Bourbon & Boots

Early Stage

Artisan inspired lifestyle brand handcrafting at scale rare & unique goods.

Analytics

Raised to Date: Raised: $9,700

Aggregate Commitments $

Platform

Wefunder

Start Date

09/06/2018

Close Date

02/28/2019

Min. Goal

$60,000

Max. Goal

$107,000

Min. Investment

$100

Security Type

SAFE

Funding Type

RegCF

Valuation Cap

$5,000,000

Discount Rate

10%

Rolling Commitments $

Status
Not Funded
Reporting Date

02/24/2019

Days Remaining
Not Funded
% of Min. Goal

16%

% of Max. Goal

9%

Likelihood of Max
Not Funded
Avg. Daily Raise

$55

# of Investors

18

Momentum
Not Funded
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Location

Little Rock, Arkansas

Industry

Consumer Products, Goods & Services

Tech Sector

Bourbon & Boots is here to offer a new artisan, homemade marketplace for consumers -- that can offer these types of goods at a large scale, especially when compared to companies like Etsy and Amazon Handmade. Bourbon & Boots sells only via their website, and they’re on track for $4M this year with 125,000 customers. They experienced 300% sales growth from 2015-2018, and they’ve shipped over 90,000 orders. They also have partnerships with distributors like Wayfair and Overstock, and Inc. Magazine named them one of top 16 Fastest Growing Private Brands in the U.S. for 2017. Plus, their chairman and CEO has been the founder and MP of a seed stage VC firm and has founded three companies, including CognitiveDATA which was sold to Merkle.
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Analyst Report Analyst Report Methodology Article

Problem

Most consumer products are now made in factories, with production lines specifically designed to eliminate variance in outputs. As a result, everyday products, from iPhones to coffee mugs are identical replicas to the millions of other iPhones and coffee mugs produced along the same process. These innovations in production help to control quality consistency, which is absolutely essential for most products. iPhones, for example, cost hundreds to produce, and discrepancies between products are either expensive to correct, or detracts from the user experience.

At the same time, however, discrepancies may add value to other products. When a skilled artisan designs and handcrafts a coffee mug, the uniqueness of their skill, the value of their attention, and personal touch, seem to come together and make an imperfect product more valuable than its flawless mass-produced counterpart.

This appeal has spawned a sizable market for creative, handcrafted items, valued in 2017 to be worth about $44Bn. Etsy, the first extensive online marketplace for handmade goods, now generates over $3.25Bn in revenue. Recognizing this unique opportunity, many other marketplaces and sites have begun expanding into the handmade product market: Amazon Handmade, eBay, DeviantArt are just some of many sites offering creative, unique products.

The following are some of the most popular platforms for people seeking to buy and sell handmade goods.

Sites  

Goods

Format

Etsy

All products: handmade and some manufactured

Free shop, 3.5% transaction fee

Handmade at Amazon

All kinds of handmade goods

 

15% transaction fee (very high in comparison to other platforms)

eBay

Sells just about everything

Auction, listing fees, transaction fees based on sold price

 

Shop Handmade

Crafts and gently used craft supplies

Free, paid immediately when sold

 

While these sites attract consumers because of their handmade product offerings, by nature of handmade products, items that are sold often take a long time to create, and are difficult to replicate at a larger scale. Similarly, while handmade products are personalized and uniquel y created, it is difficult to ensure that products are made with consistent quality.

There seems to be a lack of a middle ground, where handmade products by skilled artisans can be created and sold with consistent quality and on a relatively larger scale.

Bourbon & Boots Solution

Bourbon & Boots aims to provide a consistent supply of artisan products of the highest quality. The company managed to gather a group of highly skilled artisans for the productions sold. On top of that, they have their own woodwork shop.  With this combination, Bourbon & Boots is able to achieve the high scale of production that single makers cannot.

Bourbon & Boots is an attempt to solve this problem, providing a consistent supply of quality artisan products. So, while other sites for handmade products are meant for individual artisans to sell their own craft, Bourbon & Boots gathers a group of highly skilled artisans in their inhouse workshop in order to produce creative, handmade products at scale.

The company attempts to control its product quality by carefully sourcing their materials. For example, some of their materials include bourbon barrels from Kentucky, wine barrels from Sonoma, and barn wood from Vermont, giving an authentic feel and touch that small scale handmade shops would find difficult to replicate.

Instead of simply acting as a platform for sellers and buyers to find one another, the company reportedly strictly monitors the quality of its products. The company made about $4MM in 2018, just three short years after their initial launch.

General Market

The handmade goods market has been growing over the past decade.  In 2011, the creative market had a worth of 30.1 billion and increased 45% to 43.9 billions of dollars by 2017.

The reason for their rapid sales growth is in part due to a rapidly growing handmade goods market. Between 2011 and 2017, the market for these kinds of creative items grew 45%, from $30.1Bn to $44Bn. Existing marketplaces for handmade product s have also been well received by the market. Etsy alone, for example, now features more than 1.9 million sellers and 33.4 million buyers.

Even everyday consumers are somewhat drawn to handmade goods, with 70% of consumers buying handmade goods at least once or twice, 81% of which claim they chose handmade alternatives to conventional options to find something truly unique. Clearly, the market for handmade goods is large, and should continue to steadily grow.

Additional Considerations

So far it seems that Bourbon & Boots has a strong revenue stream, a growing market to expand into, and a promising production strategy that brings together scaled production and the unique personal touch of handcrafted items. The company’s sales are driven in large part by returning sales, with 125K customers, suggesting quality services and products, and is expanding into wholesale distribution. All in all, the company seems to be a promising investment with a number of macro-level tailwinds driving its success.

Even so, there are worrying details left out in the company’s Wefunder page. The company has hundreds of one-star reviews online, claiming the items they ordered and paid for were never delivered. The company had previously had a track record of late deliveries, which could be understandable due to the time-consuming nature of creating handmade products.

But, in the past few months, the number of reviews not only claiming a late delivery but no delivery at all has been steadily rising. Consumers claim that contacting customer support is near impossible, and when customer support does reply to their tickets, they claim their order is on backorder repeatedly without actually working to deliver on their orders.

Their problems are evident on larger review sites as well. The Better Business Bureau (BBB) reports over 211 complaints filed against the company, of which 74 continue to be unresolved or completely ignored. In fact, BBB’s rating of the company yielded a failing grade, citing that the “business has failed to resolve underlying cause(s) of a pattern of complaints”. There is even a Facebook page with 237 likes named “Shame on Bourbon & Boots”, where many members post/reshare stories of customer complaints about the business.

These factors are especially troubling due to management’s lack of responsiveness. Each time BBB has reached out to Bourbon & Boots, they have been met with explanations, but no improvement in practical results. One time they claimed some vendors were unable to fulfill orders on time, and another time they claimed to have hired a customer service manager to ensure prompt customer support. Despite these supposed steps towards improvement, customer support has continued to be evasive and unresponsive, and orders continue to be unfulfilled.

Over the past week, the company’s various website links have also been down. Between their main website, and their “live customer reviews” page that Rod Ford (Founder/CEO) linked on the Wefunder page, the company’s website seems to be no longer working as well. Whether or not this is due to a history of complaints, or just server troubles, in the context of their history of inconsistent delivery and service their faulty website is troubling.

Most damning and concerning. It appears as though both the CMO and CEO left in Q3 2018 based on their LinkedIn profiles even though they are still listed on the offering page. This is likely the reason for the recent set of issues that have arose and is a significant red flag that needs to be addressed.

Rating

Ultimately, the handmade goods market is still expanding, and customers are looking for more than cost-efficiency for certain, more creative items. Bourbon & Boots has a promising idea, targeting the same audience as a larger more established marketplace like Etsy, but with a different focus and distribution style.

However, the company’s value needs to be heavily discounted, due to the reputational damage that the company has incurred from its recent negative exposure in the media, as well as from their poor online reviews and run-ins with the Better Business Bureau. This gives us great concern regarding future growth and success.

Even in considering an acquisition, it would be hard to consider suiters at this time with such a poor customer service record. With the current flaws regarding the quality of the customer experience, which speak to an overall misalignment at the management level, requires us to rate this as an underweight deal at this time. The fact that the valuation cap is largely in line with 2018 revenues would make it seem attractive, but the issues around execution would suggest there is a reason for the current terms of the deal.

If anything, there is likely an internal capital requirement not being met, which is holding back the production of goods and delivery to customers. Through their strong historical performance, they have managed to appear as a very successful company by minimizing their recent failures at the most fundamental aspects of an online store: not only fulfilling orders, but even just having a functioning website for consumers to visit.

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Bourbon & Boots on Wefunder
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Platform: Wefunder
Security Type: SAFE
Valuation: $5,000,000

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