John Accardi started CRAVEBOX in 2014. CRAVEBOX sells snack boxes and gift baskets at cravebox.com. In today’s current inflationary environment, it’s difficult to for many businesses to maintain a healthy profit margin. Accardi is not only maintaining but growing CRAVEBOX’s profit margin by manufacturing private label products, cutting waste, finding new suppliers, and raising prices when necessary.
Manufacture Private Label Products
Accardi likes to emphasize that difficulties can almost always lead to opportunities if you react positively and work hard. For example, Accardi has always sourced popular snack brands to include in CRAVEBOXES like Cheez-its and Chex Mix. However, lately, prices for these brands have increased by more than 20% and this inflationary cost increase has made it difficult for CRAVEBOX to maintain its profit margins without also raising prices by 20%. Accardi has used this pressure as motivation to move forward with private label snack manufacturing. He has hired co-manufacturers and designers to create his own branded packaging and his own formulated snack foods to put in this branded packaging. The result is a unique snack product that can’t be found anywhere besides in CRAVEBOX packages and the cost is lower. “The cost of private label is lower than buying established brands because you’re directly manufacturing the product which brings your costs closer to the cost of raw materials, which will always be more efficient,” Accardi says.
Cut Waste
Something simple that any business can do to preserve margins during inflation is to take a close look at their operations and determine where waste can be removed. Accardi found waste in redundancy. During COVID, CRAVEBOX hired extra help to make roles redundant in the case of sickness, or unreliability in a tight labor market. Redundancy can be necessary to some degree but ultimately it’s a luxury that isn’t required if times are tough. Accardi cut redundant positions to bring down costs. He also improved CRAVEBOX’s sales projection system so he could hold less inventory and be more accurate in determining how much should be produced and stocked, which can significantly improve cashflow.
Find New Suppliers
Accardi says that finding new suppliers is another benefit that difficult times triggered. CRAVEBOX had used the same reliable suppliers for many years and it had been a long time since competitor suppliers were considered. Accardi has noticed that if you stick with the same suppliers, they will slowly raise prices, but if you begin to look at new competing suppliers, their prices will often be significantly lower than your current suppliers. Accardi says, “I think a supplier becomes comfortable. They think that your business and loyalty will always be with them so they slowly raise prices to increase their margin, at the expense of your margin. It’s important to always be talking to new suppliers to constantly compare prices and negotiate with that price information.” CRAVEBOX started using several new suppliers recently and it’s helped control increasing inflationary costs. If CRAVEBOX adapts more effectively with regards to cutting costs than its competitors, it will gain market share. Reacting properly to difficult times is absolutely crucial to survival in business, because if you don’t do it, many of your competitors will and you’ll find yourself in a weak position.
Raise Prices when Necessary
Lastly, during high inflation, it’s often necessary to raises prices. You can do everything in your power to become more efficient, cut costs, and not pass price increases to your customers, but often this is not entirely possible. You will likely need to raise prices to some degree to maintain a healthy profit margin but the important thing is that you do not raise prices more than your competitors.
About John Accardi
John Accardi is the founder and CEO of cravebox.com and starcoursecap.com. CRAVEBOX assembles care packages and gift baskets to be sold online. STARCOURSE CAPITAL is a venture capital firm that invests in young e-commerce companies. John dropped out of a PhD program at Georgetown University in 2014 to start CRAVEBOX and he says it’s the best decision he ever made. He now runs the businesses out of North Wales, PA and also lives in Manhattan part-time. When John’s not working, he enjoys sailing, playing guitar, and spending time with family. Check John Accardi’s Instagram profile.
