Where: Shanghai, China
Industry: Consumer & Lifestyle
Products: Rooftop tents for cars and trucks
The rapidly growing outdoor brand manufactures in China to control pricing, but tariffs have changed the math.
With vehicle-based camping popping up across the U.S., Roofnest founder Tim Nickles saw an opportunity to create rooftop tents and looked to China for manufacturing help. In three years, it's become a multimillion-dollar company.
"I thought this was a unique product that provided a unique solution that isn't really well represented," sasy Nickles. "And it's relatively inexpensive compared to other kinds of luxury camping kind of things like a remodeled Sprinter van or a tow-behind teardrop trailer."
With Roofnest models starting at $2,795 and weighing just 130 pounds, they're also lighter and easier to install and transport than teardrop trailers, too. "It's also compatible with every vehicle. And it is very simple, that's why I thought this would be a good product when I started the company."
"I started the company thinking I would sell something like 20 tents to friends and strangers," Nickles says. For 2019, he anticipates selling roughly 900. "We hope to break a thousand, that's our milestone."
To launch the direct-to-consumer (DTC) company and grow it so quickly Nickles looked to manufacture overseas and even decentralized U.S. operations. While the company is headquartered in Boulder, it's warehousing in Los Angeles, since shipments arrive at that port. "It's just a lot easier to keep the tents there and ship individually to customers all over the U.S. from there."
Where Roofnest manufactures
With five models available already and more on the way, Roofnest already is contracting with three factories within a few hours of Shanghai. "I have different factories making the different styles of tent that I offer," Nickles explains.
Nickles estimates that with the growth in demand Roofnest now takes up 85 to 90 percent of the manufacturing at each plant. "They're essentially our manufacturing factory, but we don't own them per se."
In operating as a DTC company, Nickles has more control over pricing and the wholesale/retail conundrum. Marketing mainly through word of mouth and online platforms like Google and Instagram, as well as influencers the company can control pricing even in the face of the ongoing trade war with China.
"Right now we've experienced a threefold increase in our rate of tariff, but we have the potential of experiencing a tenfold increase, so we have to kind of dodge and weave," Nickles says. "One of the ways that companies handle tariff changes, and especially like a trade war situation like we have going on with China is by sometimes modifying . . . so that they can move their import codes to a different type of product."
He continues, "In our case, you know our tent can be viewed as an automotive accessory or as a camping product. That's one way we have of trying to make sure that we're paying a fair tariff."
"The chances of these tariffs actually being a permanent feature of you know, the outdoor industry or car accessory landscape is small because you know Trump may or may not win the election, they may or may not resolve differences," Nickles says.
That's part of the reason he hasn't considered moving manufacturing. "Moving fabrication facilities to another country could involve a multi-year effort and be very expensive, so it's just not worth it to try doing that," Nickles explains. "If, in a couple years, it looks like tariffs are going to be in place for 5 to 10 years, then we would have to make a change," Nickles concedes.
More immediately, Nickles is focused on expanding product lines. "We plan to release another new tent here in the next couple months, and then I think one possible plan for expansion is to create a more feature-rich tent that sells at a higher price point," he says. "That's a risky decision for us. I think we've kind of developed a niche in the marketplace for a good value tent. I think that there is a place for nicer, more expensive tents. But I'm not sure how big that place is. I'm more interested in continuing to make the things that we already do better, than I am in trying to do something new."
The company may also venture into retail. "It's sort of a matter of the intersection of the growth of our brand," says Nickles, noting that the challenge is to find retailers that are willing to work with a company that's primarily direct to consumer.