Hello, beautiful teahearts. Let's chat.
It's no secret that your fave indies have been going through it these last few years. We've seen a ton of our fellow small businesses do everything right, work hard and bring immeasurable value to their communities, but still go out of business. Conditions are constantly shifting for us behind the scenes, and there's way more adaptation, struggle and sacrifice than you see.
I firmly believe the only reason our brick and mortar has stayed open when so many others have shuttered is because we are willing to be vulnerable, raw, and frankly embarrassed by asking for help. We've seen conditions get more and more hostile to small businesses over the last few years, particularly those of us in product-based, import-heavy businesses. From tariffs to base cost of goods increasing to folks having less money to spend, we're all barely hanging in.
There are so few true community-based third places left. We're committed to being one of them, and to keeping our brick and mortar doors open through the hard times. We want to be your second home, your connection hub, your bubble of refuge. This is extremely important work, and we've done it well for nearly ten years in our physical space (for sixteen years online and at events, can you believe that?).
In light of The Struggles, in light of our believe in transparency and mutual investment between community and community spaces, I'm here to deliver you a status update today. I'm a bullet point girly, so let me break this down into four categories.
1. What pain points are killing us?
- Increasing cost of goods, rising cost of living and rising cost of shipping are all conspiring to narrow our margins to unsustainable levels.
- Demand has shifted from equally in-person retail, wholesale, online retail, event boothing and education/shop event ticket sales to almost entirely online retail sales.
- Revenue growth is falling behind expense growth, causing us to take on more debt to maintain operations.
- We did not have our usual "Second Christmas" aka Pride rush this year. The early fall surge in the brick and mortar did not manifest. Our in-person sales are about half of what we've seen in previous years.
- I personally keep working longer, harder hours with fewer and fewer resources.
2. Why these are killing us?
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Narrowing margins mean we can't get ahead of demand by buying in greater bulk, staffing more folks, and otherwise preparing ourselves to take care of you to our established standards of fulfillment speed.
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We built our entire business model on a diversified revenue system that worked brilliantly for over a decade...then suddenly changed with no indication that was coming and no infrastructure to support it. The whiplash of changing demand distribution across our revenue streams is not something that can be reasonably adjusted on the fly. It takes time to make changes to meet new conditions.
- Bonus round: we had a couple of posts go viral on social media in the middle of our big fall sale, so we were hit with a huge wave of emails and orders that we couldn't have anticipated or prepared for. It's still kicking our butts a month later.
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We now have areas of our operation that aren't pulling their financial weight and are costing us more money than they're bringing in. We have to analyze and shift our approach in a number of places to keep these formerly-profitable areas from dragging the still-functioning areas down with them.
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I am going to drop dead of a heart attack at this rate. I wish that were hyperbole, but it is not. I have a heart condition and the stress is slowly killing me. Additionally, I've been surviving for ages on almost no pay. Literally, I pay myself only the bare minimum to keep my family housed and fed, the company payroll owes me over $13k from my own deferred payroll. Better me than my crew, who are always fully paid. I stand by that, but OUCH. I can't keep this up.
3. What are we doing to address these problems?
- We are reassessing our costs as quickly as we can. Shipping charges and free shipping threshold will both go up on 10/4, which we hate, but we've swallowed all of those ballooning costs we can. We are "killing our darlings," eliminating products we can't consistently source or that don't sell through as quickly as we need. We are minimizing freebies and discounts, which used to work with our margins, but no longer do. This means samples in shipped orders are decreasing to one free sample per order, full stop, regardless of order size. We'll also be running fewer sales, and discontinuing Thirsty Thursdays. You can count on us still maintaining our clearance section for optimal freshness and rotation, and we'll keep our quarterly crossover sales, but that's it.
- We have plans to boost and rebalance distribution of demand. We'll be running more community events, popups, classes and other events in the store to bring more folks back out to our storefront. We're simultaneously increasing our labor to the degree we can afford over at the online order fulfillment center to help boost fulfillment speed for online customers. Between the boosting of crew filling online orders and the drive of more people to the storefront, we anticipate a return to standards of service.
- We're continuing to cull the "weak link" blends. You've seen us cut blends from our rotation over the past year. This has been very helpful in reducing our total number of SKUs. The more products we carry, the higher our overhead. It used to work just fine, but doesn't anymore. We will have to cut a few more things: custom modification on any and all orders by demand, off-season micro-batching to name two. We love being able to offer you super customized tea experiences, but it does not scale. My desire to say "yes" to you all is literally killing the business at scale. In a better, more stable future, I hope we can offer that again. For now, we can't.
- We have to do whatever it takes to first pay our people (yes, including me), then pay our bills, then bring in cool and exciting teas and rare ingredients. Our key to survival is going to be minimizing our SKUs wherever possible. This means we're reducing our gorgeous new packaging down to only one colorway rather than eight and continue to eliminate products that don't pull their weight. We're cutting what makes sense to cut, but never will compromise the quality and ethics behind our sourcing.
4. What can you do to help us survive and thrive?
- While we're making these adjustments, please do keep shopping with us. We've had surges and dearths of sales, causing a "feast or famine" cycle that is either keeping us way too busy and slow or struggling to bring in any sales at all. We encourage you to keep your tea purchasing steady rather than doing a huge "we have to save the tea shop!" burst every few months that gets our tiny team us in the order weeds.
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Online customer? We've seen average online order size shift from 3-4 teas to 20-30 teas in the past year. We've seen average daily orders shift from about 10-15 daily orders to more like 30-50 daily orders. We blend to order by hand in small batches, so you can see how quickly and exponentially this shift has slowed us down. It's just math! We want you to have everything you want, but we have to ask your patience as we adjust to meet the new shape of demand. It takes time to pivot and get back to our standard fulfillment times. We are filling all orders. We are getting to you. We just need to ask your grace and patience.
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Local to Seattle? Come into the store and buy the already-blended product on the shelf (all on-hand inventory is debt until sold), save yourself and ourselves the shipping cost, get your instant gratification! Truly everyone wins when you come see us in person as much as is possible for you.
- Please do continue to share your Friday Tea love with friends, engage with our social media posts, rock that word of mouth and buy holiday gifts as early as you can. Every drop helps fill the bucket!
- Yes, we do absolutely need a cash infusion to keep up with rent and not get evicted. That's the area where we're most behind and things are most time-critical. Any gift cards, in-store sales, or purchasing of ready-to-ship items will save our butts without contributing to our backlog struggle. We can ship out tea pets, samplers, matcha or houjicha tins, caked teas, teawares and clearance items right away. If you only have these items in your cart, they ship way faster and we can clear them from our queue right away. We also have a tea shop financial health fund you can contribute to if you have cash burning a hole in your pocket and don't need or want more tea right now.
As I mentioned at the beginning of this post, it's always mortifying to come to y'all (many of whom are equally struggling) to ask for communitea investment so we can survive the fall of the empire. History indicates that the current struggle is the ugly side of a pendulum swing and that we will return to the stability and operations health of the first 2/3 of our business life. The trick is surviving the downswing.
We feel our work is vital. Yes, it's "just tea," but it's not, you know? Tea is humanity, it's soul, it's the opposite of isolation and despair. Our work is to provide that third place experience that makes life worthwhile, and we do it so well.
This company is not funded by generational wealth. I don't come from a tech money background, I didn't marry into money, we don't have investors, we've never been awarded any grants. Surviving the current economic climate is a nigh-impossible task without those things.
We are doing everything we know how (which is a LOT, as you can see) to ride the rough tides and make our way back to port. The reality is this: if we can't turn this around this month, we'll have to sacrifice the brick and mortar and make a strategic retreat to online-only status until conditions are more favorable.
That would be the nuclear option and would break our hearts. We hope to avoid that option, and we are once again asking for your patience and support while we make the necessary adjustments for survival. Thank you for your love. Thank you for believing in us. Thank you for staying at our tea table while the world burns.
xoxo, Friday
