The Climb Back from Failure

Having closed my business of eight years, Rejuvenation Water, at the end of 2023, reading through my article, posted this time last year, it was one of reflection and trying to articulate my thoughts and emotions.?

8 years was almost of quarter of my life and Rejuvenation Water was more than a business to me, it has defined me as a person.?

In dealing with failure, it was to compute a whole host of emotions. The overriding one was the feeling of guilt, especially for letting down investors that included family and close friends.

The messages that I received from many investors were overwhelmingly positive. With many of the investors coming from crowdfund, part of the investment experience was to be part of the adventure and this was one part of being a Founder that I fully embraced. I was diligently kept my investors up to date with exactly what had been going on behind the scenes of the business with a monthly newsletter. The investors shared in the new product innovation, the new supermarket launches, new country launches - both the successes and failures. All my updates were in my straight up Yorkshire tone - there were no holds barred.

By doing so, as we were coming to an end, if we didn’t raise or exit, I essentially gave investors a 12 month countdown for when the business would have to close. I then kept them up to date with progress. In managing this, there were no surprised investors and they knew exactly what I put into the business - my all.

There was one detractor in all of this and their words hit deeper:

No one questions your commitment, creativity or drive, but clearly the skill set needed to translate ideas into a deliverable working models doesn’t exist

These were the words of an experienced CEO who’d invested and acted as a mentor, of sorts, to me through the business.

In dealing with this failure, it would be easy for me to go into my shell and head back into the banking World, [flat] cap in hand.?

Instead, covered in battle scars and lessons learned, I decided to double down on my entrepreneurial experiences and go again.

In being a solo-founder in an industry that I had zero experience in, I had been a sponge? but also a rogue - using my untainted perspective of FMCG to discover, open and maximise opportunities. This saw Rejuvenation Water land in five major U.K. supermarkets as well as the likes of Costco and across the Food Service channel. This gave me an insight into literally everything sales, marketing, contract packing, end to end supply chains, logistics but also an opportunity, first hand, to see all the inefficiencies involved - the biggest of which, for me, was excess and liquidation stock.

Liquidation.store was born - buying up excess and liquidation stock and flash selling it direct to consumer for up to 90% off. With everything from inflatable palm trees and kayaks, sliced olives to premium beauty products, we have new stock landing every week. But the nature of excess stock means that once it's gone, it's gone.

When running Rejuvenation Water and dealing with two of the largest supermarkets in the U.K. a combination of wildly inaccurate first order indications and then covid restrictions meant we were left with around 50,000 of our sparkling drinks range. Gathering dust and accumulating eye watering weekly storage costs I reached out to my usual excess stock brokers to get the product shifted. From where I’d usually get my cost of goods covered, I received bids of 2p a unit, less than the price of the aluminium used to make the cans. The supplementary message was:

?‘the discounters got so big that they can’t rely on excess stock to fill shelves - they now have SKU (stock keeping unit) count restrictions, ranging windows and they now get the big F&B to produce to order’?

in other words, the discounters had become supermarkets.?

In coming out of covid, a time where supply of almost every lacked, brands binged, over ordering on almost everything to service pent up demand. But, as one crisis finished, several others started putting cost of living pressures on consumers and in turn reducing demand for this over-ordered stock. Every brand in the country had excess stock and the biggest purchasers of this stock had stopped purchasing. This meant, as warehouses burst at the seams, energy bills made warehousing even more expensive and it was cheaper for many brands to send excess stock to landfill rather than store it.?

$163bn of excess stock went to landfill Worldwide in 2022. That’s brand new, unopened, unused stock. We cannot compute what that amount of stock looks like.?

liquidation.store started as a channel to sell my own excess stock from Rejuvenation Water as to not cannibalise customers coming in for a full price sale. I wanted to raise seed investment. I reached out to my investor pool of Rejuvenation Water investors. 523 in total. 3 invested. ￡19.000 in total. Ok, let’s go.?

The biggest lesson to come out of my first business experience was CONTROL. Throughout Rejuvenation Water, I had so little of it. From investors to suppliers and customers, if one had a change of heart (for supermarkets buyers, simply rotated roles) it left the business entirely exposed.?I also spent a significant amount of time raising money throughout the life of Rejuvenation Water. This took me away from actually the day to day running/growing of the business. The business model for FMCG which is inherently cash flow negative, meant that I had to stay on the funding merry-go-round throughout the journey. I essentially needed funding for working capital, for production runs to keep up with demand.

This meant I’d do things very differently this time around. This translated into hustling and bootstrapping my way slower but more sustainable growth. I would strive for breakeven off the bat, an old school convention in a World of eye watering raises, as to not require the constant tap of funding and this also circles back to control with retaining most of the share capital. With all my Swiss Army knife styled entrepreneur skills, it also means that I’d be able to save ridiculous amount of start up money doing everything myself including building my own website. And so liquidation.store was born, from my bedroom, at the end of 2023 with a batch of 1,200 discounted The Ordinary Foundation products.?

This was lucky - I’ve learned that discontinued, popular products like these foundations are the unicorns of the excess stock market.?

Having bought for ￡1, sold for ￡6+p&p - the first batch sold out. I recycled this cash to buy even more - 4,680 to be exact.?

The major breakthrough came shortly after. A brand called Ricco went into administration. Ricco made for ride on kids vehicles with licenses for the likes of Range Rover, Bugatti, Lamborghini, Mercedes to name a few. They went into administration holding 600 pallets of stock.?

Bootstrapping means that I didn’t have the 'dry powder' to take even a decent amount of this stock but, it always been my philosophy to corner the market in a certain product as to not become a race to the bottom when I sell the product.?

So I took a bank loan, paid it into the business and I focused on a single product, Ride on Kids Diggers, little JCB style numbers, and I purchased over 600 of them used a 3PL to store and pick/pack them. I sold 500 of them in the lead up to Christmas in 2023. I actually have a few Ride on Diggers left in stock at the moment.?

The week after the JCBs, the guys I bought the JCBs from came back and offered me 1,600 Disney Trunki style suitcases. This was going to be expensive though. I went to another bank and took another loan. I did have a fear that I was being scammed. It would have been a classic scam. Feed them a small entry level purchase to build trust then hit them with a large order that never arrives after transferring the money.?

The money went, the stock arrived. All 30 pallets of it. Phew!

The stock was pretty much thrown onto pallets so I spent two days at the 3PL’s warehouse organising 12 different SKUs into pallets of the same SKUs - imagine the coloured ball test tube game on a warehouse sized scale.

This stock was too large in volume for my recently built website to handle so I reached out to my network to sell it. I sold two thirds of the stock for double the money I purchased the job lot for and I held one third back to sell myself (for me, this was lucky again). With the new found funding, liquidation.store was properly up and running. (I have 2 left if anybody is looking for a Mickey Mouse designed Trunki).

Delivering pallets to my apartment was messy. My bedroom was exchanged for a 200sq ft Big Yellow Storage unit in Vauxhall in late January. With a light and no electricity, this fitted in about 4 pallets plus a camping bench and a chair. With my portable charger to power my thermal printer, I went buying stock and selling it. Within 2 weeks buying excess stock from brands, distributors, I was receiving 16 pallets a week, encumbering the goods lift and the loading bay for hours at a time. I think I upset everybody in there at some point.?

It was at this post that the guys who were delivering my consignment of pallets on a daily basis got in touch to say that they have noticed my flow of pallets and had warehouse space that they would be willing to rent to me. I could take whatever space I liked and I could take more as I needed it. That saw liquidation.store move to Peckham - the irony of wheeling and dealing out of Peckham isn’t lost on me.

In March, I took 250 sq/ft in the corner of an open warehouse. Put on 3 fleeces and got to work again. By April, I took 500sq/ft. By May, I took 1,000 sq/ft and now I stand at a very full 1,250 sq/ft.

By the time May came around. I was buying so much stock that I had stock in my warehouse that I hadn’t even listed on my website. I had to hire.

My first hire, Lydia, has been amazing. Working out of a freezing cold warehouse, packing up to 250 orders a day whilst managing email and text marketing, building website listings and dealing with me without any fuss, Lydia has enable to the business to keep growing.

By July, bootstrapping ￡19k of investment and the initial bank loans whilst borrowing from whoever would lend me money for more stock - Amazon, eBay, shopify, PayPal et al - we’d bootstrapped to ￡500k ARR (annualised recurring revenue), without any social media spend, and I decided it was time to raise investment.?

Why you might ask whilst I am bootstrapping pretty well?

Pinch points.?My limitations are working capital and warehouse space.

In the first year, I have been offered over ￡1bn of excess stock. Factor in that, from inception, I am yet to reach out to buy any stock - this is all incoming offers.?

This means that I have had to be exceptionally selective to the stock that I have purchased. liquidation.store is very much a velocity play, even more so given that it's bootstrapped but the conventions of the business are straightforward - the more that can I buy, the more that I can sell and the flywheels of the business spin increasingly faster. However, when buying discontinued stock, there's value in holding onto some of the stock to sell when the market runs out. This adds greater profitability but slows the short term velocity due to money being tied up in stock and warehouse space being encumbered.

Given the bootstrapped ￡500k ARR and the SEIS (Seed Enterprise Investment Scheme) availability, where UK tax payers can offset 50% of any investment against their personal tax bills, I assumed raising ￡250k would be relatively straightforward. This was not the case.

Two months of conversations ranging from angels to VCs and ￡37,500 was all that was raised. I also managed to raise a further ￡30,000 of debt. This is enough to get us to next level without dilution but the make weight for the extra funding is even more hard work and hustle.

As 2024 comes to an end we've, for the first time, switched on social media ads and we are quickly closing in on the ￡1m ARR. We continue to drive our presence via organic platforms including Whatsapp and Tiktok/TikTok Shop. Via the liquidation.store Tiktok I go live every morning as we pack Christmas orders whilst running giveaways and flash sales. We've doubled our following in 2 weeks and Tiktok Shop sales continue to grow.

Despite the detractor, another experienced FMCG MD and investor sent me an email when I closed Rejuvenation Water:

You've gained some invaluable experience to carry forward into subsequent ventures...an old proverb. Always back the warrior with the most scars.

Given the Christmas rush and over 300 products in stock, December is going to be, by far, our biggest month to date and sets us up for an exciting 2025.

I'll be sure to keep you up to date with the adventure.

Merry Christmas & Happy New Year

Kris