“Breaking Bad”: Burned out programmer makes 37 million a year selling plants and fertilisers.

By Slava Riumin. Business blogs can be found at https://neploho.agency. I also run the blog “Fell, Got Up” at https://t.me/ruminblog.
The text is published with the permission of the author.
The original text is here.

I burned out as a programmer and turned my hobby into a business. Now I make 37 million a year selling on marketplaces.

I’m 42 years old, and like many IT professionals, I completely burned out by the age of 35. In gardening groups, I became friends with a chemist, and in December 2021, we decided to start producing fertilizers and soil for houseplants.

I didn’t start the trend of selling “crap” on marketplaces, but as an experienced gardener, I decided to take it literally and produce fertilisers instead of manure.

Although sometimes after marketplace tariff updates, there's a temptation to literally deliver manure to the pickup points.

I’ll tell you how to obtain the product using a concrete mixer, a drill, and Uralhim, why Ozon steals measuring spoons, what unpleasant condition Leroy Merlin imposes on manufacturers, why the Chinese don’t want to deal with powders, and how much my production earns and spends.

Usually, home gardening is perceived as a “hobby for old-timers,” with simple cacti or violets.

…

Everyone remembers the semi-alive greens in schools on shelves and windowsills.

In reality, the indoor plant market is worth billions. The cost of rare or trendy varieties of philodendrons, monsteras, alocasias can range from 20,000 to 50,000 rubles. And this is a common occurrence.

Professional fertilizers and soil are required for their cultivation. It’s another gigantic market where billions of rubles are involved. Today, let’s talk about it.

…

In the photo, a variegated Melanochrisum is growing.

If you know the difference between a Monstera and a fern, give a like, and share in the comments which plants accompany you!

DISCLAIMER: The article was written by the author of the blog “Fell, Got Up” based on an interview with the founder of a fertilizer production company, who chose to remain anonymous to preserve relationships with technology giants and retail chains.

Table of Contents

1. Introduction
   .
2. Business in Fertilizers from Scratch, Without Loans, Credits, or Government Support
   .
3. Revenue of Fertilizer and Soil Production
   .
4. Expenses of Fertilizer and Soil Production
   .
5. Profit Potential in Soil and Fertilizer Production

Business in Fertilisers from Scratch, Without Loans, Credits, or Government Support

For the initial purchase of ingredients, my partner and I each contributed 5,000 ₽, and we sold that batch through a VK group of fellow gardeners. Gradually, sales grew, and we first moved into a basement, then eventually to a full production facility.

The process of making our fertilizers looks like this:

1. Develop the formula – we reverse-engineer it using the Chinese method

We take an Indonesian or well-known American fertilizer and perform reverse engineering using the Chinese method.

That means we examine the ingredients listed on the label and ask the seller about the proportions from the perspective of experienced gardeners. Next, we study scientific patents to adjust the proportions. These patents describe the effects of various concentrations of essential ingredients on plants and are, by the way, freely accessible.

This way, we create our own product copy at 30% less cost than the original.

…

The Chinese approach involves taking a well-known product, reproducing it exactly, and then adding your own innovations.

2. Mix the necessary components

In the basement, we mixed the components using a concrete mixer and a drill with attachments.

At the production facility, we use powder mixers instead of concrete mixers, specifically “drunken barrel” mixers (2 units at 84.5 gallons each).

It turns out the classics were wrong when they said a concrete mixer only mixes concrete. It does an excellent job mixing soil and fertilisers too.

3. Package the fertilizers into bags and jars

In the basement, we used a chair, a scoop, and a bucket for this.

At the production facility: you load the mixture into an automatic packer, the machine fills it into jars and seals them. Labels are applied using a third machine.

Automatic packer - 700,000 ₽

Packaging machine - 350,000 ₽

We manually add measured scoops and pack them into sturdy bags with marketplace labeling (if required).

…

1. Primary raw materials: agricultural and fine chemicals.
   .
2. Grind the components into a powdered form.
   .
3. Mix the components according to the recipes into homogeneous blends.
   
   In the photo – the process of fertilizer production. Our fertilizer is half mineral (agrochemicals) and half organic: vitamins, amino acids, phytohormones (fine chemicals).

…

1. We package the fertiliser into PET jars of various sizes.
   .
2. We pack them into crates, palletize, and send them to warehouses or wholesale.

In the photo, packaging of fertilisers.

Similarly with soils: you load the mixture into the packaging line, the machine fills it into bags and seals them. Then you manually apply the label and pack them into boxes.

Packaging line - 950,000 ₽

We manually apply the labels and pack them into boxes.

According to wholesalers’ standards, we have a small volume. Printing houses reluctantly produce 5,000 labels, and if they do, it’s at 10 ₽ per label. But if you order a million labels, they come out to 1 ruble each. Therefore, we print the labels both in the basement and now on a printer, laminate them, cut them with a cutter, and stick them on self-adhesive paper.

…

1. We mix according to recipes. We add anti-fungal additives.
   .
2. Primary raw materials, divided into fractions: zeolites, bark, lava, and others.
   .
3. We pack them into bags, apply labels.
   .
4. We pack them into crates, palletize, and send them to warehouses or wholesale.

The process of soil production

4. We test the resulting mixture.

When introducing a new formula, we first test it on our own plants, then we pass it to a focus group – several familiar gardeners with a variety of plants and families (25 people). We give a trial jar to the laboratory. Then friendly nurseries test it on a mass scale of plants. If everything is fine, the product is launched into production (+ certification).

…

Some succulents have bloomed, while others have acquired beautiful colors, which means we can launch the fertiliser for sale.

At the start of our developments, there are often blatant failures. Complaints about hygroscopicity, clumping, powder hardening, burst packaging, and so on. Fortunately, customers provide feedback and advice – ultimately, we address the shortcomings and move forward.

In total, the estimates for the launch looked like this:

…

1. Concrete mixer
   .
2. Drill with attachments
   .
3. Buckets
   .
4. Shovels
   .
   Total: 200,000 rubles

Basement

…

Production estimate:

Soils:

1. 82.5 gallons mixer. Externally similar to a concrete mixer, but more powerful. 80,000 rubles.
   .
2. Automatic packer for packaging and sealing the mixture in bags. 950,000 rubles.
   .
3. Stone crusher for grinding components to the required fraction. 70,000 rubles.

Fertilisers:

1. Powder mixer similar to a “drunken barrel” (2 units). 640,000 rubles
   .
2. Dosing-packaging machine for packaging powder into PET jars. 700,000 rubles
   .
3. Capper for lids, also a dater, also a labeler. 350,000 rubles
   .
4. Mills for fine grinding of components (2 units). 60,000 rubles

Total equipment cost: 2,850,000 rubles

Production

The main problem in the production of fertilizers and soils is dust and dirt. It’s not like laboratory coats and clean offices. When mixing powders, dust rises, some of it is captured by the exhaust system, and some settles on all surfaces.

…

The same problem exists with soils: peat, stones, zeolites – almost every component generates dust.

Therefore, throughout the entire cycle, workers wear masks and special clothing. Afterwards, thorough cleaning and washing of all surfaces and equipment are mandatory.

…

Visually, it looks like this.

Revenue from the production of fertilisers and soils

As you can imagine, December 2022 was the perfect time to start replacing Western products with domestic alternatives. Some competitors disappeared. Due to sanctions and disrupted supply chains, Western original competitors became more expensive, while our product became 2-2.5 times cheaper, leading to significant growth.

Soils and mineral-organic fertilizers are purchased by everyone who imports, collects, propagates, grows, or resells houseplants, including expensive exotics and super-expensive new varieties.

The monthly revenue by channel is averaged over the last three months.

Marketplaces (WB and Ozon) – 1,410,000 ₽

Problems with marketplaces – items are thrown around, and components are stolen.

As a result, a customer might receive just a bag instead of a bag with fertiliser, or only a jar instead of a jar with a measuring spoon. However, in defence of marketplaces, it should be noted that sometimes buyers steal the measuring spoons and then refuse the purchase.

Warehouses have sealing machines that help reseal the product when the spoon has already been stolen. I don't know why this happens; maybe they use them for their meals.

…

User chose to hide their details: “This is the second product I’ve purchased, but there’s no measuring spoon again.”

Stolen again.

Retail – 190,000 ₽

We sell through a VK group to small towns where there are no Ozon or WB points. In Moscow, customers either pick up their orders or have them delivered by a courier. One person processes orders, and when they’re unavailable due to personal matters, we handle inquiries ourselves.

…

When the gardeners are satisfied, they send their horticultural successes.

Wholesale sales – 600,000 ₽

Nurseries buy wholesale. They nurture imported plants, acquire microclones from Taiwan, and sell them at x10 prices in Russia. To ensure good plant survival, they purchase specific soils and fertilisers.

Group orders – 850,000 ₽

In the most remote regions (Sakhalin, Kamchatka, Khanty-Mansi Autonomous Okrug, Transbaikal, etc.), it’s cheaper for gardeners to pool their resources and order a large batch. The organizer of such a purchase receives a 30% discount on the entire batch (this is their earnings), and in exchange, they advertise for us.

Leroy Merlin and chains – 0 ₽

To enter Leroy Merlin, an unpleasant condition must be met. The price at Leroy Merlin must be lower than the market price. For example, if fertilizer costs 1,000 ₽ in a VK group, 1,200 ₽ on a marketplace, it should be priced at 900 ₽ in Leroy Merlin. At this selling price, they want to buy fertilizers for 450 ₽ because the French markup is 100% of the purchase price. This is 250 ₽ cheaper than our usual wholesale price (our wholesale price is 700 ₽).

So instead of earning 700 ₽, I’ll only get 450 ₽, and this price doesn’t guarantee sales volume, especially since you’re competing with well-known brands on the shelves. Big players like PhosAgro or Uralchem are pushing through huge batches via chains.

In other words, to sell at Leroy Merlin, you yourself must promote the brand through advertising, just like with brands like Head & Shoulders, which were recognized on the shelf thanks to advertising. Otherwise, it’s just like on marketplaces, but with less favorable conditions for me.

Therefore, it's currently more profitable to collaborate with Ozon and WB than with Leroy Merlin.

Resellers – 0 ₽

Periodically, there are those willing to become dealers, and twice we even agreed.

For a reseller to make a profit, they sold at double the purchase price, meaning they bought for 700 ₽ and sold for 1,400 ₽. With such a price, they couldn’t compete with us (we sell for 1,200 on marketplaces). Selling wholesale for less is not interesting for us. And if we start raising retail prices, we reduce demand. It’s beneficial for us to keep prices below the market; then people come to us rather than to the Dutch.

Distributors were relevant before the era of marketplaces: you produce in Moscow, and customers are in Kamchatka. Postage is expensive, and then you need a dealer. They will bring in a wholesale load and resell it at retail there.

But now, with marketplaces everywhere, anyone in the countryside can order directly, and dealer intermediaries are no longer needed. And if we sell to resellers to trade on marketplaces, we have to give them a price of 250-300 ₽ because on marketplaces, the price from the purchase must be increased by three times for the math to work out. And for us, as manufacturers, it’s absolutely unprofitable to sell at such a price, let alone breed competitors.

…

Leroy Merlin and resellers – zero.

Ozon – 580,000.00 rubles

Wildberries – 830,000.00 rubles

Retail – 190,000.00 rubles

Wholesale – 600,000.00 rubles

Collective orders – 850,000.00 rubles

Total: 3,050,000.00 rubles

Production expenses for fertilizers and soils

Expenses calculated based on a turnover of 3,050,000 ₽.

Suppliers (ingredients and packaging) – 610,000 ₽

In nature, organic substances are generated by mold, bacteria—everything that exists in the soil. That’s why it’s not necessary to heavily fertilize plants in the field; minerals suffice—nitrogen, phosphorus, potassium—and the rest will come from nature. However, for potted indoor plants, nothing naturally comes to the pot, so besides mineral fertilizers, organic additives (fine chemistry) are included—vitamins, amino acids, phytohormones, sugars, and so on.

We source mineral fertilizers in Russia. We traditionally have many fields, so mineral fertilizers are abundant here. Russia also accounts for 16% of global exports in this sector. Previously, we bought from resellers, which was twice as expensive, but with a small volume, we couldn’t deal with major suppliers like PhosAgro and Uralchem, as they only deal with orders of at least 1 ton.

As for fine chemistry—vitamins, phytohormones, amino acids—we get them from China; they simply aren’t produced here. The Chinese trick is to dilute everything with maltodextrin, a derivative of white starch. As a result, you get a vitamin where half of the bag is maltodextrin. However, maltodextrin isn’t a problem in our business; in such cases, we can just use double the diluted component.

To avoid being deceived in China, you can find a buyer. These are specially trained individuals who speak both Russian and Chinese.

…

Through the website 1688, buyers purchase what you need, verify it, and send it to Russia.

An isolated issue in our niche is that no one wants to deal with powders. Customs scrutinise powders carefully.

…

You never know what you’ve mixed in there.

Your shipment from China can either be transported by auto as a consolidated cargo or in a maritime container, and you pay $1.5-2 per kilogram. That’s why we’re trying to transition to working with Russian wholesalers. They buy in bulk from China and distribute in Russia. It’s cheaper for them because large wholesalers fill a whole container with their goods, and the delivery cost per kilogram is only a few cents.

But we’ve had problems with other countries as well. For example, last year we ordered 20 tons of volcanic lava from Armenia for our soil. We expected stones sized 3-5 mm, but we received a truckload of lava sized 4-8 cm. We had to buy a crusher.

The 610,000 for suppliers is the total amount of purchases for the year divided by 12. We don’t calculate the cost for each item like large factories do because inflation has hit, and everything has gone up in price. The dollar has increased, Chinese components have become more expensive, etc. We just use a simple Excel sheet. I think 90% of accounting is the ability to input data, you can even do it in a very convenient accounting service, you just need to be diligent and enter the numbers. For now, it’s enough for us.

…

Self-employed – 342,000 ₽

We are located in an industrial zone (food industry, metal rolling), and nearby there is a workers’ settlement where many are interested in part-time work. We have a WhatsApp group with 8 people who work for us regularly. We set a project, for example, on Fri, Sat, Sun, the task is to produce, package, and pack 4,000 units of product. And whoever is available comes – usually 3-4 people.

Currently, we pay 1,000 ₽ per hour, and from this amount, the person pays taxes themselves. When we paid 500 ₽/hour, there was a high turnover, people could earn more easily as couriers.

If there are any issues, for example, if we prepared components for 4,000 jars, but we are told that only 3,500 jars were produced, we start checking the surveillance camera recordings.

Once we found out that a bag containing one of the components had been spilled, swept up, and simply thrown away.

People tend to stick to this job because they like the pay rate, so there are few problems.

…

We don’t prohibit the guys from taking fertilizers for their own flowers; they take one jar once every six months, which doesn’t make us poorer. Besides, fertilizers are not stolen willingly in general.

The main value of our company is the formulation, the secrets that cannot be shared with anyone. Therefore, when we invite employees, we prepare the components in such a way that they do not understand the composition; otherwise, this formulation will quickly leak from us. Our task is to prepare the bags, mix the fine chemicals into the primary mixtures. And we show the employees which bags to use to get the final product. These bags are already not labeled with what is what, and visually, you cannot guess.

Marketplaces – 496,800 rubles

At a turnover of 580,000 rubles, Ozon consumes 214,600 rubles (37%).

At a turnover of 830,000 rubles, Wildberries consumes 282,200 rubles (34%).

Tariffs are constantly changing, but for now, the margin allows it. We don’t buy premium, we don’t promote, we don’t monitor competitors, we don’t participate in promotions, and we don’t create colorful cards. Traffic on marketplaces is purely organic, through word of mouth – people search either by brand, product name, or through direct links.

…

To find us, you either need to know the exact name or click on the “Next” button. Currently, we are at the 250th position.

I think if we start advertising, we’ll end up giving away the remaining profits to the marketplaces. Additionally, we’ll have to produce more, deal with a lot of disloyal customers, and face many complaints. In essence, we’ll be producing more, earning less, and essentially working for the marketplaces.

…

Review: “Maxim: Pros – happy plants. Cons – none.”

Certification (spread over the year + government registration) – 100,000 ₽

In Russia, certification for fertilizers and pesticides is complicated, and everything remains from Soviet times, tailored to large enterprises. The agro-industry is state-owned, and it is not profitable for it to allow small companies into this sector, so they do not change the requirements, and they are very stringent.

To register mineral fertilisers, you need to pay 3 million for one position.

Exactly, for our 17 positions, we would have to pay 50 million. We wouldn't make that much income in 10 years.

Got it, since our fertilizers are not purely mineral but organic-mineral, with half minerals and half organic components, we don’t need to go through the Ministry of Agriculture and register with Rosreestr. Instead, we just need to obtain a declaration of conformity to GOST standards. This is a simpler process, and the certification for each product costs around 100,000 ₽ including testing. We have 17 products, and we periodically certify new ones, so I’ve budgeted 100,000 ₽ per month for certification expenses.

Advertising – 0 ₽

Group on VK, a few giveaways – and that’s it. We don’t run contextual ads, don’t attend exhibitions, and don’t engage in barter in exchange for praises about our products. We haven’t been working on the design of the group and cards for a long time – “it’s good enough as it is”.

Everything that promotes us at the moment is free word-of-mouth. There are plenty of groups and chats among plant enthusiasts – that’s where all this magic happens every day without breaks on weekends.

…

Review: “Pros: I love this stimulator. Plants grow roots superbly, quickly, and adapt painlessly.”

I believe that the best advertisement is recommendations from those who use the product, are satisfied with it, and share their emotions and impressions with others. And the overall estimate looks like this:

…

1. Taxes (7% of revenue) 213,500.00 rubles
2. Cost of goods (materials plus packaging) 610,000.00 rubles
3. Rent (plus utilities plus cleaning) 100,000.00 rubles
4. Equipment and depreciation 150,000.00 rubles
5. Certification (spread over the year plus government registration) 100,000.00 rubles
6. Payroll for order processing and assembly (3 employees) 150,000.00 rubles
7. Ozon commissions (37%) 282,200.00 rubles
8. Logistics (pallets and boxes, stretch wrap, and delivery to the marketplace) 50,000.00 rubles
9. Unforeseen expenses 40,000.00 rubles
10. Accumulated balance (reserve fund, 5%) 152,500.00 rubles
    

Total: 2,304,800.00 rubles

The total expenditure on turnover of 3,050,000 ₽ amounted to 2,304,800 ₽.

How much can you earn from the production of soils and fertilisers?

In the basement, the variable expenses included rent – 15,000 ₽, ingredient purchase for 700,000 ₽ revenue – about 100,000 ₽. We mixed, packaged, and sold everything with my partner. Since the process was not well-organized, we had about 5-7% returns. But still, out of 700k revenue, we managed to make about 300k profit.

If we look at the average over the last three months, the monthly calculation is as follows:

…

• Revenue: 3,050,000.00 RUB
• Expenses: 2,304,800.00 RUB

Total (for two): 745,200.00 RUB

For 745,200 RUB between the two of us, we each spend about 60 hours per month. I handle the formulations and production, while my partner takes care of finances, procurement, managing non-production staff, and order issues.

Currently, the quarterly growth is around 18-25%, and last year it reached up to 40%. There is virtually no seasonality (unlike the agrochemical market for summer cottages and gardens). The biggest contributors to growth are marketplaces and bulk orders.

In conclusion, I believe it is more sensible to invest in the product rather than advertising. A good product naturally encourages people to advertise for you.

…

Reviews: “Hello everyone! I read a post here that after using Micro Plus, orchids started to bloom. I decided to try it too. And indeed, after just one application, some of my orchids started to bloom (they rarely bloom for me). I recommend it.”

And there’s no better advertisement than that.
Thank you for reading, and please water your plants, not me, in the comments.

Credits

DISCLAIMER: This article was written by the author of the blog “Fell, Got Up” based on an interview with the founder of a fertilizer production company, who chose to remain anonymous to maintain good relationships with technological giants and retail chains.

I run the blog “Fell, Got Up,” featuring stories about real businesses, not just “success stories.”

You’ll read about: how I opened and failed a chain of nightclubs, how to properly glue cardboard to sell it on marketplaces for 50 million rubles a year, how a farmer spent 250 million in a village, why dumpling production is dying in the provinces, why a taxi fleet with 300 drivers and 40 cars is no longer a business, how a techie restored a Soviet camp but fell into a 60 million ruble cash flow gap, and other stories.

I write these articles for my blog, and my team and I also create commercial blogs, such as the blog for MoySklad. If you need content marketing, for example, on Habr or vc.ru, contact Ryumin.

By Slava Riumin. Business blogs can be found at https://neploho.agency. I also run the blog “Fell, Got Up” at https://t.me/ruminblog.
The text is published with the permission of the author.
The original text is here.