As young professionals, Evan Mendelsohn and Nick Morton found their day jobs a drag. They were itching to be more creative, to get more satisfaction from work than being a lawyer and endodontist, respectively.
It was around then that ugly Christmas sweaters became a hot trend in the US. People hosted holiday parties where everyone wore the kind of lurid green and red, holly-patterned sweaters their well-meaning grandmothers gifted them when they were kids.
The problem was that nobody made those anymore. You might find one in a box in the basement or in a bin at goodwill, but brand new? Forget about it. This was Evan and Nick’s eureka moment, to make new ugly Christmas sweaters with a punchy, funny twist.
Making a Splash on Shark Tank
Tipsy Elves caught on from its launch in 2011, but it was their 2013 appearance on Shark Tank that put them on the map.
“It aired in early December and it was perfect timing,” says Andrew Sutton, head of operations and Tipsy Elves' first employee. “It was the best exposure we could hope to get as a brand, and it put our name in front of a lot of people.”
The ripple effect was nothing but positive. Sales grew, but by 2015, Tipsy Elves knew it would be limited by seasonal cash flow if they remained focused solely on ugly Christmas sweaters.
“At that point, we were heavy in the fourth quarter, but the first three quarters of the year we weren’t producing a lot of income,” Andrew says. “So we took a step back and asked what other holidays can we enhance throughout the year.”
Tipsy Elves introduced products for Independence Day, Halloween, Cinco de Mayo, Mother’s Day, ultimately bringing 20 or so distinct clothing lines to market with the same fun, clever style as their ugly Christmas sweaters.
Spreadsheet Stress, COGS Anxiety
New product lines sent order volume through the roof. Over a short period, Tipsy Elves went from 60,000 units a year to sometimes 60,000 a quarter. Success put a strain on their “manual and tedious” business processes.
They used spreadsheets to create orders and advanced shipping notifications and relied on their 3PL as their inventory master. There was no system to track lost or damaged inventory, and fixing errors took up a lot of staff time.
“We would look at what our warehouse was saying and it would be 15% off and we had no idea why,” Andrew says. “Then we’d have to try to figure out: was this thing misreceived, was that thing mislabeled? It would make us stressed and anxious.”
The stress and risk of error only increased as the company grew its supplier base from one to more than 10.
“In 2016, we were wrapping up the year and again our numbers were just off with all the growth,” Andrew says. “A 5% or 10% variance now represented a large amount of money and that was very concerning. It was something we knew we had to take more seriously because inventory is our number one biggest asset.”
Cin7 Brings Inventory to Order
Tipsy Elves needed a system that would give them real-time visibility and notifications, and eliminate the need to retroactively correct cost variances. They needed to manage all their purchase orders in one solution. Andrew says Cin7 addressed all their concerns.
“Getting that final end of month or year inventory valuation is exponentially faster than it used to be,” Andrew says. “It used to be a lot of spreadsheets and piecing together a lot of stuff. Being able to see that all in one place has been a big enhancement.”
Cin7 made it easier to create and manage purchase orders and advanced shipping notices. Its automated workflows made it possible to keep orders in line with the inventory in their 3PL.
“Automatically sending communication back and forth to the 3PL has been a huge help,” Andrew says. “If we notice that the inventory is not aligning we can quickly see it in Cin7 in real-time and then ask for more information from our 3PL to get a clear idea of what’s going on rather than waiting until the end of the month.”
This level of control and visibility wasn’t possible before Cin7.
“Previously, the POs were stored in different systems and folders depending on what the PO was for or who the supplier was, so having all POs in one central location with quick access is a huge benefit,” says Andrew.
Finally, Tipsy Elves needed a system that could get orders from their website to their 3PL.
“Other systems we were looking at couldn’t work with our boutique ecommerce platform. The fact that Cin7 has an open API component was a huge sell for us,” Andrew says.