Shark Energy Drink Still Haunts Me...

In 1995, my parents purchased their first gas station. I was 10 years old at the time, and started working there on the weekends and over the summer when school was out. I remember I would have to climb up on a stool to look over the register to ring people up.

My first taste of business was at the gas station. Each week, wholesalers would send their sales reps to our stores and get purchase orders from us. The next day, the wholesaler would deliver the product. Let me give you a concrete example. On Tuesday, the Budweiser sales rep would come in and say “what Bud products do you want more of”. We would tell him, and then he would tell us about sales they were having and new products they were introducing, and we might add those onto our order. The next day, the Budweiser delivery driver would show up with the stuff we ordered, and we’d write him a check on the spot.

Over the summer, I often dealt with these sales people since I worked weekdays.

I have two really vivid memories of doing this type of merchandising (only later did I realize ordering from the Bud guy had a fancy name so that college graduates could do it without feeling bad).

First, a Miller sales person came to the store. I was probably 13 at the time, and walked with him to the cooler to get the order going. I remember being like “we need two cases of miller high life, and one case of miller lite” and he was like “are you authorized to do this.” I laughed so hard.

Second, and more importantly, was Shark Energy Drink. Shark became my archenemy. If you’ve never heard of Shark Energy Drink, you’re not alone. You shouldn’t have heard of it. It is a terrible brand. But one day when I was about 17 years old, a sales person comes in and says he is selling Shark Energy Drink. “Are you interested in selling any?” he asks. This is when Red Bull was crushing it, and competitors like Celsius and Monster still hadn’t been born (or at least didn’t have great distribution).

It’s important to note here that while some wholesalers had a separate sales person and separate delivery person, smaller wholesalers didn’t do that. The salesperson and delivery person were the same. That was true for Frito Lay, and for Shark.

The Shark guy comes in and is like “we’re a new energy drink and killing it, especially among hispanics. They prefer us to Red Bull.” Fuck, hispanics like it I thought? That’s my demographic! So I said I would order three cases. That would last me a month, until he was back to take the next order.

And then the Shark guy said he had a deal going on. Buy 10 cases and get 10 free. Great! I’ve got two gas stations actually, so I’ll sell 10 cases here and 10 there. I’ll keep the same price as Red Bull ($1.99) and double my profit when people buy Shark. I took the 20 cases (and paid for 10). I stocked them right next to Red Bull and even gave them two facings so it looked like they sold well. The next time I drove to our other store, I took a few cases of Shark with me and loaded them up there too.

After a week, I called the guys down there (my Uncle ran the store) and asked him how it was doing. “Not selling” he said. Fuck, it wasn’t selling here either.

A couple weeks later, my mom was giving me grief over it. “Why are there so many cases of Shark in the backroom” she asked me. I had no good answer. Looking back on it, the answer was a mix of stupidity (that was a huge order for a new untested brand), bravado (I wanted to look good in front of the sales person like my store was busy), and not understanding brands.

The Shark sat in our store room collecting dust until it was going to expire in a month. Then, my mom moved a cooler right next to the register and filled it with ice. She priced the shark at 99 cents and we sold out of it before it expired (or maybe after it expired 🤣). But everyday I came into the store and saw it there, I felt ashamed.

I can’t tell you how much that experience taught me in terms of running Native. It may seem bananas that working at a gas station and buying energy drinks was the seminal experience that informed the backbone of our operational strategy at Native, but it did.

I think of that story often, and here’s what I took away from it:

• Dip Your Toes In

  • This Shark guy was coming once a month and I was stocking up on buying a new item for a month so I wouldn’t run out of stock? Was I dumb enough to buy enough inventory to make sure I didn’t run out, rather than buy enough to see if it had velocity and then would buy more in a month? It turned out the answer was yes, I was that dumb.

  • This informed me at Native in so many ways.

    • When we placed our first order with our Etsy supplier, I only ordered 100 units. That’s actually less than the number of Shark Energy Drinks I ordered from that dude. I wanted to see if I could sell the product before I made a ton. I didn’t want another Shark Energy Drink on my hands. I remember telling my brother that when I placed our first order.

    • We created seasonal scents at Native so we could dip our toes into other scents. Did people love them? Great. Lets make it a permanent scent and make money off of it. Did they hate them? Discontinued, as planned! This was a great way to dip our toes into things without overly committing. I would rather sell out of a seasonal scent early, rather than have too much stock when it was over. Paradoxically, I feel like operations people are always incentivized to over order rather than under order. They always get shit if they run out of stock, but never get much shit if they over order.

• Just In Time Inventory

  • This is the holy grail of business operations. You want inventory just before you sell the item, and not before. That means you keep your cash in your pocket, until your customer comes and buys the item from you. Why? Many reasons:

    • Low inventory. You can live with low inventory, because you are making products as people are selling them. That means you don’t have a ton of cash tied up in inventory, even if the inventory is moving. You can use your cash to do other things.

    • More flexibility. Want to change your “BEST SELLING” scent that is 50% of your business? We did at Native. It’s hard to do that if you have six months of inventory of Eucalyptus & Mint in your warehouse, because when you move it from your BEST SELLING scent, you’ll go from having 6 month of inventory to 16 months. It’s easy to do that if you have only two weeks worth, because you don’t have too much and will sell through it fast.

  • At Native, we had just in time inventory. Our manufacturer produced Native Deodorant literally every day. That allowed us to start Native with very little cash. In addition, as we grew the business, she grew her business so that we were all rising together.

• ATC and Post Purchase Sales

  • My mom moved the Shark Energy drink into a cooler and put a 99 cent sticker on it and it sold out without a few weeks. Real estate near the counter is prime. So is your Add To Cart and Post Purchase Pop up. In fact, when I talk about these pop ups with my family, I talk about moving the products in those pop ups (travel sizes, 3 packs) closer to the counter.

  • While you can move products that are about to expire or that you really need to get rid of closer to your counter (something my Mom would do for sure), I like to put products there that will delight customers + improve retention rates.

While this has nothing to do with Shark Energy Drink, if you run an ecommerce business and are looking to manage inventory, you should use Fulfil.io. Fulfil didn’t pay me to say that (this isn’t sponsored) but I am an investor. A few of my brands use them, and as a result, they will never have a Shark Energy Drink moment.

When I get around to writing my next post, it will be about how we iterated on products in order to improve Native’s retention rate. I promise not to mention gas stations.