Say goodbye to Coolest Cooler. The young and hip, high tech cooler company recently announced they are closing down. CEO, Ryan Grepper cited the increase to a 25% tariff on Chinese imported products as the reason for their closing.
In a memo to backers of the Kickstarter campaign Grepper stated, “Today, I’m sad to report this has proved to be an insurmountable challenge for Coolest Cooler and we are forced to close down operations.”
This closure will leave one-third of early backers, roughly 20,000 people, without a cooler to call their own. The company has had many ups and downs, but what lead to their ultimate demise and disappointment of thousands of customers?
Early Interest
Coolest Cooler first caught the public’s attention in 2014 when it was one of the most successfully funded Kickstarter campaigns of all time. The company raised nearly 13 million dollars from around 60,000 backers.
Backers paid $185 for a cooler with a built-in blender, Bluetooth speaker and USB charger. Although this price was on the higher end for a typical cooler, the combination of features made it highly attractive to consumers. At the time of this product’s introduction, Kickstarter had never had a campaign receive so much support.
The cooler was promised to be everything you could hope for, and the company received tons of media attention. They featured in some of the most popular publications such as Time, Forbes, and The Washington Post, among others. Because of Coolest Cooler’s high profile launch, the decline of the company would be somewhat high profile as well.
Early Issues
Coolest Cooler came across significant issues early on. Cost of production was much higher than expected, and the $185 from each customer was determined to not actually cover those costs. The company had to find ways to create the product despite a lack of sufficient funds, which caused significant delays in delivering on their promises.
The only way Coolest Cooler could come up with the money to deliver coolers to early backers was to sell coolers at retail prices in order to generate the required profits. The coolers were listed on Amazon for between $400 and $500.
Although retail prices were much higher than the price Kickstarter backers had paid, many backers who had still not received a cooler were furious that regular customers would be getting one first. Coolest Cooler was beginning to cause major frustration among fans.
Labor Disputes Abroad
High production costs for Coolest Cooler were compounded by manufacturing strikes in China. The factory that produced the motor for the blender went on strike in 2015. The company struggled to find an alternative manufacturer that met their needs.
Unfortunately, one possible alternative manufacturer was not able to produce a product that met the standards of Coolest Cooler, and other manufacturers had increased expenses. Due to Coolest Cooler’s extremely limited cash funds, they were not able to go with an option that would raise expenses.
Additionally, there were many other factories in China that were experiencing labor disputes as well. The result of all these issues was even further delays for the production of the coolers. Customer frustration levels were rising.
Legal Trouble
At this point, despite a rocky start, a small amount of early backers had received their coolers, but tens of thousands were still waiting.
In 2017, Grepper released a statement that an investigation from the Oregon DOJ had been slowing down production. Frustrated backers from the Kickstarter campaign had filed complaints due to the extreme wait for their coolers. They suspected fraud.
Coolest Cooler worked with the DOJ to provide financial statements and come to a solution for delivering the promised products. They agreed on a timeline for delivering more coolers to early backers.
Unfortunately, there was simply no way to supply ever customer with a product because Coolest Cooler did not have the cash. The agreement was to provide a portion of customers within a year, however, even following this timeline agreement, thousands were left without the coolers they ordered.
Chinese Trade Wars
According to Grepper, tariffs on Chinese imported products were the last straw for the Coolest Cooler Company. The company relied on Chinese imported products, and due to their extremely tight budget, the increased costs were not manageable.
The trade wars with China began with tariffs and other trade barriers set in 2018 by U.S. President Donald Trump. These put an increased stress on Coolest Cooler, however, the 2019 increase to a 25% tariff is what pushed Coolest Cooler over the edge, forcing the company to close its doors for good.
Coolest Cooler originally hoped to make it through what they thought would be a short-term trade war, however, the issue lasted longer than expected and is not expected to calm down soon. Coolest Cooler gave up on its 5-year battle to stay afloat.
The End of a Company
This final company closure for Coolest Cooler leaves around 20,000 early Kickstarter backers without a cooler and without the originally invested $185. According to Grepper’s statement, those people who never received coolers are entitled to a $20 refund, which is still $165 short of what they originally paid. Understandably, many are upset.
After five years of waiting to see how the Coolest Cooler saga would end, we now know that tariffs would be the final struggle. The trade war was too much for the too much for the company to survive.
Coolest Cooler is not the only e-commerce business hit by increased costs related to the recent trade wars. They have received some of the most attention, however many small businesses, especially e-commerce businesses that outsource many supply chain needs have affected by increased tariffs.
Hopefully, other businesses will be able to find ways to weather the storm. Sadly, for Coolest Cooler, we will have to say goodbye.