How to Plan for a Product Recall Before You Need One | #634

Most product businesses don't have a recall plan. Not because they've decided against it. Just because the moment hasn't arrived yet.

Melanie Nolan built Naternal Vitamins to eight million dollars in four years without running a paid ad for the first two. She built it on trust. Then in April last year, a manufacturing error created iodine variability across fifteen thousand units of her prenatal supplement. The TGA required a full voluntary recall. She refunded nearly three hundred thousand dollars in a single month. And came out the other side still growing, with 95% of her customers still there.

That outcome is not accidental. In this Playbook episode, Nathan unpacks three things every physical product business should do before a recall arrives, not during one.

Today, we're discussing:

• Why recall infrastructure fails when you build it inside the crisis rather than before it [lesson one]
• The four systems Naternal built after the recall: recalls@ email, Google Drive docs, batch tracking, fillable forms [lesson one]
• Why going first on transparency is the commercial move, not just the ethical one [lesson two]
• How 95% of customers stayed after a $300K refund month because of how Mel communicated [lesson two]
• Why the brands that come through a crisis are the ones that move toward the problem [lesson three]
• The $22,000 recall insurance policy that was worth every cent [lesson one]

Explore Naternal Vitamins | Connect with Melanie Nolan | Hear EP620

Transcript

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Fast Delivery As A Growth Signal

SPEAKER_01 0:01

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The Recall No One Plans For

SPEAKER_01 0:51

Most product businesses don't have a recall plan. And it's not because they've decided against it. It's usually just because the moment hasn't arrived yet, and there's always something that is much more pressing to work on. But the exposure is real, regardless of category. It could be a labeling error, a batch inconsistency from a contract manufacturer or a supplier that cut a corner that you didn't even know about. Any business selling physical products are exposed to this risk. Melanie Nolan built Naturnal Vitamins to $8 million in four years without even running paid ads for the first two years. She built it on trust. It was a community that knew her as a practitioner long before they were ever her customers. Then, in April last year, a manufacturing error created iodine variability across 15,000 units of her prenatal supplement. The TGA required a full recall. She refunded nearly $300,000 in a single month. This taught her a massive lesson, which she shared with us. But she came out the other side, still growing, with 95% of her customers still there. Let's hear how she did it.

Inside The TGA Recall Reality

SPEAKER_00 2:07

So that was April last year. I got an email from my product developer at 11 o'clock at night on a Friday. And he said, Hey Melanie, I'm just letting you know I just got off a call with your manufacturer for Evernatal. And they have some concerns about the iodine dosing in each capsule. I don't know how big this is going to be, but I just want you to, you know, be aware of it. And I was like, okay, what does that mean? I didn't understand the gravity of it. And by Monday, yeah, we were in meetings with the TGA, so we had to voluntarily recall our whole Evernatal batch, which was like 15,000 units we'd sold. So what happened was the manufacturer just made an RD error. So some capsules had more iodine, some didn't have any, and some had a great amount. And because we didn't know which ones were fine, which ones weren't, we had to recall the whole batch. It was a huge, huge, huge nightmare logistically. Obviously, my heart went out to customers that weren't sure which ones they got. Did I get too much iodine? Did I not get enough? So that was horrific trying to deal with the customer comms. But my biggest learnings were you have to have systems and processes in place for all the bad things to happen. Like I was just like, oh, that'll never happen to us. And you know, I don't need any of these things. Like we're going so well. And then, you know, all of a sudden it's like, oh God, then you're trying to catch your own tail. Yeah. If we had had everything in place, because the TGA makes you contact each customer, get them to fill you out of form. The customer needs to send it back. You then need to process a refund or a replacement. We couldn't do replacements because we're out of stock because we didn't have any unaffected batch.

SPEAKER_01 3:45

What kind of like replenishment times are you talking if you to restock that?

SPEAKER_00 3:49

Four months for every batch. Thankfully, we had a batch already getting made. So we were only out of stock for maybe six weeks, but we had to contact, yeah, thousands and thousands of customers. And then the TGA requires you to contact them three times. So if they don't respond the first time, you have to try a different method. So email, call, you know, text, letter. It was really difficult to keep track, and you need to, you know, keep track of exactly where the customer is, have they responded, how many bottles did they use, how many did they return, and did they destroy any? It was huge. So I think just if I had everything in place, I know bigger brands have recall teams, they have recall kind of practice runs, which I didn't even know was a thing. Which like a fire alarm. Yeah, literally, which would be a benefit to have done previously because it just felt like I was thrown in this really stressful situation and customers were angry and it was it was horrid. And the news picked up a story like pregnant women, you know, I don't know if I use the word poisoned, but it was it was very alarmist. It was me and a few other brands. So yeah, there was it was on the news. Yes.

SPEAKER_01 4:56

And you mentioned there that customers were angry. Was that the majority of your customers or did most understand? Because I could imagine that you communicated in a pretty upfront way.

SPEAKER_00 5:04

Yeah, I did, definitely. And I think that's key. Like we didn't try to hide behind anything. I got on my Instagram story straight away. I wrote an email from me. I explained exactly what happened. I think like if someone's a bit frightened about like, oh, have I taken something that's potentially unsafe or not good enough, you know, they want to know exactly what happened, how it happened, and what are you doing about it. So I think that really helped build trust again. And most people understood. I would say 95% of my customers were so gracious about it. There was 5% that weren't. That's to be expected. But yeah, most people were really like, oh my gosh, we know you didn't want this to happen. It's not your fault. I didn't put the iodine in myself.

SPEAKER_01 5:45

Yeah, yeah, yeah. That makes sense. And tell me, you mentioned there around some of the systems and the backups that you would have loved to have had in place. And I think this is a really good lesson for everyone, whether it's TGA or not, because anyone can get a product recall at any time.

SPEAKER_00 5:59

Yeah, I forget that. Yes, you can.

SPEAKER_01 6:01

What did you change in your business to make sure that if it does happen again, that you're a little bit more protected and prepared?

The Systems Melanie Built After

SPEAKER_00 6:09

So what I have now is we have a dedicated email that is like recalls at Naternal Vitamins. And within that system, it's like, okay, this is the documents we would send out. So they're already, you know, in a Google Drive, we've got all the documents ready to go. Because we were kind of scrambling like to make the right communications out to customers. So I guess I'd be editing that if God forbid anything ever happened, so they're ready to go. Also, the ability to track customers, so really ensuring we know exactly what customers get what batch. Because on Shopify, until this happened, it was kind of like, okay, so everyone from this date we think got the product. So we had to communicate with a lot of customers that it was like over a two-day window. I was like, which batch did you get? You know, I wasn't asking them that, but we just had to let them know, okay, could you please check your batch number? Because on Shopify, it doesn't track batches. And so, yeah, if you're halfway through one batch and you're starting another on one day, it's like which customer at 11 a.m. got which bottle? So that is definitely firmed up now. And just spreadsheets that are able to track and allow people to fill out documents because there was issues where we were sending documents to customers saying, Hey, can you fill this out? And they were like, Well, I don't have a printer. And it was like, because they needed to send it back. And, you know, so just trying to like make it super easy so we can send out a fillable document to each person and just having the manpower to be able to receive back, you know, 6,000 forms and reading each one, just setting it all up so that it's as easy as something really difficult can be.

SPEAKER_01 7:44

That's a lot of work.

SPEAKER_00 7:46

Oh, it was huge, huge. I've never experienced that amount of work before. Hours and hours of just receiving forms, you know, reassuring people, trying to communicate what was going on. Yeah, I'm glad that's over.

SPEAKER_01 8:00

Did you still grow last year, even with that in the middle of it all? You know, did it even the long-term trajectory?

SPEAKER_00 8:06

So April was obviously our worst month we've ever had because we refunded nearly $300,000 worth of orders. But once we got over that, we grew, which I was nervous about because I thought we're losing trust where that's what my brand's been built on, and I've lost the trust of everyone. But thankfully, people still do believe in us, trust us. And again, I think that was because I communicated really, really transparently about what was going on. My other tip is just having business insurances for every scenario. I only had just got recall insurance four months prior.

SPEAKER_01 8:42

Oh, how lucky.

SPEAKER_00 8:44

Yeah, I got a business insurance broker, which I hadn't had before. And he was like, okay, these are the 11 types of insurances you need for this scenario, this scenario, this scenario. And I was like, oh, I didn't even know that was a type of insurance. And I hadn't even considered recall insurance because I'm like, oh, that, you know, come on, like, really? So I'm so glad for him because there's so many different ones, like business interruption insurance.

SPEAKER_01 9:09

Good on you for taking them up though, because every time I see those lists of insurances, I'm like, they're just making up insurances now.

SPEAKER_00 9:15

Yes, I well, I felt the same, but I was like, oh, there's that anxious mind. Like, if you don't, you know, and so our insurance is about $22,000 a year for certain insurances, but well worth it when I consider like how much we got back from the recall.

Three Rules For Surviving A Crisis

SPEAKER_01 9:33

What Mel is describing there isn't just a supplement story. It's a stress test that every business selling physical product will face eventually. And almost everything that determines how it ends gets decided long before the problem arrives. Here are three things worth acting on today if you sell physical products. Number one, the recall infrastructure doesn't exist until you need it. And that is a huge problem. Most recall failures aren't communication failures, they are system failures. The moment an issue is flagged, you suddenly need a lot of things all at once. Batch level tracking to know which customers got which stock, a dedicated comms channel, a pre-drafted copy that you can edit rather than write from scratch, digital forms that customers can actually fill in. None of that gets built cleanly in the middle of a crisis, and it needs to be done fast. Melanie had none of it when her call came in. Shopify doesn't track batches at the order level, which meant contacting everyone from a two-day window and asking customers to check their own codes. The dedicated email address didn't exist. The comms had to be written while simultaneously managing thousands of incoming responses. Some customers couldn't return the forms because they didn't have a printer. The list she built after the recall is worth building now for you. It could be a dedicated recall's email address, pre-drafted communications sitting in a shared drive ready to edit, batch level tracking tied to specific orders, not just date ranges, fillable digital forms ready to go. None of this is overly complicated. You just don't want to be doing it in a rush. From a different angle, Joshua Mamaliti at the Blue Space learned the same thing during COVID. Demand surged and he had to turn off ads because the fulfillment infrastructure couldn't hold. He ended up in the warehouse at 11 p.m. doing six-hour pick and pack shifts while running his business. The systems he needed weren't complicated, they just weren't there for that demand. Building them under pressure cost him weeks. He could have spent elsewhere. Lesson number two, transparency is the mechanism, and it's not just the ethical move. The instinct in a crisis is to control the information, get legal across it, understand the full picture before saying anything. That instinct is likely to cost you customers because it takes too long often. Melanie got on Instagram stories the same day. She sent an email from herself. She explained what happened, how it happened, and what she was doing about it. 95% of her customers understood and they stayed. That number tracks with what the Add to Card Archive keeps coming back to. Oliver Hagen from Hagen's Organics has a rule about this. He says, don't make up little white lies. If something went wrong, just say what happened and say you're very sorry. It's very human, isn't it? His experience every time is that customers are more forgiving than you expect when you're honest first. The same principle runs across three brands at HealthPost. Their CEO, Abel Butler, frames it very directly. Give customers the benefit of the doubt, be honest with them, and then they'll do the same for you. Sounds simple, right? The critical word in all of this is first. What destroys trust in a crisis isn't the problem itself. It's finding out the brand knew before you did and said nothing. Know your channels, know who posts on them, and agree in advance that when, not if, when something goes wrong, you're going first. Not after legal clears it, not after you understand everything. First, get in front of it, build that trust. And the third lesson today, the brands that come through crisis intact go towards the problem, not away from it. Every version of this story has the same pattern. The brands that come through move towards the hard thing, not away from it. Holding inventory that isn't moving is commercially painful. Vic Gigliotti at Muscle Republic sat on a full tights range for four months because the fabric wasn't right. Akoza scrapped an entire earplug production run after it failed real-world testing before they launched. It was a costly decision, but they both took it. In both cases, absorbing the short-term hit protected the customer relationship in the long term. But there's a real simpler, everyday version of this. At Budgie Smuggler, anytime a customer reaches out, even slightly disgruntled, the team calls rather than emails. A phone call, it signals that you're not hiding. That signal in the moment when a customer is probably a little emotional and is deciding whether to stay or go, it matters more than anything you say. That signal is really strong that you care. And of course, a product recall is probably the highest of stakes. The brands that come through are the ones that move first before they have all the answers. The ones that waited until they could explain it perfectly mostly found that there was no one left to explain it to. So as we heard, Melanie got that email at 11 p.m. on Friday night without any of these systems in place. TGA meetings started on Monday. By the time she'd built the infrastructure she needed, she'd already had the worst month of her business. Most product brands are sitting in exactly that place right now. The preparation isn't complicated. It just needs to happen before that Friday night phone call arrives.

Join The Community And Wrap

SPEAKER_01 15:04

If you're working through what recall readiness looks like for your business or how to build the communications plan before you need it, those conversations are happening in the Ad to Cart community every week. You can join for free over on adducart.com.au. We would love to see you in there. That's the playbook for this week. See you next week.