Fred & Friends

New Year News from Fred

‎Posted January 04, 2008 in . Tagged with .

My apologies for letting the blog go dim and quiet since November. We’ve been jammin’ on the new line, and we didn’t even have time to brag about getting FOUR items on Oprah’s Christmas shopping list, two recommendations in Food & Wine, and other press in Bon Appetit, Wired, and Dwell. Check out the link on our home page to 30 totally cool (alright, pretty cool) new Fred items. But wait…there’s more news….

2. We’re sorry if we left your stocking empty this Christmas. Over the holiday season we disappointed (or, more likely pissed off) more than a few of our customers with back-orders and late shipping. For this I really want to apologize -- we’ve learned that success can be as challenging as failure! Our business was up by more than 70% last year and every time we thought we ordered enough stock, we realized we didn’t. Deliveries from China were frequently late due to labor shortages and our fussiness about quality-control. Some new items were delayed and replenishment was spotty, and then on top of it all we didn’t have the shipping staff to stay current when everything cranked up in November. We’ve absorbed all this and learned from it and we hope you’ll see an improvement this year!

3. We’ve had to raise a few prices. We’ve been absorbing price hikes from our suppliers for many months, so this adjustment is actually overdue. Most of the increases are quite modest and we are confident that Fred products continue to deliver great value. Nevertheless, I’d like to explain my point of view on why prices are trending upward…

Improved working conditions in China come at a price! There are interesting social trends afoot in China. The government realized that food production was lagging behind population growth and took steps to reduce migration from the farms to the factories. This has created significant labor shortages in the new towns where our products are produced. If a factory doesn’t provide clean dormitories, wholesome food, recreational facilities, and most importantly competitive wages and safe, comfortable working conditions, the good workers leave. Of course this is a great trend for Chinese workers, and good news for every right-minded person, but increased factory overhead and wages inevitably results in higher prices.

Inflation is everywhere - could it be the cost of oil? As everyone knows the Chinese economy is growing by leaps and bounds and it’s experiencing tremendous growing pains. Here’s an example – the government used to place strict controls on the price of electricity. As factories expanded many areas began to experience power shortages, so the government removed price controls to spur construction of new generating plants. They let the market set the price, and cost of electricity has dramatically increased. It’s a similar story with trucking, shipping, and each and every raw material. When pressed, suppliers always point to the cost of oil as the driving force. Need I say more?

Ensuring safety and quality is expensive (not to mention a full-time job). In my humble (?) opinion the main cause for the recent safety scandals in the toy business is that many toy companies squeezed their vendors for rock-bottom prices, then looked the other way and satisfied themselves that a safety test was adequate to ensure safety. I believe that product safety and quality begin from the ground up – choosing vendors who own their own factories so I will know exactly where and how the products are made; selecting factories who have made the investment in ISO 9000 certification, so they can monitor and control their processes and systems; specifying the correct materials from the best suppliers; paying a fair price; and checking production at every step. The suppliers who can meet our standards charge more, but you get what you pay for.

We’re taking recycling seriously. This year all our new products in plastic packaging use PETE (#1) blisters and boxes, which cost 20% more than PVC. PETE is the material soda bottles are made from, and is the most successfully recycled plastic (think polar fleece). It may also be incinerated, leaving only carbon, hydrogen, and oxygen behind. Ultimately we’d really like to package ALL our products in recycled cardboard boxes, and I would love to have input from both retailers and consumers on this subject.

The Dollar ain’t what it used to be. If you’ve traveled to Europe lately you know this for a painful fact. The American government is pursuing a weak-dollar policy to assist American exports and support a more even balance of trade. This may be great for Boeing but it hurts the consumer. The Dollar has already lost around 10% in real buying power against the Chinese RMB, and the tom toms are beating steadily in China and Hong Kong for further and more dramatic erosion.

Well that’s enough heavy reading for now! The good news is that Chinese workers are definitely leading better lives, business is great, and we’ve got lots of new ways to put a smile on your face this season. So Happy 2008! And keep those bouquets and brickbats coming my way…

Fred