Ep 531: The TikTok Strategy, Tariff Setback, and Product Pivot Behind Plufl’s Growth

0:00Yuki Kinoshita:We've had a very explosive start to our business, which set the trajectory for everything, but also created its challenges, right? Because we got so much attention while we were still small, that kind of opened the floodgate for thousands of knockoffs. Our Amazon agency said that it was the worst that he had ever seen. Near Google's top 100 trending gifts, that gave us a lot of exposure into pretty much every single gift guide that ever existed on the internet. Because we have like the followers on TikTok, we constantly get outreached by pretty big creators to want to feature our product or just want our product for free, which is pretty great.

0:36Yuki Kinoshita:Instagram creators, they charge an arm and a leg. For one reel, they want like$1 ,000. It's outrageous, right? But TikTok creators are just much, much cheaper. And there's just so many more of them. So what we do is...

0:53Yuki, welcome back to the D2C podcast. I am looking over at my pluffle, which I have to say my dog has claimed. It's kind of just become his giant bed, but still a huge fixture in my life. Love it. It's been almost three years, two and a half years since you were last on the podcast. We were just discussing, I think you were just into pre-orders or just into fulfillment. It's been a wild ride. I've seen you on your controversial Reuters article. Welcome back to the D2C podcast.

1:19Yuki Kinoshita:It's great to be back. Thanks for having me, Eric. Yeah, I think the last time I was on the pod, I was still living in my co-founder's parents' house. Things have gone a little bit better since then, definitely not without its challenges, but yeah, it's been a fun ride and still happy to say that we're standing, we're still in business and things are looking up. Super cool. Well, walk me through some of the big developments, the growth that you've experienced kind of since last time we talked. Yeah. So honestly, I don't exactly remember where we were at last time, but I think if we were still in the pre-order phase, fortunately, we're not in pre-orders anymore.

1:56Yuki Kinoshita:We went on Shark Tank, which was a really cool experience that kind of catapulted a lot of our growth and success. We've now also launched multiple new products, which have kind of added a nice chunk of revenue and have kind of been our strategy for continued growth and expansion. And also, this year was supposed to be the year of retail, which we can get into later. But unfortunately, things kind of took a turn with the tariffs. And we are looking to expand into retail next year. But it was definitely unfortunate. it, made a LinkedIn post about it, but we lost out close to$7 to$8 million worth of revenue, retail orders.

2:35Yuki Kinoshita:Wild. Because of the tariffs. And, you know, that's just the nature of when you manufacture something overseas. You know, you don't fully control your supply chain, you don't fully control your costs. It's, you know, it's not expected, but it's part of the game. So yeah, we're doing well. We're launching a new product this month as well. Very exciting. Going to be a really cool product in a vertical. and yeah, just finding new ways to grow within, I will say, a challenging DTC commerce environment. Well, so we just put out a survey a couple of weeks ago. We had surveyed over 600 DTC founders about the impacts of tariffs and everyone seems to be handling it differently.

3:13It's affecting people differently. Walk me through that process of the actions you took once you realized that tariffs were going to be a thing and how you've had to kind of change the business.

3:22Yuki Kinoshita:Yeah, so we try to get ahead of it as we kind of knew tariffs were always going to be something that was a risk to our business. But at the end of the day, there's only so much we can do when you're, you know, sub, you know, nine figure business. Hopefully, I think we should be hitting eight figures this year. But, you know, we're not a Nike. We're not a Lulu. We're not even a nine figure business. Right. There's only so much you can do at the end of the day. You're really only going to be manufacturing from one or two key manufacturers. but we did our groundwork. So we actually, this February, went to visit our manufacturers in China, but also visit our manufacturing in Vietnam.

3:58Yuki Kinoshita:So we had a potential option there that was ready to go. We had a final sample made for Voberto products. We have two flagship products now. One's the human dog bed, which is kind of behind me. Another is a cooling body pillow called the Huggle, which is a U-shaped body pillow that has a lot of cool features, like turns into a chair and stuff like that. And we have a third innovation coming this month, launching our website, which should be fun as well. But yeah, we kind of were getting all those products made in the Vietnamese manufacturing option. And then kind of as I was happening, we come back, we feel good about this option.

4:35Yuki Kinoshita:We're still a little bit uneasy just because of the high MOQ and also longer lead times that are associated with Vietnam. And also we don't have as much expertise. For example, we have an employee and it's a small team based out of China, but we don't have that in Vietnam. So we knew that it was kind of uncharted territory, but we always wanted to have it in our bad pocket. And then, yeah, we had a pending Costco order and also target order that was supposed to be for this Q4 launch. So we had a really nice kind of holiday launch planned with both those retailers, both like varying PO sizes. The Costco one was definitely larger.

5:09Yuki Kinoshita:and as that was all happening, we were supposed to receive confirmation in April. The team tells us, hold up, there may be news that Trump may impose a lot of tariffs that not just gonna change our retail plans, but their entire retail strategy, right? A lot of their products obviously come from China. So that kind of put us in a little bit of a panic, but we're like, okay, well, we'll pitch them a Vietnamese option. Maybe we'll go and try to find the US option, which was kind of what that Reuters article was about. That happened. Tariffs went up to like 150 % and the whole kind of retail space went into a freeze essentially.

5:47Yuki Kinoshita:And it didn't really matter where you were manufacturing. They just weren't really making any large decisions, especially not a large like one-time PO for the holiday season with a new product that they had never launched before. You know, we had gone from something that they were really excited about to this is a back burner. we need to focus on our essentials, toilet paper, you know, TVs, things that like really drive the core revenue of our business, not a novel product like a human dog bed. So yeah, we just kind of - Especially it's got a big footprint too, right? Like to actually display it in a store, it probably takes up a lot of space.

6:20Yuki Kinoshita:For sure. Yeah. I mean, we definitely worked a lot on the box. Our box is like maybe like 60 to 70 % smaller than what it was when we went on Shark Tank. So the box definitely doesn't take us much space, but each store kind of when we did a trial run with him last year, had it out on display. So yeah, for sure, it takes up a lot of space. And yeah, it's like, at the end of the day, like they rather prioritize something that they know for fact has retail velocity, like a TV or like, you know, a vacuum, rather than try something new that, you know, could be good, could be okay. Especially when consumer confidence could be lower, we don't know what it looks like, what we don't know what it's going to look like this Q4.

7:02Yuki Kinoshita:So yeah, that's what happened. We tried pitching an option out of Vietnam. We tried pitching an option out of the US for various reasons. At least the one in Vietnam didn't work out because they didn't know whether the tariff was going to go back up. And as we saw, it was at 7 % before. Now it's back up to 25 something percent, right? So they were kind of right in that, that even Vietnam wasn't safe from tariffs. And they also didn't know whether tariffs in China were going to come back down either. So it was just a really hard time to make any sort of decisions, no matter where your manufacturing was, because there was not a single country, as you saw, that was safe from the tariffs.

7:38Yuki Kinoshita:Definitely not Canada. So it was just a fun time. Yeah, not even Canada. So when you were looking at these two options, like Vietnam, were you also factoring in price changes? Did you have to absorb that into the price right away when you were thinking about this? Yeah, so the interesting thing about Vietnam is that actually their labor costs are cheaper. So when I posted this on LinkedIn, I got a lot of controversial comments, people saying, oh, you know, Chinese prices are so cheap because they don't pay their workers. You know, that's why these other options are more expensive. It's like that's actually not why, at least for our category, Vietnam is more expensive.

8:12Yuki Kinoshita:It's because of the materials, because all the materials end up coming from China anyways. And this is the same if we were to manufacture in the U.S. is that no one really makes this faux fur type bedding, pillow, cover material. really outside of China. For sure, there's a few other countries like India and stuff like that, but no one really specializes it and also makes it as much volume as China. So at the end of the day, no matter where you make it, it ends up coming from China. So that's what you're paying for when you manufacture Vietnam is that the additional cost, the shipping cost, and the transaction cost associated with getting it and importing it from China.

8:49Yuki Kinoshita:But also at the same time, they don't have any machinery. So for our product, we would have to invest or the manufacturer had to invest in getting certain machines to be able to make our product. So that's why they require such a high MOQ, because they're almost buying these machines just for us with hopefully, you know, other companies and manufacturers or brands also using the machines as well. But they don't have that guarantee. So, yeah, that's what really drives up the per unit cost in Vietnam. But overall, it kind of balances out. And the cost differences actually at this point aren't too significant.

9:24Yuki Kinoshita:So for some of the products that we're manufacturing, it actually would be a couple of dollars cheaper for some products if we were to make it in Vietnam. But we just don't because of the operational headache. And if we're not doing a huge MOQ or a huge run, it's really not worth saving like a dollar over 10 ,000 units, for example, when it could take like a month or two months longer than China. First of all, I think when this does hit retail, it's going to do well. It's just such a unique product. It resonates with people when they see it, when they lie down in it. So I think it's unfortunate that tariffs kind of scuttled that launch.

9:58But when it does happen, I think it's going to be great for you. Right now, I guess you're just stomaching the tariffs. Is that right? Is that you've just sort of like built the tariffs into the model in China for the most part?

10:08Yuki Kinoshita:Yeah, a little bit. So we did increase prices on our website a little bit. But also the tariffs aren't as crazy as they were at its height, right? So it was at, I think, like 26 % before Trump came. He had another 10%. And then I think it went up to 40 again, 40 something. And then obviously that whole war happened and it went up like 180, 170. Don't call me the number. I don't even know. No one really knows. It just went so high. So we just stopped ordering and we were in pre-orders for about almost two months just because we really couldn't make any decisions on buying. And we just knew that, hey, if we were to buy this product and actually pay that 180 % tariff, we're not going to be profitable.

10:46Yuki Kinoshita:Right. So we kind of just decided that if we did the math, it's better to, let's say, do 10 % of our orders as cancellations, but kind of hope that are expected. The tariffs go down rather than to like buy a bunch of units now and and lock in on profitability for the for April and May. So, yeah, that was kind of painful. It's just hard being out of stock, but still continue to spend on meta and still continue to acquire customers. But then I'm working out because the tariffs went back down to 40 something percent, which is still definitely higher than the beginning of the year. But with a few price increases, and we also have been working a lot on increasing our margins through other ways, such as we switched manufacturers.

11:26Yuki Kinoshita:That was big. But also, as we mentioned, we shrunk the box close again, 50 to 60 percent. And that in and of itself saves us about 10 plus dollars of land and cost. So, you know, if we sell 10,$15 ,000 a year, units just a month or even, you know, during Q4, we'll probably do that around a month. You know, that's 150K, 200K and extra profit or more money that we can use to acquire customers. So that has been a really core focus of ours. And that's really been a big help, especially now once the tariffs are lower, we've been able to go back to kind of growing and be able to acquire customers profitably because of the COGS reduction that we've been able to.

12:06Yuki Kinoshita:The fundamentals, right? Like that even if tariffs come and go, you're building, you know, fundamentals that are going to improve your business long term. Super cool. Talk to me a little bit about the Reuters article. I was saying I was listening to one of my weird MetaPolitics podcasts and the announcer was going off on this dog bed for human brands that was unable to produce in the US. And what a shame that was. And talk to me about how the Reuters article came about. Yeah, it was definitely a little bit sensationalized for sure. and it is a little bit controversial because I had a chat with a Reuters reporter about back in April when the tariffs first came out and the situation was very, very different then.

12:44Yuki Kinoshita:The situation was that, hey, these retailers aren't even talking to us. We're pitching them other options, but they're just not really talking to us and not getting back to us. And the reason being is that they were just so focused and busy and strapped with other things. Later when we had a conversation with them, And they told us that it was crazier than COVID, that the tariff situation created more of a impact and harm on their business and planning than COVID did, which is kind of crazy because COVID was like a global pandemic. But that's just how kind of insane these tariffs were for the retailers so that they just had no time or possibility to do any planning or forecasting for Q4.

13:24Yuki Kinoshita:No matter what cogs, no matter what price that we presented them, that wasn't really the issue. So that's what we found out later, right? But when we first had the conversation, I think I talked about how we had gone and sort of presented them a U.S.-made option because we were kind of not desperate, but we wanted to just make sure that we shot our shot and we had presented every option and there was not a stone unturned in terms of what we presented. So we presented the Vietnam option, the US option, the China option with the tariffs, China option if the tariffs went down. We presented every single forecasted option.

13:56Yuki Kinoshita:And we just didn't really get much of a response. And that's what I told the Reuters reporter. But then later, for some reason, I won't say he twisted it, but he kind of, I forgot about the article. Maybe we had like one brief chat afterwards after the tariffs went down. I was like, you know, we're going back to China. That was about it. And then we hear from the Walmart, our Walmart rep, that's like, hey, by the way, we got informed that this Reuters article is coming out tomorrow saying that Walmart does not want to support U.S. space manufacturing. And I'm like, whoa, whoa, whoa. That's not what I said.

14:35Yuki Kinoshita:And this is bad, right, for us because as a brand, one, that's not what I intended and it's not what I said. and two obviously it's a bad look on Walmart and as a future potential partner retail partner we we don't want that right that's that's definitely not a good look on us as a brand if we went out publicly saying that so I frantically called a Reuters guy and I was like hey like listen like I didn't say this like that's not what I meant none of these retailers like explicitly said that they don't want to make U.S. made manufacturing it's more just like they couldn't really address And also a lot of these retailers, we didn't even pitch them US-made manufacturing because we knew that, you know, from our internal decision, we knew what price point consumers are willing to buy this product at.

15:18Yuki Kinoshita:And we knew that the US-made manufacturing option was just not viable from the first place, right? So that's what was more important. Not the retailers saying, hey, like we don't support US-made manufacturing. It's more us saying or deciding that, hey, this is not going to work, right? As much as we would like for it to work, especially now we saw the tariffs went down, right? it makes even less sense to do a US-based manufacturing option. So that kind of caused a little bit of chaos. We got it fixed. The article ended up being really good for us, actually. Someone actually emailed us who owns, I think, a gaming studio that wants to buy 100 of these beds or something like that.

15:59Yuki Kinoshita:So we're currently in talks with them to do a wholesale order. He was trying to decide between us or Moonpod. And then also we saw a lot of like, uh, website traffic and, you know, we only, I don't think I only got like one DM that was like negative. That was like, you know, screw you. But otherwise, good press as they say, right? Right. Otherwise it was a good event for us and, uh, definitely boosted, boosted sales for that. And then how about the Walmart relationship? Was it, was it South? Was it okay? Yeah. So it was fine. Apparently, uh, the, the reporter is a little bit notorious for kind of, uh, making a little bit of, uh, exaggerated headlines that kind of catch people's attentions, right?

16:35Yuki Kinoshita:So they ended up being understanding. The article ended up not even mentioning Walmart. And the article also ended up being very neutral. So I appreciate the reporter for honestly being flexible and even listening to what I had to say. Because sometimes I've had experience with reporters that you tell them day before articles being published, hey, don't say this. They'll be like, I can't. I can't change what the article says. And that's what it was close to. But yeah, he ended up changing everything to kind of match what the reality of the situation was. When I think back on our first interview, I was like, these guys are already like seven, eight figure brand just because you had a lot of momentum.

17:14But to hear that you're hitting, you're looking at hitting eight figures this year, that's huge. Like in just the three years, like you really have fulfilled the promise of all that excitement in the beginning in a lot of ways. what have been the biggest growth levers between when we last talked and now to where you are approaching eight figures potentially this year?

17:31Yuki Kinoshita:For sure. And yeah, the number when we first started felt like kind of the dream, the goal for us. And now that we're actually probably going to hit it, it feels like, oh, you know what? Like eight figures is nothing. You know, you see all these other brands doing nine figures. And so it's like, yeah, it's kind of this endless cycle. And perspective is, I think is really, really important for us. Yeah. I think we've had a very explosive growth start to our business, which kind of set the trajectory for everything, but also created its challenges, right? Because we got so much attention while we were still small, while we were still just started, while we were still pre-orders, that kind of opened the floodgate for thousands of knockoffs at an unprecedented level.

18:11Yuki Kinoshita:You know, our Amazon agency said that it was the worst that he had ever seen in his lifetime of running Amazon brands. So that created its problems, right? So we knew that, you know, we had to pivot. Hey, we still want to kind of push this human dog bed brand, but we knew that there was a limit to how much we could scale this product profitably without kind of running to the wall of knockoffs that we eventually did, right? So that human dog bed product is actually still, you know, it's still a key driver of sales for us, but it's not our point of growth, right? The sales for that have kind of flatlined.

18:46Yuki Kinoshita:We don't really put too much marketing spend behind it. We do a lot of organic affiliate seating and we do a lot of organic content with it. But kind of our primary driver of growth has been that Huggle body pillow product. And which is great because the human dog bread product still has a lot of potential as, as we mentioned in retail. So when we did, we did a roadshow in Costco last year where we did 10 stores and we completely sold out of our inventory. We did about like, I think like six or seven units a day at a$200 price point. So we did about$1 ,500 to$1 ,600 a day in GMV per store, which is pretty good for a retail store, even during the weekday.

19:27Yuki Kinoshita:So the product did really, really well in retail, which kind of validated the fact that, hey, if we can bring a more affordable price point to retailers, this is a product that can do really well as long as we have the distribution. And then from an e-commerce perspective, we're like, okay, well, how do we kind of build out a more direct response product, right? That can convert year long. The issue with the human dog bed is that one, it's not super direct response. It's a kind of a novelty item. It's a nice to have, it's comfortable. It's a cool item, but you know, it's not a, you don't need it, right?

19:59Yuki Kinoshita:It's a, it's a fun to have, but it does really well during the holiday season. But as soon as the summer months hit, we saw this issue where, you know, sales would drop by 80, 80%, 90%. So we knew that we had to build a product that was more year long and had the ability to also convert well meta. And that came the Huggle cooling body pillow product, which does really well because one, it's a cooling product, right? Hot sleepers are hot all year long. Two, it's still kind of in line with our brand. It's still a big oversized product. And especially our past customers love the product because they know, you know, they know us for quality and comfort.

20:38Yuki Kinoshita:And, and the third point being is that it does really well from a meta perspective because it actually solves problems, right? So people that are hot sleepers are looking for a product. People that are side sleepers and have back pain are looking for this product. People that are pregnant or post-pregnant are looking for this product. So we have all these different specific customer segments and customer problems that now we can solve for. And instead of building a product that people didn't know they needed, now we're creating a product that people are already looking for, but they don't know what they're looking for, right?

21:10And we found that that is so much easier to convert and to build growth off rather than like continuously shoving products in people's face that, you know, like you need this product, even though they've never heard of it.

21:23Yuki Kinoshita:Right. It just requires so much more education. And it's just much more difficult to scale that way. How long have you been eyeing up like a cooling body pillow as a secondary product? Was it something that you just kind of stumbled on and like, oh, this fits or yeah. When did you decide? Yeah, so we were kind of looking at the growth trajectory of Hush when we first started. And not so much anymore, just because they've kind of been acquired and they're going through a whole different path of growth. But they went through a similar issue where they sold weighted blankets. And, you know, weighted blankets were great.

21:58Yuki Kinoshita:They were also a novel item. I don't think they were the first, but they were one of the first to sell it. Right. But there's also nothing proprietary about the product. So two issues they faced, right? One is the issue we face that when summer months hit, just regardless of competition, sales just plummeted. So they went and launched a cooling blanket with proprietary cooling fabric. And that kind of skyrocketed their growth and sales. And two, they also faced a whole bunch of knockoffs. So they wanted to create a product that's harder to replicate, fabric that's a little bit more proprietary, fabric that's kind of specialized and harder to acquire.