overcome a lot of internal resistance."
Third, the change opens up space for us to work on new scents!
(If you want to join our Keaper lab, and be involved with the process, email us at email@example.com.)
Finally, by getting back in tune with the fundamentals of our business, we’re able to build sustainably and generate surplus to invest in our product, our team, our customers, and our purpose.
Hoping to soon be making my serious fragrance-design face more often!
When we first discussed the idea of reducing our catalog from twelve to two scents, it seemed completely bonkers, perhaps even self-destructive. We had to overcome a lot of internal resistance (in the form of that little troll I mentioned earlier).
Ultimately, gratitude is what allowed us to tell that troll that perhaps its energies could be better deployed elsewhere. Gratitude that we get to do this work. Gratitude for the support we get from this incredible community.
Thank you for reading all the way through. I hope this was enlightening and brought you a sense of what went into the decision. If you have any feedback or reactions you would like to share, as always, send us an email at firstname.lastname@example.org.
Keep the fire burning,