Table of Contents
This story is part of, CNET’s coverage of the Biden administration’s push to grow American manufacturing and make more things in the USA.
The sputtering hum of sewing machines accompanies my tour of the Tom Bihn production floor in Seattle, where employees cut batches of fabric pieces, then pass them from machine to machine where workers sew the parts together. Finally, two quality control inspectors sitting on barstool-height chairs hold each resulting bag under a light, checking for loose threads or holes where seams should be, sometimes taking out a lighter to fully melt the ends of nylon straps to prevent fraying.
The company’s backpacks, camera carriers and messenger bags are popular, but customers can only find them on the Tom Bihn website (or in the showroom at the company’s facility prior to the pandemic) — they’re not sold in retail stores or on third-party websites. On tombihn.com, you can accessorize and pick out color combinations and learn about the specialty nylons that go into each bag. Prices range from $55 up to $370 for a top-of-the-line backpack.
The target audience is people who deeply research the kind of bag they want, says Nik Dukich, chief operating officer at Tom Bihn said.
“We’re bag nerds designing for bag nerds.”
The labor costs for making each bag at its home in Seattle are higher than they would be abroad, even if it has benefits like catching mistakes early. Workers making apparel in the US earn about 3.5 times more than they would in China and 13 times more than they would in Vietnam, the US’ two biggest sources of textile and apparel imports, according to wage estimates from Global Data. But the company is able to offset some of that expense because the benefits of producing locally means that costly errors are reduced (in manufacturing parlance, that means the production line generates a higher yield).
Its biggest cost savings: selling direct to consumers through a single website. That gets the brand in front of people shopping online throughout the US without requiring Tom Bihn to give a cut to online marketplaces like Amazon or Walmart, which charge fees for access and for connecting shoppers to products. It also avoids a higher price required to sell at retail outlets, which typically charge double the manufacturer’s price. That direct connection to consumers also helps the company quickly respond to customer feedback, which has led to positive professional reviews of their products (as well as a handful of glowing reviews on e-commerce review site TrustPilot.)
All those pluses help Tom Bihn build in value that the company believes justifies a higher price. The strategy seems to be working. Started in 1982 with one employee (Tom Bihn himself), the privately held company now employs 55 workers. The company didn’t share sales numbers.
E-commerce has become an essential tool for both large and small brands that have decided to make their products in the US, allowing them to keep costs low and get their products in front of more customers. After booming during the pandemic because of indoor shopping restrictions, with US consumers buying $206.7 billion in retail goods from online shops in the final three months of 2020, e-commerce has the potential to keep growing, introducing customers to more made-in-the-USA products that may not be sold in nearby stores. Apparel in particular has a strong future in e-commerce, with people in the US buying more than 46% of their clothing and accessories online in 2020. However, domestic goods only accounted for 2.3% to 3.5% of all apparel sales in the US in 2020, according to the American Apparel and Footwear Association.
For consumers, the benefit is more choice at their fingertips, but for businesses online retail can be a mixed blessing.
“E-commerce can expose domestically produced goods to a wider audience,” said Nick Maynard, a lead analyst at research firm Juniper. But, he added, “e-commerce also allows an enormous amount of competition.”
US makers are also at a disadvantage compared with companies that sell imported products that cost less to make.
It’s a dilemma understood both by businesses that sell directly to customers, like Tom Bihn, and sellers who rely on marketplaces like Amazon or Target. Josh Allen, owner of Bozeman, Montana-based dog toy brand WO, lists his locally made plastic chew toys on Amazon in addition to selling them in brick-and-mortar stores. Allen says e-commerce is a necessity, even though he helped found a chain of pet stores.
“There are so many other people in the country who aren’t going to be reached in brick-and-mortar stores,” he said.
Some businesses turn to automation
Adam Ravat wanted to make face masks in the US when the pandemic began, but he had to wait until technology was available that could fully automate the manufacturing process. As part of his other e-commerce businesses, Ravat has contracted with overseas manufacturers, working as a distributor for products his company doesn’t directly make. With N95 mask company BNX, he’s moving toward making more things himself in the US. It’s only practical when he can keep labor costs down to compete with imported products.
Using robotics made that possible, he said. “We have to be able to sell basically at the same price China can sell at, or we’re going to be defeated in the end.”
Once he found suppliers who could provide the necessary machines, BNX started making masks. It honed its processes by making KN95 and generic masks while it waited for National Institute for Occupational Safety and Health, or NIOSH, certification for its N95 masks.
Since January, BNX has been selling N95 masks made in a facility in Houston. At the factory, a metal cylinder the size of a pony keg perforates the outline of a mask over and over again onto a flat strip of mask fabric. Next, the fabric rolls down the assembly line to a set of two metal arms that stamp the ends of an elastic strap onto the sides of each outline. Further down the line, the long band of material folds in half lengthwise across a tapered piece of metal before rolling into a machine that cuts out each mask.
It’s not just e-commerce, but Amazon specifically, that completes Ravat’s business strategy. Selling his masks exclusively on the online retail giant’s marketplace, Ravat said his goal is to become a top seller on Amazon and attract mask suppliers who want to make him a wholesaler.
Ravat isn’t motivated to make masks in the US because he thinks customers want domestically made products (something people support in public polling, if not in their purchasing habits). Instead, it’s just smart for US businesses to find ways to do their own manufacturing now. A domestic supply of masks, for example, could fill in gaps if the global supply chain continues to face disruption from the pandemic. Ravat says he also expects to compete directly with overseas mask manufacturers in five to 10 years, when he predicts those companies will sell directly to customers under their own brands.
“The days of being a distributor are winding down,” he said.
Analysts agree that direct-to-customer sales are a. Brands that have historically partnered with retailers expect to make more than half their revenue from sales right off their websites within the next three years, said Dan Wallace-Brewster, senior vice president of marketing at e-commerce services company Scalefast. Many manufacturers are still working out the logistics of keeping track of stock and shipping individual orders, but in time industry observers expect the process to become smoother and a larger part of the online shopping experience. Customers are already getting used to shopping directly from a brand’s website, and the companies “make much better margins,” said Neil Saunders, who leads the retail analysis team at GlobalData.
Dealing with imitators
In addition to selling online, specialty leather goods maker Hardmill has a retail outlet and production floor in Seattle, where workers take rolls of leather made in Pennsylvania and central Mexico and cut it into patterns to make large totes, chef’s aprons, belts and hats.
The local store showcases the company’s high-end items, but the company makes most of its sales online, Barrie said. The Hardmill website sees the most shoppers, followed by the brand’s Amazon store, where the company tailors its strategy for the harsher realities of the retail giant’s marketplace.
It costs a lot to make Hardmill’s products, and they come at a premium, which could put them at odds with the low prices on which Amazon prides itself. So to catch the eye of an Amazon shopper browsing quickly, the company lists its less expensive products. For example, a $20 canvas roll made for chefs to store their knives might appeal to customers willing to spend a little more than they planned without breaking the bank. Hardmill’s Amazon store is also part of the site’s Handmade section, where some customers may already be willing to buy something with a bit of a premium that’s made in the USA.
“It feels very authentic to our brand to make things locally,” said Hardmill co-founder Ryan Barrie.
Selling on Amazon also brings imitators who start producing similar products at a lower price. As soon as a Hardmill product starts selling well, the knife rolls included, Barrie said he sees cheaper competing products. But the rivalry doesn’t faze the company, which considers it a part of doing business.
“That’s just how it is on Amazon,” he said.
Tapping into local talent
Before it all goes online, businesses have found manufacturing locally can make a product stand out. For example, having workers nearby — the company hires its sewing staff directly from the local labor pool in Seattle — helps Tom Bihn maintain the quality of its products. It’s easier and faster to catch faulty materials or clear up confusion over how a product should look when the people making the bags are in the same building as the designers, Dukich said. And the e-commerce-only strategy builds a strong connection to customers as they have just one place to ask questions and give feedback about their purchases
If the company ordered batches of its bags from overseas, it might have to spend a lot more money and wait longer to learn that something isn’t working. Just having all the materials in the same place provides an additional benefit, he said, especially for special-ordered fabrics. Nothing gets lost overseas when it’s on a shelf in the local warehouse. Additionally, it helps the company avoid shipping delays caused by the pandemic, storms, and a huge increase in demand for consumer goods.
For mask maker BNX, using local talent to run machinery and handle varying order volumes keeps everything running smoothly between the robot-equipped mask facility and the Amazon shopper’s doorstep. It also can respond to the ebbs and flows of demand to help keep prices low.
“We have full control and can service our customers immediately without having to rely on third-party service providers,” Ravat said.
Allen, who’s proud of his ability to create local jobs, also praised the benefits of doing so. WO partners with a production facility near Bozeman to make injection-molded plastic chew toys, and it contracts the manufacture of its plush pet toys to a Seattle company whose workers sew on machines in their homes.
To get WO’s dog toys in front of shoppers outside of the Montana area, Allen said, Amazon is crucial. The e-commerce marketplace lets WO show its products to customers who search for keywords like “Kong dog toys,” Allen said. “It’s really easy to target the people on Amazon who are trying to buy a dog toy.”