In 2005 Rob Sickel and Pete Dispirito founded Ergo Clothing (formerly Ergophobia) out of their home state of New Jersey, and the company’s surf and skate inspired apparel and brand name, which many shreds can relate to, have caught on rapidly across the country. Last year the brand saw sales pushing the $1 million mark, and with that growth came some important business lessons.
Throughout its early years, Ergo utilized a Third Party Logistics (3PL) firm to handle its shipping and logistics, but Sickel thought the company could handle operations more efficiently and with higher quality in house. So at the end of 2010, the brand hired a consultant to create a new strategy, moved into a larger space in Jersey with a warehouse, and opened an office in Costa Mesa. The result? Even with the new office, they’re saving over $10,000 a month.
We caught up with Sickel, Ergo’s president, to find out the lessons learned in bringing home his business’s back end.
Rob Sickel
How has bringing your shipping and warehouse functions internally affected your business?
This whole move was the best thing that we’ve done. Our original setup was an office in New Jersey and then we had a 3PL in Long Beach, California. They were picking and packing our stuff for us, but there wasn’t the quality and the service that we necessarily wanted to provide our customers. Even little things like throwing in a couple stickers wasn’t really possible so we wanted to take it on ourselves. If an account needs something tomorrow, we want to be able to do that – not call the 3PL, who gives you an excuse. Even though they’re supposed to be able to do things right away, it doesn’t always work out that way.
Talk about the process of making that change. What were the biggest lessons you had to learn?
From day one, everything has been a learning process. This was no different. We hired a consulting firm for warehousing and supply chain management and they’re here in New Jersey—we didn’t know what we were doing, but we knew that we could do it better. They came in and helped us set up our warehouse and our processes and got us running smoothly. Every day that we do things we see how they can work better for us—we’re still working the kinks out and refining our processes with that in mind.
That’s the way that we’ve kind of done everything in our company including POP and large format printing for example. We were spending a ton of money outsourcing that and we weren’t getting everything that we needed. We bought a printer, a laminator, and have our own print shop now and we’re getting everything that we need and more for less money. We definitely like the model of a little elbow grease gets the job done.
What were the red flags in analyzing your business that made you realize that it was time to bring your warehouse logistics in house?
A look inside Ergo's new warehouse
Looking at our monthly 3PL costs was the biggest thing. In our business, we have to give product to team riders and promo product to reps and that alone was costing us money that we didn’t have to spend. The monthly bill was really the thing—we moved into a larger space in New Jersey with a warehouse, picked up an office in California, and we’re still saving money over the 3PL.
What kind of savings are we talking and what do you anticipate as you continue to get those kinks worked out?
We’re looking at around $10,000 a month in savings. That’s with picking up the California office as well—thanks to Doug Works and his team at CBRE who negotiated on our behalf for both locations.
As far as bringing that office online, what functions are you running out of there?
Our product design, development, and sales are all run out of the California office. It’s no secret that the industry is in Orange County and San Diego. We started our company from New Jersey – we’re not trying to be the Orange County company, it’s not who we are, but we definitely saw the need to have a footprint in California. There’s talent out there that we can’t touch from here and the visibility is key.
Ergo's new showroom in Costa Mesa, California
Have you gotten any new accounts since moving out there or is it more just spreading the word at this point?
Yeah, absolutely—Rusty, Board House, we just opened Kaitin. There’s a bunch that have always been on the fence and this is helping push it over the edge.
What’s your goal for Ergo over the next couple years as far as further expansion? Where do you see things heading?
We’re trying to get to $1.5 million this year. It’s good growth from where we started. We started shipping in January of 2008. It’s our fourth year in business and we were just under $1 million last year—we think we can break one million and maybe even 1.5.
