To our community and stakeholders:
Amidst the turmoil of a global pandemic that has caused supply chain disruptions and accelerated the emergence of new competitive pressures, byFormica has experienced another record-breaking year. By improving our operations’ efficiency, we have met the challenge of delivering more liquid feeders and ant food to customers in 2020 than in 2014-2019 combined. At the same time, we have incorporated substantial advancements to our quality management systems (QMS), resulting in fewer refunds, returns, and replacements than in any previous year as a percentage of sales. To continue to meet this growing demand, we capped off the year by increasing our production facility space by 50%, with plans to double our number of production personnel in 2021 (from 1 to 2).
Our Continued Customer Obsession
In early 2019, we implemented a robust quality management system for SunburstTM Ant Nectar, resulting in a significantly more uniform, higher quality product. In late 2020, we began to incrementally apply many of those same processes to our liquid feeder production by recording critical quality parameters associated with each small batch. Later, we will be coding each piece to allow for precise auditing of quality events down to the part-level. To the best of my knowledge, byFormica maintains—by leaps and bounds—the most sophisticated QMS of any manufacturer in our segment.
Despite the extra investments in time and money, we think our obsession with quality is crucial to our mission to make keeping ants easier and more enjoyable for hobbyists of all ages. If customer satisfaction metrics are any indication, byFormica® products continue to set the bar for design and performance among ant-keeping equipment suppliers; from more than 500 total product ratings and reviews accrued on Amazon worldwide since 2014, over 92% of customers rate byFormica® products either 4- or 5-stars. Moreover, in an online marketplace that practically encourages merchandise returns by making them a relatively effortless experience, quality-related refunds issued for byFormica® products sold on Amazon averaged less than 0.4% during 2020, compared to a marketplace average of over 10%.
None of this would be possible without our customers continuing to ask more from us and letting us know about the things that matter most to them each day. As we routinely scour social media content to gauge customer sentiment toward our products and provide proactive customer service, I am always humbled to find so many who have come to rely on the dependability of byFormica® products for the daily care of their small pets.
As with any market, our customers continuously seek less expensive yet higher quality products. Our liquid feeder technology, lauded in 2014 as an innovative leap forward, has rapidly become as essential and ordinary a tool among ant keepers as test tubes. And yet, we will never be content to rest on our laurels; we maintain the same entrepreneurial spirit to create brand new tools and improve existing ones to better help our customers in new and exciting ways, just as we did when we launched in 2014. I can’t wait to share some of these with you soon.
A Relentlessly Evolving Industry
More ant keeping equipment manufacturers are producing higher quality products than ever before. The advancements we have seen in the formicarium space by other shops have been nothing short of impressive. More individuals and companies are working to continue this cycle of iteration and improvement, pushing us harder than ever to stay relevant in a sea of innovation buoyed both by societal advances in STEM education as well as the growing adoption and affordability of technologies like consumer 3D-printing equipment.
But as these other companies manufacture dozens or hundreds of different products and product variations, they naturally must take a more generalized approach in allocating their resources. byFormica cares about one thing: advancing feeding and specialized accessory equipment with a laser-like focus on solving everyday challenges. In that regard, we think our liquid feeders and liquid food are an unbeatable combination.
Through 2019-2020, we are especially proud to have onboarded a dozen different ant shops across three continental markets as dealers and resellers of our tailored solutions to liquid feeding, greatly expanding our brand’s reach and making it easier for customers to find and buy our products. Even as our private sales on Amazon increased 33% over 2019, third-party dealer sales of byFormica® products have ballooned to represent over half of our worldwide gross, compared to less than 10% in 2018. Countless other individuals and companies have reached out to us for partnership opportunities, and we are working hard to accommodate more as we grow.
We are also glad to see this type of cooperation become more commonplace in our industry at large. The success of Ant Keeping Depot’s model of retailing products manufactured by a multitude of skilled artisans—in contrast to the less consolidated approach of every small manufacturer selling only their own products direct-to-consumer—stands as a beacon of hope for future cooperation among manufacturers in our industry. B2B purchasers scrutinize products differently than end-users. And because relationships with inferior suppliers are generally short-lived affairs, these types of partnerships afford a kind of transparency that holds manufacturers accountable to a higher quality standard.
The Post-Pandemic World
Despite the year’s record growth, the present and future are not without their share of challenges. Pandemic-related supply chain disruptions continue to increase the cost of some of our materials by as much as 175%. Supplies on backorder result in months-long production delays. While we have been able to make adjustments and absorb these costs to preserve a fair and consistent price for our customers, further increases may not be sustainable.
More critically, the relative simplicity of byFormica® products, combined with their excellent reputation, make them an easy target for unethical opportunists. Finding information and tutorials online is now easier than ever for makers and do-it-yourselfers. With the cost of entry so low with respect to equipment and training, and due to the pandemic’s pressure on economies around the world, we find a worrying number of ant shops are seeking the benefit of byFormica’s years of research and manufacturing experience by misappropriating our intellectual property without any compensation or attribution to us. This costs us greatly.
Dealing with these threats to our significant and ongoing investments in research and development diverts time, resources, and focus away from what we could otherwise spend on more productive activities, slowing the rate at which we can introduce new products. For example, we have been forced to be less transparent with respect to publicly revealing and testing new product ideas during development. The more open approach we long preferred now poses too great a risk of allowing bad actors the unfair advantage of being able to rush an inferior copy of our inventions to market before we are able to see a return on our investments.
This is just a brief summary of the main difficulties we face today. As always, I welcome the opportunity to listen to our community and discuss the issue more in-depth publicly.
Charting a Path Ahead
The most fundamental challenge for byFormica going forward will be to introduce novel products and improvements in a way that allows us to benefit from the substantial amounts of time and money we invest in creating them.
While we promote and encourage fair competition, we also believe our tight-knit community is at its best when it supports and rallies around makers who have done the hard work of bringing their unique inventions to the market. byFormica made these investments starting with our original liquid feeder design in 2014 and SunburstTM Ant Nectar in 2015—both a response to customer frustrations with existing solutions at the time. Consequently, we see close cooperation with community influencers and enduring partnerships with other shops as the most effective way for us to proceed with the introduction of new products and improvements.
Even as cheaper imitation products have emerged, our internal market research shows that byFormica® products continue to command the trust and respect of a clear majority of customers across most regions we serve. Again, our passionate customers, fans, and faithful dealers are solely to thank for helping us to continue punching well above our weight in an increasingly competitive and chaotic market.
As evidenced by these recent developments, it is clearer than ever that our efforts have had their own small yet substantial impact on the ant keeping equipment industry. We know there is much more we can improve, and we find tremendous energy in the many challenges and opportunities that lie before us.
A huge thank you to each and every customer for allowing us to serve you, to our dealers for your unwavering support, and to the many honest makers, influencers, shopkeeps, and community members out there for your ingenuity, your shared passion, and for setting high standards as to what we can accomplish in our hobby when we choose, in good faith, to work together.
byFormica Ant Products