I’m glad I’m not a product marketer for Johnson & Johnson, because every time I walked into a Walgreens or a CVS or a Stop & Shop, I’d see the store-branded acetominophen on the shelf right next to the Tylenol, in a nearly identical box, for half the price, and I’d get a big Excedrin headache. And I’m glad I don’t work for Stanley Bostitch, because then every time I walked into Staples, I’d see a Staples stapler right next to my Bostitch stapler, for half the price, and I’d feel like stapling my eyes shut.
I honestly don’t see why the big consumer-product manufacturers put up with the store-brand phenomenon. But for retailers, getting into the private-label business is a no-brainer: they get to piggyback on the “real” product’s name recognition and capture the segment of the buying public that’s more concerned about price than brand. There’s just one trick: if you’re going to be retailing a private-label product for a lower price, you’d better be getting it at a much lower wholesale cost. A new Massachusetts company called RockBlocks—new in the sense that it just spun off from its former parent company and collected a few million in venture funding, at least—specializes in software that helps make that happen.
In other words, RockBlocks automates what retailers call “sourcing” a new private-label product—or any product, for that matter—from finding a supplier to putting the store logo on the box. “Every retailer worth their salt is putting in place their own brand,” says David Diamond, the Wayland, MA, company’s CEO. “We prepare the way. Within one Web-based application, you can evaluate vendors, create invoices and letters of credit, select a trade route, complete a supply chain, and have one version of the documentation on everything from product design to delivery of goods to a distribution center.”
Of course, it’s possible to do all these things without specialized software, but that leaves more to chance, Diamond argues. “If you estimate that the shoes you are having made will land on the shelf for $10 a pair and they hit at $15, your margins aren’t going to be there. You need to clearly understand when goods will be available and what costs will be layered in, from raw material to labor to transportation, so that you can accurately project what it’s going to cost you to do business.”
It would be wonderful to say that RockBlocks can do all of this because data standards like XML have made business systems worldwide smoothly interoperable, creating an uninterrupted data trail from the artisan potter in Peru to the Pottery Barn outlet in Peoria. But in actuality, the global economy is nowhere close to being integrated in this way, Diamond says. The value in RockBlocks’ system is that the company has done the hard work of creating custom interfaces with dozens of different business software systems.
“It isn’t some great inflection point in the back office that made this possible,” Diamond says. “It was our recognition that we need to accommodate many different ways of getting information into the system. We deal with suppliers in Peru [you thought I was kidding about that, eh?] who not only don’t have e-mail—they don’t have a fax machine or a phone. They deliver pottery by mule to an agent who faxes the information to Saks Fifth Avenue and they have data-entry people who put the information into RockBlocks.”
Once all the data has been aggregated inside a single Web-accessible database, RockBlocks’ service starts to pay off, according to Diamond. “It gives you great visibility into your supply chain, which can help you lower your logistics expenses and your inventory carrying cost, for instance by making smaller, more frequent orders.” And just as important, the system shortens the design-to-delivery time for new products. “If your competitor is printing out the specs for that blue frock and faxing to or mailing to someone else who then puts it into their spreadsheet and faxes it back, weeks can go by. In our system you can track conversations and collaborations and collaborations much more rapidly”—getting that frock onto the retail rack while the competitor is still waiting for a truck to show up.
Until December, RockBlocks was part of Tourtellotte Solutions, a supply chain management company also based in Wayland. The spinoff, accomplished with $5 million in Series A funding from Wakefield, MA-based Brook Venture Partners, is intended to give the company room to accelerate development of its platform. “There really is an urgent need in supply chain management specifically for support for private-label sourcing,” says Brook Venture partner Ned Williams. “There are not a lot of other companies doing what RockBlocks is doing, and we felt this was the right team with the right technology.”
