By Angela Rose | Aug 26, 2020
Salt Lake City, Utah
Soft goods design and manufacturing services
Back when Blacksmith International was founded, Sather says there was a rush of brands looking for manufacturing resources in China. "I'm not talking about huge companies like Mattel who had been manufacturing in Asia for some time," he continues, "but smaller consumer goods brands who had no idea what they were doing." These companies were the inspiration behind the international manufacturing services -- including factory vetting, production management, quality control, shipping, and logistics -- that guided Blacksmith's strategy.
"As we've moved into a more modern era, our 'why' has changed," Sather says. "Direct-to-consumer brands need more than just someone to help them manufacture in Asia. They need to understand how to design their products better. They need supply chain strategy and logistics management. Now we're getting involved in the brands at a much deeper level and helping them create a strategy for scale."
That's led to a company-owned manufacturing facility in Utah, along with a broader range of services to help clients with outsourcing to vetted factories in Asia. Today the team at Blacksmith International includes brand and product managers, engineers and designers, merchandisers, and quality control professionals who work with clients every step of the way from initial product idea to scaling up their business. "We're purpose-built for direct-to-consumer brands that are heavily focused on quality and delivery," Sather adds. "We're not built for the commodity game but for the companies that have a brand that they really love and want to build."
It's a niche that's growing rapidly. According to analysts at eMarketer, direct-to-consumer will account for $17.75 billion in e-commerce sales in 2020, an increase of 24.3 percent over the previous year. "While we don't discuss revenue publicly, I can say that the trajectory of Blacksmith International mirrors the direct-to-consumer growth trajectory," Sather says.
He notes that Blacksmith is adding between 30 to 40 new full-service clients each year along with "many more" who enlist the company's services "at various stages of the process." The team is usually working on 20 to 100 projects at any given time and has helped brands in more than 300 product categories. They can generally take a brand from a new product idea to sample production in anywhere from 90 to 120 days.
"Our focus is on helping brands grow," Sather says. "We aren't here to just give you the name of a factory and send you on your way. We're here to help you grow from where you are today to where you want to be tomorrow. We're successful when we take brands that are doing $200,000 or $500,000 in revenue and get them to where they do $10 million to $20 million in revenue."
Challenges: Sather says that the economic uncertainty around the COVID-19 pandemic has been a challenge. "We managed to keep our operations going and didn't lose a day," he continues. "We didn't lose people. We didn't shrink but expanded during this. But I think we're going to see a change in the economy, certainly after the election. That's what keeps me up at night. It's not a problem just for Blacksmith but for the industry as a whole. We're all in wait and see mode."
He says "extremely shortsighted" tariffs have also complicated matters. "It has been a real struggle for many companies that have suddenly seen their margins depleted because of tariffs," Sather continues. "Even though in a lot of ways we've sort of settled into a new normal with companies just accepting and passing on the costs, it keeps them from making quick decisions and makes them think twice about placing orders at times."
Opportunities: Over the past couple years, Blacksmith International has built its own demand-based factory for domestic soft goods manufacturing in Tremonton, Utah. "We built it for the minimum order quantity of one," Sather says, "because direct-to-consumer apparel brands need a partner who will help them make only what they need and do it quickly. Our factory is built to respond to demand in the market within days, not months."
He says that the company has worked with equipment manufacturers to develop new technology for their factory. "We've also worked with a lot of different beta clients to figure out what the best processes are," Sather adds, "and I think that we're closer to solving this problem than anybody else that I'm aware of."
Needs: Sather says that his biggest need is "for technology to catch up with the needs of the industry." He notes that modern automotive technology has "completely changed how automobiles are developed," and he'd like to see similar technological advancements in the manufacturing of consumer goods.
"The capital just hasn't been there," he continues. "It has been easier for brands just to chase cheap needles around the globe hoping to find a better price than to invest in the technology to make their products better. We're seeing that start to change with companies like Nike and Under Armour and Amazon now putting their hat in the ring to try to create technology that will improve consumer goods manufacturing, but it largely isn't here yet."