Chase: Jimmy, thank you for joining us.
Jimmy: Yeah. Thanks, Chase. Excited to be here.
Chase: Danny, thank you so much for joining us.
Danny: Thanks for having me, Chase. Always a pleasure speaking with you.
Chase: So, give us a quick intro about yourself and about Bokksu.
Danny: Sure. So I'm Danny Taing, the founder and CEO of Bokksu. Our mission is to bridge cultures authentically. At our core, we're a subscription box, so every month you get a kind of boxing, awesome, curated, authentic Japanese snacks. But kind of what we are is that we partner directly with these century old family snack makers throughout Japan that have been making their delicious matcha cakes and red bean buns for hundreds of years. And we source it there, pack it there and ship it to over 100 countries directly worldwide powered by ReCharge.
Chase: Love it. So we're definitely getting to this later, but definitely check out the maker series. We'll talk about some content later, but check out the maker series. It's one of the coolest things. Danny, you do some of that in person. You go actually over to Japan, you talk to all these makers, people who actually make the candy, it's an awesome, awesome piece of art there.
Danny: Thank you. Yeah, I'm happy to talk about it more later as well.
Chase: So, I want to start with inventory. It's something that's been coming up recently with a lot of different conversations across countries really. COVID obviously has impacted a lot of different things. So, talk to me first about how your inventory chain works, maybe just give me the overall picture, and we'll dive into kind of some of the inevitable problems we've had in the last couple months.
Danny: Sure. So, we now kind of have two parts of the business, but I'll start with our subscription box, which is still the majority and kind of core of our revenue and user base or whatever. How that works is nowadays we plan our boxes and curations and what we're going to put in the box at least six months in advance now. So there's a whole lot of early curating, talking with the makers, finding the right snacks that's going to fit in with it. And we have to finalize our inventory of what we're going to be ordering roughly between a month and two months before we start using, of course, the closer we get, I mean, we're always trying to push that limit, the better our forecasting is going to be, and we'll have less excess, or God forbid, under-forecast, which is even worse position to be in.
And so, that's kind of the strategy we have is that we forecast some amount that we think we're going to reach in that month. We then source that, it's all sourced in Japan, shipped to our fulfillment center warehouse in Osaka. And from there, packed and immediately shipped out to customers worldwide. So because of the wonderful subscription box model, where it's kind of like ordering as needed, we don't generally have a ton of excess or we don't need to keep things permanently in stock, but because we do sometimes over-forecast or even do it on purpose, we then just move that excess inventory into what we call the Bokksu market, which is our eCommerce shop, where we now have about 200 skews permanently stocked and people can buy on-demand from our eCommerce marketplace.
Chase: Is that the other half of that business you were just talking about?
Danny: Exactly, yeah. So the Bokksu market, I launched that, so Bokksu's been around for almost five years now, the Bokksu market has been around for two and a half years. In January of 2018 is when we launched, actually almost three. And what started as like 10 skews at any given time because we were just kind of trying to get rid of excess inventory, but customers also wanted to buy more of their favorite products, has now really expanded to be 200 skews. It was like 5% of our revenue, nowadays it's 15 plus and rising percent of our revenue. That's a really strong growing part of our business as well.
However, we certainly learned, I was very exuberant when I launched this thing without much planning, that eCommerce and subscription are very different businesses. And that requires, I mean, with the inventory alone, just managing the stock, expiration dates, reordering, planning, it's like a whole different style of business that we had to learn along the way.
Chase: So that's actually one of the questions. Let's jump into that while we're on topic here. How do you manage that? I know it's kind of a bold general question, but is this something that you keep all of the individual snacks that are in the box on hand and you can order those month over month whenever you want, or is this something that you use as extra inventory and you just have them until they run out, or they're like limited stocks?
Danny: It's been a bit of an evolution. As I mentioned, early 2018, it was primarily what you said, the former. It was a good way for us to try and offload the excess inventory and to sell it till it runs out, just so we don't have to worry about just all this loss you might have if you over-forecast, which we did quite a bit back in the day. And so, that was a really good strategy. And like you said, it was a win-win-win, customers were happy, we were happy, our bottom line was happy, etc.
However, as things went on, there was clearly just some snacks and some products that customers wanted all the time. They didn't just want it for the month or two after we put it into a box, they wanted it consistently. And so, then we started just restocking permanently some of these products because it would just sell so well. And then that just kept expanding to the point where we now have these 200 plus permanently stock skews, where every month we then get an infusion of 10 to 12 new skews that come in from the box because we have totally new curation every single month that then adds to the market.
We've all kind of grown all of this ourselves homegrown, I'm sure there might be better ways out there, but what we figured on our own processes is that we just [inaudible 00:05:48] look at our sales data. What are people kind of buying? Is it a good rate? Is it trending pretty well? Things that we can sell out of, we restock. Things that are taking long time, it's just not selling the velocity we want it to, especially within its expiration dates or whatnot, we just sunset.
And so, that's kind of how we've naturally, so to speak, kind of using data, curated our market to be like, whatever's on market now, with the exception of those kind of 10 to 12 new skews that come in every month, are generally best-selling products. And so it just has kind of come about as a really good spot of all great hits
Chase: Aside from revenue, are there any other commonalities within those products. I'm just curious. Is it generally sweet stuff, is it crunchy stuff, do you track any of that or is it just like this is what's popular?
Danny: No, yeah, that's a great question actually, especially as we just started those analysis in the last few months. In the last couple years, the market sells are not significant enough for us to kind of pay too much attention to it, but this year alone, we're on track to do over a million dollars in revenue just on the market, which is kind of a big deal for us. And so, we do start tracking those things. Things like category. Sweet, savory, tea. Is it a kind of high priced item? Does it correlate with snack ratings because we also, every single month, survey our customers with what products they like and what they don't like. So then we can then cross-reference that with kind of what people buy in market and see what sells well, what doesn't sell well.
So we do have actually these kinds of multiple dimensions and variables to look at it, which is super helpful for us to be like, this one we should restock or this one we should actually bring back into a box in six months, 12 months from now, etc, etc. It's not just purely revenue. In our experience, sweet ranks better, rates better, but for some reasons, savory sells slightly better. I think people are just, they want to keep popping those seaweed tempura chips or mochi puffs into their mouth or something.
Chase: With all the health craze, it's not really surprising to hear that people want the sweet, but that may not be what they end up buying.
Chase: There's like a logical bridge there somewhere. Pushing on this data piece a bit more, and I know we promised to talk about inventory, we'll get back there in a sec, but how do you use data, I know you just talked about, you're actually looking at all these numbers and seeing which ones you bring back permanently versus add it to another box in the future. How important is data to you day-to-day. Is this something that was important initially or has grown a lot recently? Seems like you're really leaning into the data.
Danny: Yeah. In the beginning, it was just me, and it was actually just me and maybe a couple of people for a few years. And we only had one box, one curation, and maybe a few items on market. And so, at the very beginning, data was certainly much less important. It was pretty much all like intuition/ just me looking at my orders every day and looking at my numbers, and just getting a sense of roughly what the data was telling me. But now that we have well over 20,000 subscribers and are getting, I guess with new ad renewals, 800 orders a day or whatever, it's hard for me to then do that. It's not so easy anymore for me to glance at my orders and what are ordering from the market and get a sense of it. Data is everything now.
We even hired an in-house data engineer as of a few months ago because we just have so much data we need to parse through. And the slight unique downside to the whole subscription plus market with Shopify, ReCharge, and all these other places, that data's everywhere. There was no tool we've been able to find. When we looked into a lot of these vendor, partners or whatever, that can do what we want. So we've had to just bring all of that in-house. So we actually analyze our own data and build our own KPI dashboards and snack ratings dashboards, and market dashboards and stuff like that.
Chase: That's a super interesting conversation. I bet we could go into that for an entire episode, maybe actually we will go into that for another episode as I make a note, internal data team. But let's get back to inventory as promised. I hate to bring up COVID, I know everyone's sick of talking about this. But for the sake of, maybe relating it to just general problems, how has COVID impacted your shipping, obviously being an American company based in New York and running this out of literally Japan, it's not a figure of speech, it's literally Japanese company, how has this impacted your day to day and your actual products?
Danny: It's been the most challenging and life-altering, and I seriously thought my business was going to be over, situation that came up and crisis. And April is actually when it really hit us. And the reason why it was specifically, there's one day, April 22nd here in New York, is that Japan Post, which is the main carrier we use to ship everything from Japan to over 100 countries around the world, which has always been very reliable in the past and worked about a problem, announced on that day that they were suspending shipping to the US as well as 100 plus other countries. They'd only shipped over 200 countries. And so it was like a very serious suspension. And the US represents something like 70% of our revenue globally. That would have been bad. If we could not find another way of shipping, we would either have to close up shop or just do nothing for like six months until it resumed.
Thankfully, I took a shot of whiskey right when I heard that news and just got to work. And I was super stressed out but I immediately called up every single logistics freight forwarder 3PL person I could find under the sun. Had them refer me to others, ask founder friends. And I ended finding an alternative shipping solution that was more expensive but did allow me to keep shipping to the US, which was a kind of a game changer for us, because even though there were hiccups along the way, and we don't have to go into that, it allowed us to keep shipping and selling where there were competitors that had to either stop shipping altogether or charge a really exorbitant shipping fee, which then kind of positioned us really strongly from this.
Chase: Right. And I'm sure that was terrifying to get that news. It's probably one of those dates you're going to look back on in 20, 30, 40 years and say, this is the future of the business is you figure out this problem, you keep moving forward and you solve your solutions. That's awesome. That's great to hear.
Danny: Yeah. And because of that, I mean, COVID has been super unfortunate and really stressful and really bad, but people are stuck at home, and nobody knew what people wanted when COVID was first hitting and how it was going to affect all of the different consumer behavior patterns in the future. But I had some potential investors pull out because they were like, oh, nobody's going to want premium Japanese stacks when there's a global pandemic happening. Turns out a ton of people want premium Japanese snacks when there's a pandemic happening, because they can't travel and they want to explore the world and taste new flavors and learn new things and cultures. And that's where kind of Bokksu provides that in a box delivered to their door. So it's been a really strong growth. We've about doubled our subscriber base since COVID.
Chase: I absolutely love that. I'm proud to say I'm part of that subscriber base. The product is awesome, and it's crazy, I got to say just from personal experience, you open this box, which is beautiful and orange and it's great and it pops, and you open the box and there's a whole bunch of things written in Japanese, and I don't understand, but they're all awesome. It's exactly what you said, it's a taste of a different culture, it's understanding different things. It really is just a full experience that you can't get right now while you're just sitting at home. You go room to room in your house, that's all you can do. So, you need to be transported through the product. It's a phenomenal product, it's really awesome.
Danny: Thank you.
Chase: So digging in on inventory a bit more but I guess kind of taking a step backwards, is inventory something, could you argue it's maybe even a cornerstone of a business? If you don't have your inventory, if you don't have your stream of products constantly coming in, you don't really have a business.
Danny: I would say that it's a cornerstone of a business that's looking to scale to a certain level. I think that people can run smaller businesses just fine with very limited inventory. But then if you're looking to really break through to six digits, seven digits, eight digits to the kind of next level of large scale of eCommerce business, inventory is everything, I absolutely agree.
Consumers, at least in my experience, get bored pretty quickly. I've heard this from other snack subscription box founders where they were creating their own nuts or other types of more healthy foods. But because they were creating all themselves, you can't really have that many different skews. It's really difficult because it's for like recipe development, product development every single time. And then one of the big reasons their customers churn was that after three or four boxes, things started repeating. And people just found that to be quite boring and why are they subscribing in that case.
In our case, we have this very unique proposition, and our supply chain, thankfully, from Japan that we have totally new products that come out every month, every season, every year, every region of Japan has their own specialties and limited edition products. And so that allows us to keep the curation fresh all the time. And if we do have a product that repeats, it's on purpose because customers love it so much. And we even have our own rules internally, we set like a product can only repeat maximum two times a year, things like that to always make sure that it's a new original creation for people. And then that also feeds into our market to give us unique skews that nobody else has.
Chase: So that's awesome to hear. So let's jump into this maker series again, we mentioned upfront. You do have this really awesome product that come from Japan, it's really authentic. How do you showcase these people? It's called this maker series, talk a little bit more about that?
Danny: Sure. From the very beginning, I mean, that was always kind of the mission and ethos of Bokksu, what we're trying to accomplish. Anybody can say that. The word authentic in and of itself is in some ways a little overused, and we have competitors and our direct space where even just indirect spaces where everybody says it's an authentic product. And so we were like, how do we tell people? We write it into our culture guide magazine that we put in a box every month. It's a magazine where we write our own copy, do our own design, even interviews of the makers. However, I think what really gets people nowadays is seeing the kind of video and the actual storytelling. And we're all about storytelling. So we figured out another way to level up that storytelling was through a kind of web documentary series I've been dreaming about for years.
And so, it first concepted in early 2019. Like I said, it was a bit of a dream, just toss it around. It's not cheap to do something like that. But it came about because every time I went back to Japan to visit our makers, to make new relationships, or we just cement the existing ones, they would take me around to their workshop or their factory, where there was like an 80 year old artisan that's been making this handmade [inaudible 00:16:11] candy for like 50 years. And I was like that doesn't exist in America, that's not a thing. This is amazing. I was wowed by my own products as weird as that sounds. I was like, I think our customers will really love this. How can we make this in a form for them to watch and digest and really see and trust that every dollar they put into Bokksu kind of goes to these small businesses.
That's where I kind of went out and ended up finding a kind of freelance documentary filmmaker with a lot of grit and a lot of passion for what I was doing, wanting to tell these Asian stories worldwide, he's also Asian American, so there's a lot of kind of pride there in telling the stories. Where we flew over to Japan in October of 2019. Thankfully, it was all before kind of COVID happened, because I think this type of project would be very difficult right now.
And then we had a little skeleton crew, and we went around for two weeks visiting five of our makers from Hokkaido to Kyoto to Saitama to all these different prefectures. We filmed them, me interviewing them in Japanese about their family histories, filming them actually making the products, and showing the snacks being fresh off the oven or kind of fresh off the [inaudible 00:17:17] handmade stuff. And then kind of editing that, subtitling it and releasing it earlier this year on our website, and this whole kind of makers hub we call it, the documentary we titled Snack Bites, it's a kind of stories of craft, culture and cravings. You can go to bokksu.com/snackbites, and people can go take a look right now.
Chase: We'll link it on the podcast landing page for those of you listening, we'll put it in the show notes as well. It is really, really cool. It's really well done. Whoever your cinematographers is is excellent on this. But yeah, it's really, really cool. And it takes you behind the scenes, like you said, and it really does give you an insight into what's actually in the box. It's not just candy and snacks and tea in a box, this is authentic stuff, and to use your word, to use the phrase, it's like it's someone's grandmother sitting in this building making these things that she's been doing for 50 years. That's a crazy thought because, like you said, it doesn't exist in the US.
Danny: There's a lot more emphasis and value on history and craftsmanship and lineage in Japan that I feel is not quite, yeah, but Americans love it though, I mean, that's why we're so fascinated by European dramas and things like that, and similar to Japanese food shows, I think it's really delicious and fun to watch.
Chase: Absolutely. So in that same vein of bringing other people in and creating content, do you use user-generated content for sales, for unboxing videos, for anything like that? Where do you see the value there?
Danny: Yeah. So we actually just embarked on that journey, and that kind of marketing strategy earlier this year in 2020, where up until early 2020, a lot of what we were doing were pretty typical with Facebook ads, Google ads, Instagram, just trying to really break through a lot of the paid media channels. But we were really finding that our CACs were just going up a ton as I'm sure every eCommerce merchant is feeling in this space as it gets saturated. So we're looking for diversification in it.
And one way is that, I mean, our product is so unique and people get so passionate and excited about it, they were like, well, why don't we kind of use some of their content or just get some organic stuff where it feels genuine. And we went about this in two ways. One was that we started contacting and working with YouTube creators. We tried Instagram a little bit, it's not really for us. I think our product really requires video and eating and tasting and talking. So we started contracting with kind of partnering with YouTube creators to send them boxes. They create the content, they show their enthusiasm, they eat it. And not only does that generate conversions for us through their kind of channel, but also we get to use their video content for our advertising or even just kind of testimonial situation.
We have some on our website, we had some on ads, but the other piece was just our own customers. We had one customer, and this was a bit of a surprise for us, on TikTok, which was not a channel that, I might be too old, that I was looking into too deeply, but during the pandemic maybe six months ago already, we had one customer, her name was Elena, and she was just so excited. She was like, her third box, she filmed a TikTok about it. It was really zooming in and out and really flashy and really loud sounds. I sound even older when I say that. But people loved it, it went viral on TikTok and we got this huge deluge of orders. And we only knew about that because we have a post-purchase attribution survey, and we were seeing people write TikTok, and we were like, wait, what's going on. And then we saw that, and we contacted her and we asked her if we could use her video for an ad, and she was totally okay with it.
And what was great about that was she then outperformed every ad creative our creative team had done. They were a little bitter about that. The hours and hours of time they put into making polish videos, this one girl doing a TikTok video outperformed it. So there's a lot of potential to UGC.
Chase: That's amazing though. I totally get it because I'm in marketing as well. So hit a bit of a roadblock, especially with COVID happening. Everybody's online, everybody's putting up more and more content. The webinar fatigue and the Zoom fatigue and all of this stuff is a real thing. People do crave authentic experiences, and just some random girl in the middle of her living room filming a TikTok opening a box goes viral. That's so cool.
Danny: It's really cool. The point to that, just to add more color to everyone, is we then were like, oh, let's try advertising on TikTok. It did not do well, for us anyway. Not to say that's not possible, it's just that, it's all about the authentic original content. That's the kind of golden nugget everybody needs to look for.
Chase: That word authentic keeps coming up, and it should be clear that you mentioned earlier authentic not in terms of just throw the word authentic in there and just call it an authentic product, it really does have to be honest and genuine and forthright, and making sure that people understand that I'm not doing this to make money, I'm doing this because it's a passion and it's something that I feel and it's exciting. And people really, really do connect with those things.
Danny: I totally agree.
Chase: So let's talk scaling. Do you have a silver bullet? I'm assuming the answer is no, you've been around the subscription box world a long time. What are a couple of things maybe that you've tried and failed at or have worked that you've leaned into? How have you gotten to this point?
Danny: Yeah. I think maybe for some companies if they just happened to luckily hit on some type of silver bullet, they might be able to say that. But honestly, I'd say you're absolutely right, there is no silver bullet for us. It's been a battle, a climb the whole way. We've been fighting for every next milestone. And the strategies have changed each time. Going from zero to 100, one to 10, 10 to 20,000 subscribers, all took different angles and strategies and diversification.
So to kind of quickly go over from the very beginning, I was a solo bootstrap founder, soft launch in May, 2016. And to get to that first thousand, I had no budget. I had no marketing budgets to throw at Facebook or even Google. And so, it was very scrappy strategies of in-kind affiliate, influencer sponsorships, where I would just send them a box. They were all small micro influencers. But if they just got me one or two conversions, it was worth it. To like referral programs, word of mouth, kind of discounting, etc.
Chase: Just all grassroots kinds of things.
Danny: Just all grassroots, all grassroots. Kind of getting as many friends to subscribe as possible. Whatever it takes to just up your numbers and start building some type of fan base. I was going to conventions and tabling and stuff like that just to get our name out there. We kind of through that as well as just a huge obsession and focus on our product. The word just spread naturally because people were just, we were doing something nobody else was doing. And that got us to a thousand. But then we had a hard time breaking through from there. At that point, we had budget. So from a thousand to 10, that was a lot of the paid media side, Facebook, Instagram, Google. And especially because we were just new to it, things kind of took off. It felt like a silver bullet back then because we were just brand new. This is also 2018, so it wasn't quite as saturated yet in this space. So the ad buys weren't as bad.
Chase:That’s the point where they started to go up.
Danny: Exactly. I wish I'd started even earlier. I think every eCommerce merchant probably says that. Could you can imagine if we were in Facebook advertising in 2015 or 14. Oh God, that would've been amazing.
Chase: I can't wait to look back at this in 2024, 2025 and go, man, can you believe we didn't do this more in 2020?
Danny: Exactly. And so, when the CACs are just going through the roof in a bad way in late 2018, getting to 10k subscribers. We needed to look into diversification. And that's when we started looking into YouTube creators, affiliate marketing. But the biggest for us that's been huge to keep us profitable, keep us kind of afloat and not too in the burn stage, it was organic and SEO. The content piece we just talked about. That is something that's been intentional for a long time for us, for me anyway, I've given those instructions. Even though content organic SEO is not something that you see immediate results on. That takes like six months to a year at least sometimes to even get that type of turnaround.
Certainly the maker documentary is a good example we just talked about. We released it, it got a little bit press, people were cool, whatever, but then we're really seeing the value now where investors find it or kind of like other founders or new customers. And they're like, oh, this company is legit. There's long lasting evergreen effects of it. Same with our blog, we release two to three blog articles a week on Japanese food or culture or some festival or aspect. That took us years but now we consistently ranked number one for Japanese snack box or just Japanese snacks as a Google search, which is huge for us to get that organic traffic. And so, all of that kind of worked together to really help us kind of scale to this point that we are now.
Chase: I have a couple of closing questions for you, and they're all kind of built around what you were just talking about. But you kind of just gave the definition of omni-channel without even really trying to give that definition. But a lot of the classic definition circles around, find ways to sell your product in a whole bunch of different ways so you're not super reliant on one of them. So exactly what you were saying. What kind of advice would you give to people in this just starting out phase, this zero to 100 or 1000 subscribers? What's the best piece of advice for them to get to that thousand mark?
Danny: Are you saying after they've already launched their product, before even-
Chase: Or even before. Just something in the early phase, what's something to think about.
Danny: I mean, the early phase, in my opinion, is definitely don't spend anything on marketing, unless one has just fundraised a ton and has this budget to burn. They need to focus on the product. When you're in that early stages, you don't even know if your product has product market fit, which is why that was what we were obsessed with, and we constantly surveyed subscribers, constantly reiterated. In the very beginning, we had five different products and a tea pairing, a lot of multiples of each, but now [inaudible 00:26:50]. There's like 12-ish different products, and the increased curation and quality is what really got people and made them really feel like it was experience as opposed to just a bunch of snacks in the box.
And so, that took us months, if not years, to figure out in the very beginning. And I think a lot of people kind of do this, and it was a disservice, if they just go, wow, thinking this is the way it's going to be. Just put a ton of ad budget behind it and then just churned. That's not great.
So, I would say really test that product. Don't be afraid of having a beta phase for a while where you just have 40 subscribers< that's what we had for a few months. And then once that is more kind of perfected, you'll never finish perfecting it, we're still improving our product over time, that's when you go out and do more of the scrappy things, the referral programs and kind of affiliates. Facebook marketing is something that should be reserved for when people get to maybe 500 or 1000 subscribers. And then that's when I would turn it on. My advice.Chase: Just take some of that revenue that you've generated and just start to pump it through the machine and see if you can churn out a bit more revenue.
Danny: Right. It's a very complicated product for a lot of people, Facebook ads. A lot of times, you won't find efficiency until you're spending like 500 or $1000 a day. If you're spending like a hundred bucks a day, it's just always going to be bad. It's what I've heard and what I've seen myself. So kind of bit by bit.
Chase: Definitely. Cool. So last question for you, what do you subscribe to?
Danny: As I mentioned before, I'm a bit of a content junkie, and so for me, I really like kind of online content things, and one of my favorite right now is Crunchyroll. Some people call it the Netflix of anime, but they're the largest anime streaming site in America. We're actually a close partner of theirs. We have a lot of overlap of our demographics so we work really closely. But they just have a really, really great anime on there. And during COVID, it's been my nice escape throughout all of this. It's just go into this other fantasy world. Plus I get to practice my Japanese at the same time and stay fluent while I watch things.
Chase: There you go, coming full circle. Being able to keep you fluent while you go back to Japan and keep putting more money into Bokksu, I love it. Danny, thank you for taking time, I really appreciate it. Great to talk to you again.
Danny: It's always a pleasure to talk to you, Chase. Hope to speak again soon.