Ghost Truck in Mexico - Or a Highway Robbery?

9/22/23

This is probably the first of a series of blog posts. Subscribe to emails or follow me on X/Twitter or Linkedin to watch me do everything possible to either save this company, or pivot hard to transform this loss into something better than I was ever even working towards before. Either way, I promise it won’t be boring. I've been doing this alone, and very quietly, for long enough that I think you’ll agree it’s a very good time for me to start working with an audience, for the sake of helping other people learn from my experiences with manufacturing in Mexico. And obviously it will be very good for me to diversify a little bit right now.

If your company needs an experienced resource either remote or on the ground in Mexico and you think this story suggests I could be your guy, feel free to contact me at jeff@jeffritger.com.

What just happened?

We just had a truckload of inventory get stolen in Mexico, carrying nearly 10,000 units of about 600 different products, and a retail value of over a quarter million dollars.

Híjole!

Business is hard, and this business, well it’s always been hard. But I’ve never gone through something like this. I’ve never even heard of this happening to anyone I know before, and that’s why I chose to write about it.

How bad is it?

It’s pretty bad. This is a startup and I've kept 100% ownership by using debt financing only, and a lot of it. The last 2-3 years were TOUGH, and I was about to make it out under the trap door with the prize like Indiana Jones at the beginning of Raiders, with no time to spare. That trap door just slammed shut in front of me and it’s being propped open one inch by some old inventory and a glimmer of hope that I can scale pre-order and made-to-order wholesale and Mexico manufacturing consulting immediately, after I get final word about a reimbursement for the loss, which at best is going to be very slow. Sapito has spears through his eyes and I just missed payments for the first time in my life after I reimbursed pre-sale customers who won’t be getting their orders, so that big rolling boulder is crushing one heal in slow motion. The French guy is about to take what’s mine.

It took 8 years to get to this stage of the game. I’ve worked with dozens of suppliers, 14+ creditors, and 15 warehouse partners in 5 states looking for the right fit. I’ve had manufacturing delays extend lead times by 300% and production errors rip the e-brake on delivery. I had an open, last resort loan offer get pulled when a bank collapsed, right after my application was denied for a much bigger loan with a lower rate. A warehouse got destroyed by a hurricane. A truck got held at the Texas border for almost a month with the driver sleeping in the cabin, because another warehouse partner in USA broke a promise. Yet another warehouse couldn’t find things on their shelves that I sold and needed them to ship, many times per day in the middle of peak season, and accused ME of trying to pad my sales numbers, until I flew up from Mexico and showed up at their door with a giant U-Haul, a lawyer, and some muscle.

I’ve just spent two years living full time in Mexico. And right now, this summer, everything fell into place. 2 amazing new warehouse partners are working in perfect tandem. We recently added hundreds of new products in several new categories to the catalog (most now deactivated). We manufactured our first fully custom orders for business buyers instead of just white label. We just did a bunch of Amazon optimization and some technical SEO on Shopify, and we were in the middle of major upgrades to content and photos, so we were expecting huge boosts in SERPs and conversions. 3-year old problems that prevented us from using FBA at scale were just resolved, and we activated Buy with Prime on Shopify. We were scheduling a series of outdoor photoshoots with models. We were setting up massive email and influencer marketing campaigns. We just finished the B2B tech stack on our site and we were setting up wholesale marketplace accounts. And we were planning a Kickstarter for some exciting new high value products we’ve been designing. The rest of this year was going to be glorious.

Wasn’t the truck insured? How did this happen?

In short, it was not insured the way it should have been, the way these shipments have always been, every single time in the past. And for that and other reasons, it looks like the logistics companies are going to pay instead. But in any case, just like with insurance, it's going to take several months to see a reimbursement for the production value, minus the equivalent of a deductible. And we're going miss our entire high season.

As for how this happened, it looks like someone who should not have known anything about me or this shipment, got their hands on some valuable documents when some errors that needed special handing to be corrected, got passed around a little too casually, and probably sold. And in the weeks of total chaos getting this super complex and super late shipment urgently out of Mexico with new documents, new carriers, a new customs broker, and 1000 texts, emails, and phone calls, insurance coverage didn’t come up. And to my dismay, the default with this group of service providers was for trucks to NOT be insured, when in my experience they were ALWAYS insured, and it didn’t NEED to come up.

As the business owner I feel quite a bit of personal responsibility for this. Just look at what can happen to my company! But nonetheless, at the end of the day the service providers are legally responsible for making sure these conversations and deliveries go smoothly, including checking every box and asking the client every relevant question about what they do and do not want to include with a several thousand dollar international door-to-door delivery service. The countless complex documents and procedures in these shipments are WAY outside the purview of their retail clients, just as its the logistics companies' job and not mine to hire only vetted, trustworthy staff, drivers, and subcontractors who aren't going to steal whole truckloads of merchandise. And the fact that the logistics companies are going to pay - without a lawsuit - makes it pretty clear that they agree.

As for the robbery itself, while we're not 100% sure yet, it looks like the truck was probably NOT stolen by armed bandits on the road, but rather the merchandise was stolen at the door. It was probably a ghost truck that loaded up the 28 seven-foot tall pallets and promptly disappeared in the night. Basically pirates disguised as the carrier my freight partner had hired and that my suppliers and I were expecting.

Who are you again?

I’m Jeff, the founder and 100% owner of Orizaba Original, a US consumer brand and wholesaler/distributor of colorful Mexican textiles. Our core products are the well-known clothing and blankets that have been popular with Americans for a very long time, and we offer them in huge collections with extremely high quality to attract the large natural audience for these products. We were just reaching the later stages of the plan, where we would begin to offer this consumer and business audience much, much more. And then use the skills and infrastructure built to get there, to go HUGE with new projects.

I used to sign off as Jay, but nevermind that. This was just a small e-commerce brand that didn’t need a face behind it, and I didn’t see a need to be public about the micro-niche I was working in, when I hoped to sell the whole thing as soon as it had one year of steady profitability at scale anyway.

Recently we’ve started trying figure out how to expand into wholesale (as a natural consequence of all the work done on the ground in Mexico), and this is built on real relationships. Trust and transparency are super important, so a couple years ago I dropped the business alias. But you wouldn’t have known that unless you inquired about wholesale or placed a retail order from us recently, because I still wasn’t ever sending marketing emails. Manufacturing hadn't been able to keep up with demand yet, and so I hadn’t finished building the offers it was going take to actually make the emails attractive, and useful to the company.

I finally started writing those emails last month, because it was go-time.

What are you going to do?

Today we’re beginning to liquidate current inventory. It’s been selling slowly ahead of the season restock, so to make it attractive we just made the discount code “WIPEOUT” active for everyone, which is good for 25% off any order. We’re also offering Buy One Get One Free for all kids Baja Hoodies, because we have a ton of them and didn’t quite get our full marketing launch live on those, or even finish our photography. We’re emailing our customer and subscriber lists about it, putting it here in this post, and sharing the post selectively with other types of contacts.

We’ll open up similarly huge discount offers to wholesale accounts in a few days.

This is a start and it should keep us going for a little while.

Next, pending details about the reimbursement for the loss including amount and timeline, we’re hoping to announce pre-sale offers for the legacy product lines and the HUNDREDS of brand new products that were on the truck ready for launch. We were pretty sure some of these were going to be huge with our customers, and we had a series of additional products planned that we might be able to accelerate.

Finally, we hope to still be able to do a full launch of our wholesale program, which was in its infancy but was going to get the dial turned up to 11 the day the truck cleared customs. It’s seemed from our exploratory calls, emails, and deals, that most wholesale buyers really just want to buy what they want from our US inventory, when they want it, if it’s available. Well now we’re going to see just how wrong we might have been, and figure out how to instead fill up trucks with these orders, in roughly 2 month cycles: 3 weeks sell - 5 weeks manufacture. Until we can afford our own inventory again. We've also just learned about some factory surplus inventory in Mexico that we should be able to work with temporarily, for 1-2 types of products.

What else are you planning and considering?

Obviously I have a lot on my mind. In all the years I’ve been doing this, attending the ecommerce and online business conference circuits, lurking on Twitter, and listening to podcasts, I’ve witnessed countless people build much more successful businesses than this, much more quickly, with much simpler models. Orizaba does DTC, FBA, FBM, wholesale from inventory for retailers, made-to-order for retailers and distributors, and even fully custom manufacturing with custom textiles. We’ve been planning to add some print-on-demand and dropshipping offers too. We ship to USA and internationally from 2 countries, and we have a tech stack that integrates our 2 current warehouses plus inbound inventory with several live online stores. And all this with a low customer lifetime value and low average cart value, and no equity partners. And I’ve always been the only full time employee. Something was going to have to give if wholesale didn’t take off immediately this season and provide all the cashflow required to finally make this a successful business. Considering all of this as background, I’ll be looking at every opportunity available.

Not only did I have to learn all these business models at once AND find all the right partners for each piece of it by trial and error, but because these products are all so much harder to source than anyone would imagine I also had to learn Spanish, and ultimately move full time to Mexico.

DTC & Mexican Manufacturing Consulting

It seems obvious that offering some of my time as a consultant to other DTC brands, or other companies getting into Mexico manufacturing and exports (or imports) should be a high priority. The US just started importing more from Mexico than from China for the first time in 20 years, and a LOT of people are looking to start up in Mexico or move their manufacturing here from China and elsewhere.

Well, I was in China in 2013, and I’ve been in Mexico 2-6 months per year since 2015 and currently full time for over 2 years, and now I've now definitely been through it all. So like I said up top, if you need a highly experienced remote worker or a resource on the ground in Mexico and you liked reading this story, maybe I’m your guy. Feel free to contact me on X/Twitter, or on Linkedin or by email at jeff@jeffritger.com.

Much more to come. Please share, and stay tuned.

Jeff