Let My People Go Surfing: The Education of a Reluctant Businessman

It’s imperative to maintain a sense of urgency in business because being first to market often trumps other qualities of a product, such as price and quality. It’s important to adopt an entrepreneurial rather than a conservative scientific approach to product because what the former lacks in certainty it makes up for in primacy. Suppliers often won’t have the same sense of urgency as the company itself, so it’s important to push back against suppliers’ claims that something can’t be done—these claims are in fact indications that suppliers are dragging their feet and not being creative problem solvers.

It’s crucial to successful production that the designer and producer meet before production is started and that they maintain a back-and-forth relationship through production. While design itself only incurs around 10% of a product’s cost, 90% of its cost is irrevocably committed during this stage. If the designer doesn’t understand what is actually possible to make, and if the producer doesn’t understand why a certain feature is designed the way it is, it becomes likely that the final product won’t match the intended function. If producer and designer maintain a relationship, they can address these issues as they come up before or during production to avoid costly mistakes.

Patagonia buys all of its fabric and contracts all of its production. To maintain its commitment to quality, the company fosters long-lasting and trusting relationships with its suppliers and producers. Each party is mutually codependent on the other, making each equally concerned with the other’s success. Sometimes, Patagonia leverages these relationships to ask for better conditions for workers. Others, it asks its producers to upgrade their machines or workers to improve product quality.

Ideally, all three of the elements in the title of this subsection are given equal weight, but ultimately quality comes first. However, achieving quality at the expense of on-time delivery and low cost is a failure; a company should always strive to attain all three.

Risk is essential to successful business, but it’s important to only take reasoned, researched risks. For example, it’s possible to mitigate the risk of switching from a trusted producer to a new, cheaper one by performing your own quality checks at the factory before committing and staying involved through the first production run.

It’s cheaper to go out of your way to fix manufacturing before it starts than to take extraordinary steps to correct it downstream. As such, it’s crucial to perform adept quality control before and throughout production to identify problems before they reach the customer in the form of a defective product.

Fair Trade USA is a nonprofit that fights for better prices and rights for small farmers who supply materials for apparel, food, liquor, and cosmetics. In 2014 Patagonia began selling 10 Fair Trade Certified products; by 2016 it was selling 200.

To stay competitive, Patagonia remains open to change and looks to other businesses for more efficient practices, “from MRP (materials resources planning), to just-in-time inventory, to quick response, to self-managed teams” (277).

Patagonia distributes through four channels: wholesale, retail, mail order, and e-commerce. Outside the United States, it does business in Japan, Europe, Asia, Latin America, and Canada. This diversity in channels of distribution and in markets shelters Patagonia from the worst effects of recessions; when wholesale flags, its direct sales channels pick up the slack. Likewise, when one region enters an economic downturn, the ones that don’t buoy Patagonia’s business.

The catalog was one of the first ways Chouinard sold equipment when he started his tool company, and it remains a central part of sales and marketing. Chouinard views the primary purpose of the catalog as a vehicle for selling the company and its values. As such, the company avoids typical practices such as giving the most expensive items more space and appealing to people’s sense of guilt, vanity, or greed. Of course, mail order sales are also important. From other longstanding mail-order businesses, the company learned that order fulfillment between 93% and 95% maximizes both profits and customer satisfaction. For the 5% to 7% of customers whose orders cannot be fulfilled, Patagonia’s customer service team either finds the product in a retail store or offers the customer a similar item in order to ensure 100% customer satisfaction.

As of 2016, online sales exceeded mail-order sales. As opposed to the catalog, with its website Patagonia has the advantage of being able to adjust its marketing tactics in real time. For example, cold weather in a certain region triggers marketing emails linking to warm clothes.

Like the catalog, Chouinard wanted his company’s retail stores to reflect the company’s countercultural, environmentally conscious ethos. In the 1970s, outdoor stores had a look that differed from other clothing stores: Merchandise was displayed in cardboard boxes or on chrome racks, nothing was folded, and brands were intermixed. Patagonia opened its first retail store in the San Francisco Bay Area because Berkeley was the center of the outdoor industry in the 1970s. The team renovated an old auto shop from the 1920s in a low-rent, untrafficked location with no parking lot, betting that customers would come to them. They folded rather than hung their clothes and designed their own shelving and racks.

In this store and its subsequent one, Patagonia applied the same philosophy it used to guide it in making clothes. This philosophy of architecture included an emphasis on buying old rather than building new, using recycled construction materials and used furniture, and ensuring that every store is a reflection of its unique location.

The clear benefit of wholesale is that it costs less than direct sales such as mail order or retail. However, it’s crucial to ensure that the dealer present Patagonia’s brand in an unadulterated form. For this reason, Patagonia works almost exclusively with a small number of dealers with which it has a longstanding relationship. Additionally, in the United States it aims to become 20% to 25% of a dealer’s business so that it has leverage with dealers who may be less committed to presenting Patagonia in the way the company wants.

Patagonia has fewer dealers in 2016 than it did in 1985 because it refuses to sell to bigger chains that are putting the core specialty shops that Patagonia prefers out of business. In an age of online shopping, customers expect a big selection that small stores just can’t offer. However, those specialty shops foster a sense of community and excitement around an activity in a way that’s missing online. For this reason, retail wholesale remains a crucial part of birthing enthusiasts who will become loyal customers for life.