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SME Diaries: Covid-19 nearly killed our diaper firm. After mass resignations and social media flaming, key changes saved us

In this instalment, Mr Andrew Tan, 48, recounts a dark period when his online diaper-selling firm ran out of diapers, first because the cost of materials soared, then when shipping disruptions caused major delays. After most of his colleagues quit, including the chief executive officer and his co-founder, a friend helped him turn the business around with a series of decisive measures.

SME Diaries: Covid-19 nearly killed our diaper firm. After mass resignations and social media flaming, key changes saved us

Mr Andrew Tan, 48, is the chief executive officer and co-founder of Pee-Ka-Poo Diapers, which makes its own diapers that are sold directly to consumers online.

Small- and medium-sized enterprises (SMEs), which form 99 per cent of businesses in Singapore, have felt the impact of Covid-19 keenly. TODAY’s Voices section is publishing first-hand accounts from SME owners and managers on the highs and lows of running a business in the pandemic.

In this instalment, Mr Andrew Tan, 48, recounts a dark period when his online diaper-selling firm ran out of diapers, first because the cost of materials soared, then when shipping disruptions caused major delays. After most of his colleagues quit, including the chief executive officer and his co-founder, a friend helped him turn the business around with a series of decisive measures.

In February 2020, Pee-Ka-Poo Diapers received confidence-shaking news from our factory. No diapers. We make our own diapers that we sell direct to consumers online. 

The pandemic caused the price of materials to jump 700 per cent and we could not produce diapers cost effectively. The materials were diverted to produce masks and medical gowns.

We tried sourcing from multiple factories, but still no diapers. We started to worry.

We tried selling masks for S$29 per box with our cost at S$18 per box. 

Sales came in quickly and we thought this was our lifeline, until rivals started selling masks at S$15 per box. We lost money, and entered a very dark period.

To cut costs, we gave up our office, worked at our warehouse, and announced a pay cut.

By May 2020, our reserves were depleted, expenses had piled up and cashflow was negative. I guaranteed loans to keep things afloat but 14 staff members resigned, including the chief executive officer and my co-founder. 

I felt I was being abandoned at the toughest time.

In less than a month, I lost 10kg, couldn’t sleep, and feared more bad news if I answered the phone.

Why continue? A sense of responsibility to investors who had put their savings into the firm.

Then a good friend offered to help me revive the company. I said: “I can’t pay you much.” She replied: “Let’s just focus on reviving the company first.” 

The actions we took after my friend joined included cutting expenses such as Facebook advertisements, converting our loan repayment to interest-only for one year and holding a warehouse sale to generate cash.

We also worked closely with our account managers from e-commerce platforms Shopee, Lazada and Qoo10 to promote our products on a regular basis.

Another measure was to hire a part-time sales person to connect with mummies’ groups to generate some offline sales.

In June 2020, our factory told us to expect diapers to arrive by the end of the month and we happily told customers that we were back in business, taking pre-orders.

However, there were constant shipping delays. Air freight had stopped, and demand for sea freight exceeded supply.

Almost every day in July 2020, we were apologising to customers, and replying to angry social media posts. People were calling us scammers and we were refunding many pre-orders that couldn’t be fulfilled.

In August 2020, our diapers finally arrived, and we fulfilled the orders. It was the first month we turned a profit.

Since then, our sales have become stable, and we started making profits every month. 

We gained customer confidence and went from a negative cashflow to a positive cashflow company with five staff members. 

We now focus more on net profit rather than revenue. We calculate how much we make in each transaction and we’re careful with advertising.

My advice to all entrepreneurs is to “be prepared”. There’s wisdom in the Scout motto. Maintaining constant positive cashflow is crucial to survive and thrive. 

ABOUT THE WRITER:

Andrew Tan, 48, is the chief executive officer and co-founder of Pee-Ka-Poo Diapers, which makes its own diapers that are sold directly to consumers online. He has been an e-commerce entrepreneur since 2007

If you are an SME owner or manager with an experience to share or know someone who wishes to contribute to this series, write to voices [at] mediacorp.com.sg with your full name, address and phone number.

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SME Diaries Covid-19 supply chain disruptions diapers

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