Wednesday, December 29, 2010
I've mentioned Seth Godin's book Purple Cow in my top 5 business books list before. Recently I've been talking to quite a few people about the concept and I thought it was worth briefly touching on here because I love the concept and it definitely played a part in inspiring us to start Shoes of Prey.
The purple cow is a business analogy. Imagine you're driving past a field full of cows. All the cows are the normal black, brown and white colours. You'd barely notice them. Then imagine you see a purple cow in the field. You're immediately interested and you turn to the person next to you and say, 'Hey Jodie, see that purple cow over there? Wow'. You might even call you're mate Mike who's into cows, 'Mike, holy crap I just saw a purple cow. You come across one of those before?' While the book was written pre iPhone, Facebook and Twitter you'd probably take a photo on your iPhone, post it to Facebook and Tweet it. 'Crazy, just spotted a purple cow'.
All those black, brown and white cows are like normal businesses. They do their job well, occasionally someone will notice them, but they don't do anything extraordinary. The purple cow is a business that does things differently. It's remarkable. You tell your friends and acquaintances about it. The purple cow as a business is much easier to market. It's remarkability lends itself to word of mouth marketing, PR, social media / viral marketing and search engine optimisation, all great marketing channels in today's online world.
When Google launched they had a purple cow, their search engine worked so much better than any other search engine. It was remarkable. Zappo's started out selling normal shoes online, nothing purple cow about that. They developed a purple cow with their customer service. Free upgrades to 24 hour shipping, free return shipping, a 365 day returns policy and customer support staff who go above and beyond, all remarkable. I'm sure you can think of plenty of other businesses that are purple cows too, however most businesses aren't purple cows, they're not remarkable and it's that much harder for them to market themselves to new customers.
Prior to launching Shoes of Prey Mike, Jodie and I had decided we wanted to do something in the online retail space, but we wanted a product that was a purple cow. It was that thought process that lead us to offering custom women's shoes online.
What's purple cow like about your business?
Monday, December 27, 2010
Today a group of large Australian retailers including Myer, Harvey Norman and Westfield have launched a media campaign designed to pressure the Australian government to lower the GST threshold for goods imported into Australia.
I've made my thoughts on this issue clear in two previous blog posts here and here but I thought it worth addressing the points in these retailer's latest claims.
Here's the group's media statement:
AUSTRALIAN RETAILERS FIGHT FOR A FAIR GO
We represent a range of retailers in Australia with x stores, together employing xxxxx Australians.
There is an urgent need to tackle the uneven playing field created by GST and duty loopholes.
Failing to support Australian retailers will see a reduction in hours for casual workers, shifts, and ultimately cost Australians jobs in retail, manufacturing, logistics and related services.
Our Government needs to give Australian retail business employing one in ten Australians a fair go.
Under the current regime, Australian businesses are forced by the Government to charge more than their overseas counterparts when customers spend under $1,000 in Australia.
At the rate at which internet retailing is growing with mobile internet technology, the fact that offshore retailers aren’t required to levy duty or GST creates an enormous competitive advantage for foreign businesses selling into Australia. These businesses don’t pay our taxes, employ our people, train our young people or contribute to our economy.
We agree with our customers that online retailing is a wonderful convenience that is here to stay.
We currently offer our customers online services and we want to offer more but we are baffled by an Australian tax regime prepared to offer overseas businesses a better deal.
We are not asking for special treatment. The answer is to create a level playing field where the same rules apply to everyone.
Addressing each of these points in turn:
There is an urgent need to tackle the uneven playing field created by GST and duty loopholes.When selling to Australian consumers the playing field is not uneven. It's true that Australian retailers must charge customers 10% GST and pay duties if they source their products from overseas, and foreign retailers sending less than $1,000 worth of goods to a customer in Australia don't, however an Australian retailer has the advantage of shipping the goods locally. A customer purchasing from an online Australian retailer can receive their goods within 24 hours at a low shipping cost. This is not the case with a foreign online retailer and in our experience this advantage puts Australian retailers at least on par or even slightly tips the playing field in their favour.
Failing to support Australian retailers will see a reduction in hours for casual workers, shifts, and ultimately cost Australians jobs in retail, manufacturing, logistics and related services.As explained above the playing field is not uneven so the above statement is untrue. What will see a reduction in hours for casual workers, shifts, and ultimately cost Australian jobs is the lack of innovation coming from large Australian retailers. For too long they've operated in an environment with little competition, and they've not been focused on innovating. Unfortunately now they, they're workers and the Australian tax payer are paying the price. As a nation we should be projecting the pressure they're trying to direct onto the government back on to them.
Take a look at an ad my mum received from Myer on Friday:
This is about the peak of innovation from our large Australian retailers, "Australia's Biggest Stocktake Sale"! Whoopee! They've dug themselves into a hole with extensive discounting and they can't get out of it. Now they and Australia are suffering for it. They need to embrace the online retail space, build a fantastic experience for their customer's online and out-innovate and out-compete their competition.
Our Government needs to give Australian retail business employing one in ten Australians a fair go.I agree that in an ideal world, yes the government should lower the GST threshold. The trouble is the world isn't ideal. The government has pointed out that the cost of collecting GST and duty on low value shipments would outweigh the revenue earned. To collect $30, $50 and $100 payments from every shipment coming into Australia would require a massive customs bureaucracy. Now other countries, particularly those in Europe levy VAT and customs duties even on very low value shipments, but a) their VAT rates are around 20% and duties another 10% so they're collecting more revenue than the Australian government would be and b) I've seen no evidence that they make these collections efficiently. Quite the contrary, from our experience shipping to customers in Europe it's highly inefficient and they would be incurring significant expenses to charge consumers in their countries these taxes.
Under the current regime, Australian businesses are forced by the Government to charge more than their overseas counterparts when customers spend under $1,000 in Australia.
To levy taxes on low value shipments to Australia, the Australian tax payer would have to pay for it. The Australian consumer would have to pay for it. No one would win except retailers. And as discussed in the previous points this isn't the solution to the problems they're facing anyway.
At the rate at which internet retailing is growing with mobile internet technology, the fact that offshore retailers aren’t required to levy duty or GST creates an enormous competitive advantage for foreign businesses selling into Australia. These businesses don’t pay our taxes, employ our people, train our young people or contribute to our economy.As outlined above, a small difference in pricing balanced out by faster shipping times and reduced shipping costs cannot possibly constitute 'an enormous competitive advantage' by anyone's definition of that phrase. It's true that foreign retailers don't employ Australian workers, but Australian retailers don't employ foreign workers either. Why don't we try and build a fantastic, innovative online retail industry in Australia and sell our products overseas? We're an Australian retailer and half of our sales at Shoes of Prey are to customers overseas. Why aren't the likes of Myer and Harvey Norman doing the same?
We agree with our customers that online retailing is a wonderful convenience that is here to stay.If you agree "that online retailing is a wonderful convenience and is here to stay" then why the hell are your online stores so bad?! Myer are headed in the right direction with their online store but until 3 weeks ago a search on the Myer website for "men's suits" returned a search result for a Dan Draper Barbie Doll! Westfield are making excellent inroads with their new online mall. Despite some initial scepticism we were very impressed with what Westfield have planned and last week launched a Shoes of Prey store in their mall (more on that in a future post). All that said it did take Westfield until November 2010 to launch a competitive online offering.
We currently offer our customers online services and we want to offer more but we are baffled by an Australian tax regime prepared to offer overseas businesses a better deal.
Leaving the worst until last, Harvey Norman. I can't buy a single thing from the Harvey Norman website! "We currently offer our customers online services" is a very misleading line in the above media statement. Sure I can create a wish list on the Harvey Norman website and sure I can compare products side by side. But I can't buy anything! Does Harvey Norman honestly think that's what Australian consumers want? As I understand it there are some challenges for Harvey Norman selling online because an online store may take sales away from their franchisees. That problem is solvable. One simple solution is to attribute the sale to the nearest franchised store based on the customer's delivery address. The problem is that while he appears to be coming around, Gerry Harvey still thinks "online retailing is a dead-end". I've got a lot of respect for Gerry Harvey, he's an amazing businessman who has built an amazing business but on this point he is wrong. And I don't think it's right that he and other retailers are pressuring the Australian government to do something that is bad for Australian taxpayers, bad for Australian consumers and will not have a significant impact for Australian retailers.
To summarise my points:
- In an ideal world I agree that we should levy GST and duties on all imports into Australia.
- The reality is it's highly inefficient to tax these imports. It would result in a net cost to the Australian tax payer and a net cost to the Australian consumer. The only group that stands to gain is Australian retailers.
- Australian retailers wouldn't gain a great deal anyway. The problems they're facing are not going to be solved by consumers paying a little more for goods they purchase from overseas.
- Rather than spending their money on the newspaper ads they've published today, Australian retailers need to be investing in their online offerings. Provide an amazing online retail experience and Australian customers will come back and shop with them. And they might even find new markets overseas to expand into.
If you come across these ads today and over the coming weeks, don't be fooled. Australian retailers already have a fair go should they choose to take advantage of it.
Photo by Nathan Keirn from Kadena-Cho, Japan
Friday, December 24, 2010
A few months ago we discussed the possibility of opening a Shoes of Prey store but we've recently turned off the idea.
We were particularly interested in the Oxford St. Paddington area of Sydney so we spent quite a bit of time speaking with retailers in the area. It was quite depressing. Very few retailers seemed particularly enthused by how their businesses were going and many were very negative. It seemed that most single store retailers were barely breaking even, if that.
Our concept for a store is a little different in that we have a well trafficked e-commerce store that would drive people to our physical store, so in one sense we should be able to do better than a lot of retailers, but none of us have a background in the very specialised and competitive area that is physical fashion retail so that negative may outweigh the positives. I'm sure if we threw ourselves into it we could learn and possibly do reasonably well, but we need to prioritise our time and given how other offline fashion retailers are faring at the moment I think our time is best invested elsewhere.
We're on the look out for new office space to move into in the new year, so we think a showroom as part of our office is the way to go. That means we won't need to pay retail rents for the space and we won't need to have a full time staff member in the show room as we can man it in between working in our office. It will still allow us to get a lot of the benefits in that Sydney based customers of our website can visit the showroom, but it will keep the costs in money and our time down. We'll also be able to experiment with offline retailing using the showroom and if we find that it looks like it would work as a concept, we can go down the offline retailing path at that point.
Wednesday, December 22, 2010
Cross posted to Startupsmart.
I’m trying to work out my elevator pitch for potential investors. I’m finding it hard to sum up the proposition of my business in a short, snappy way. How can I get around this?
The elevator pitch is important to any startup. You'll need to use it with investors, potential partners, customers, prospective employees and even your friends when you're telling them about this crazy idea that you're working on. Keeping it short, snappy and to the point is critical for getting your message across and getting buy in from these key groups of people you'll be working with.
A great elevator pitch does 4 things:
1. It sets out the problem
2. It sets out the opportunity
3. It sets out how the business is going to solve that in a way that's valuable to customers
4. And most importantly, it inspires the listener.
Not all of those 4 points should be explicit in the pitch, but each of them must be implicit and easy for a listener to arrive at and understand. It doesn't have to and shouldn't give all the detail, you don't need to describe the features you're building, the goal of the pitch is to inspire the listener to want to spend time with you to find out more.
Here's some questions to ask yourself before putting your elevator pitch together:
What do you and others find inspiring about the business?
What are your key selling points?
If you had to describe it to your grandmother what would you say?
In my view the ideal elevator pitch is 10 seconds and at most 2 sentences long. Here's what I imagine the elevator pitch to be for 3 of my favourite companies:
We're the fastest, most relevant search engine on the web. We'll monetise the results by showing useful, relevant ads to users.
We design and manufacture aesthetically amazing, highly desirable, easy to use consumer electronics products.
We connect everyone in the world with their friends online, and make it easy to communicate with them.
Your elevator pitch will evolve over time. Larry and Sergey, the founders of Google didn't know how they were going to monetise their search engine when they were pitching to investors back in 1998. When he started Facebook, Mark Zuckerberg was only planning to connect everyone at Harvard.
Our elevator pitch at Shoes of Prey is:
Shoes of Prey allows women to design their own shoes online which we then hand make and ship to them.
Talking to the 4 key points of a good elevator pitch above, ours:
1. Implicitly describes the problem - the difficulty in finding the perfect pair of shoes.
2. Implicitly describes the opportunity - lots of women find this to be a problem.
3. It explicitly says how we solve this problem - you design your shoes online and we make and ship them to you.
4. As it's a new and unique idea, our hope is that it inspires the listener.
Depending on their perspective the listeners mind will ideally jump to one or more of the following thoughts:
Customer - wow, I want to try this, my friend X would love it to, I should tell her!
Investor - this is a global online retail opporunity. It has low capital requirements as they don't need to hold stock.
Partner - this product would excite our customers, perhaps we can partner with this business.
Prospective employee - this sounds like a unique and fun startup to work at.
The best way to put together your own elevator pitch is to practice. Practice on your friends and family, try out different ideas to see what works. Like your business it's going to evolve
The great thing about an elevator pitch is that it can be a great tool for helping you determine if your product or business idea is going to work, and defining what it should be. If you're having trouble distilling what you're doing perhaps you're trying to do too much and you should simplify your proposition, or perhaps your value proposition isn't something customers are looking for and you need to adjust it.
If you're working on a startup at the moment what's your elevator pitch? Feel free to share in the comments below.
Photo by Aric
Monday, December 20, 2010
|THE TEAM AND PARTNERS ENJOYING LUNCH|
|THE SIGNATURE DISH - CONFIT PETUNA OCEAN TROUT WITH KONBU, CELERY & APPLE|
|PANCETTA WRAPPED QUAIL BREAST WITH FRESH SPROUTS & ONION|
|CHOCOLATE PAVÉ WITH CREAM CHEESE ICE CREAM & CINNAMON TWIGS|
How do you celebrate wins?
Wednesday, December 15, 2010
Based on Pyrmont, Sydney, Naomi Simson started RedBalloon 10 years ago and the business has been completely self funded. Naomi champions making work environments fun places to be and RedBalloon is regularly in the top 10 places to work in Australia. I thought it would be fun to make Naomi some RedBalloon themed shoes using their signature red with blue ribbon and this is how they turned out!
I had the pleasure of meeting Naomi a couple of weeks ago to present her with her shoes. She's a very nice, genuine person and it's inspiring to see the success she's had with RedBalloon and to be able to work with her and the Redballoon business. Naomi blogs at http://naomisimson.com/. Thanks to Dan Joyce from RedRoomDVD for putting us in touch with Naomi and RedBalloon.
Monday, December 13, 2010
As published in the Opinion section of the Sydney Morning Herald last Thursday:
The recent posturing by Myer chief executive Bernie Brookes and Harvey Norman chairman Gerry Harvey about opening online stores based in China to get around the $1000 GST import threshold is a blatant attempt to continue to limit competition in Australian retail.
It's abundantly clear that they won't act on their statements, because if they do, they'll be giving away their two big advantages over foreign retailers — cheap and fast shipping. The costs they'll face in shipping products individually from China will, in most cases, more than outweigh the saving in GST, and the longer delivery time will lower their sales.
What's more, given the terrible state of their existing online offerings, it's hard to imagine how either company could have an internationally competitive online retail offer available by early next year, as Brookes and Harvey have suggested.
They won't open online stores based in China. Their statements are designed to pressure the federal government into lowering the GST import threshold.
But doing so would be terrible for Australian consumers and taxpayers. The reason for the $1000 threshold is that the cost of administering GST on imports worth less than that outweighs the revenue the government would earn. Lowering the threshold would be a net cost to Australian taxpayers.
It would also mean Australian consumers would have to pay more for goods purchased overseas. The additional bureaucracy could also mean delays in Australian consumers receiving their goods. Nobody wins, except Australian retailers, and even their wins would be small.
Australian consumers aren't shopping overseas because they're saving 10 per cent by not paying GST. Recent research conducted by The Leading Edge for PayPal shows that the main reason consumers are shopping from overseas websites is to gain access to goods and services that are not available in Australia (32 per cent), with a much smaller group saying price is the main issue (19 per cent). A 10 per cent rise in prices for goods purchased from foreign online retailers isn't going to have a significant impact on the number of people purchasing goods from Australian retailers.
The real problem is that this is the first time the big Australian retailers have faced any significant competition. Their historical lack of innovation is being exposed now that consumers can conveniently shop for almost any item overseas.
The online retail offerings from the likes of Myer and Harvey Norman are abysmal compared with their US and European counterparts. The problem stems from the fact that until now, there has been limited competition in the Australian retail market. We have two major grocery chains, two major department store chains and, while there is a bit more competition in electrical goods, there are a limited number of high quality store locations available and Harvey Norman has most of those tied up.
Compare this with the US and Britain, where there are five or more significant retailers in each of these categories. Competition fosters innovation; for too long the lack of competition in the Australian retail market has left consumers with a sub-par retail experience.
If the large Australian retailers want to encourage consumers to spend domestically, they need to step up to the plate and focus on improving their offerings, rather than posturing in the media about lowing tax thresholds at the expense of taxpayers and consumers.
Rather than keeping their blinkers on and focusing on the Australian market, Myer and Harvey Norman should be looking at the opportunities online retail is opening up for them to sell to consumers overseas. If the federal government caves in to their pressure, Australia will continue to be left with a lacklustre, internationally uncompetitive retail industry.
Michael Fox is a co-founder of online custom women's shoe site www.shoesofprey.com. He blogs about online retail at www.22michaels.com
It wasn't in the published article but I should add that despite shipping our shoes directly from China we haven't attempted to structure our business to avoid charging Australian customers GST. We charge GST and remit that to the Australian government.
Friday, December 10, 2010
One of the many things I loved about working for Google was the free lunch and snacks they provided employees. The Mountain View office in the US was particularly good with around 15 different cafes offering a whole range of great food, all free for employees. Despite not having the 1000's of employees to justify so much choice, the food in the cafe in the Sydney office is also very good.
The photo above is of one of the many great meals I had at Google:
- Sweet potato sausage soup with heirloom potato chips (shown at the top)
- Vegetable medley - steamed spring vegetables, seasonings tossed in Californian extra virgin olive oil
- Pan roasted duck breast with duck-red wine reduction (on the right)
- Grilled salmon with citrus tarragon vinaigrette
- Tossed salad with blue vein cheese.
Providing free snacks and lunch for employees provides a business with a whole range of benefits including:
- Creating a more social and friendly culture within the organisation. Meals are a social time, why not encourage employees to eat and socialise together rather than force everyone to leave the office to find their own food, or prepare their own individual meals?
- More productive connections within the organisation. Conversations over lunch will no doubt include discussions around work. These discussions are more informal than meetings and generally more creative and can lead to positive outcomes for the organisation. It can also encourage people within an organisation who might not normally have a formal reason to meet, to have a discussion. I worked in sales at Google and I often had conversations with software engineers over lunch which gave me new insights into the organisation that I wouldn't have gained otherwise, some of which I could apply to my work.
- Higher productivity. What a waste of time to have all your employees each spending 15 minutes in the morning preparing their own lunch or each standing in lines at take away food places to buy their own lunch. Why not save them this time by providing lunch, they'll no doubt be working for you for at least some of this additional time they save.
- Employee retention. Even if the 15 minutes they would have spent preparing their own lunch in the morning is spent sleeping in instead of additional work for your organisation, what a great reward that is for working for your company. They're going to be less likely to leave your organisation and you'll have more people applying for jobs at your organisation.
And as I recently found out, providing snacks and lunch is also tax effective. Apparently providing employees with snacks and lunch in the office, as long as it's not extravagant (eg. doesn't include alcohol) isn't subject to fringe benefits tax, the GST input tax credits can be claimed, and the costs deducted against the company's tax like most other expenses.
All of that said, it's not a cheap exercise. Let's say a business spends $20 per day per employee on food. There are about 230 work days in a year so that's $4600 per employee. Depending on the average salaries in a business that's likely to be around a 3-10% increase in wage costs. In my experience at Google I think the business received more than that in benefits.
We're outgrowing our space at The Campaign Palace and plan to find a new office in the new year. While it's going to depend on the business's cash flow, once we move we think providing lunch and snacks will be well worth the cost.
Has anyone else had experience working in an organisation that provided free snacks and lunch for employees and if so, what are your thoughts on it? Given not many businesses do this there must be plenty of people who think the costs outweigh the benefits so I'd love to hear people's thoughts on this too.
Wednesday, December 8, 2010
There are essentially two ways to think about customer service in your business:
1. as a marketing tool or
2. as a cost of doing business.
The best approach for your business essentially comes down to what you want your key point of difference to be in the market, and whether customer service is important for that or not.
Approach 1: Customer service as a marketing tool
An approach being taken by a lot of businesses, particularly recently, is to treat customer service as a marketing tool. Rather than measuring customer service as a cost of doing business that needs to be minimised, businesses will look at customer service as a marketing tool where the return on investment should be maximised.
An excellent example of this is the US based online retailer of shoes, Zappos. Some of the amazing things Zappos do to treat their customer’s well:
- 24/7 phone and email support
- 365 day free returns policy (you can return your unworn shoes up to a year later for a full refund)
- Free shipping to the customer, and free return shipping for returns.
If you’re unsure about your shoe size, Zappos will actually suggest you order two pairs of shoes in the sizes you’re unsure about, then return the pair that doesn’t fit, all completely at their cost.
There are also numerous stories and review online of where Zappo’s employees went completely out of their way to help customers. A common story is Zappo’s employees pointing customers to competitor sites when Zappos are out of stock of a particular item.
One of my all time favourite customer service stories comes from Zappos. The customer’s mother had recently purchased some shoes and then sadly passed away. The customer had organised to return the shoes but, with everything else going on she hadn’t had time to take them to the post office to send them back. Zappos arranged to have UPS come pick up the shoes—and then sent her flowers!
Zappos obviously lost money on this transaction. Not only did they receive the shoes back they had to pay for the cost of the return shipping and flowers. However aside from doing the nice thing and acting like a normal human being rather than a faceless business, countless people, including me have retold this story and they’ve probably sold 1000’s more pairs of shoes by doing it, earning their money back and a lot more.
Approach 2: Customer service as a cost
This is the approach taken by most businesses, and while I wouldn’t recommend it for most businesses, for some it’s probably the most profitable approach to take. Take Virgin Mobile in Australia. Nearly every experience I’ve had with their customer service has been atrocious. They clearly aim to reduce their customer service costs and don’t emphasise customer service within their organisation’s culture. Despite this I stick with them because their point of difference is that unlike the other telcos they include international calls in their capped plans and I make a lot of international calls. I probably wouldn’t recommend theirs as an approach for the vast majority of businesses, but because there aren’t a large number of competitors in the mobile telco space, Virgin are able to get away with cutting costs on their customer service, and customer’s like me reluctantly stick with them.
A less extreme approach is how Google treat customer service with their free products. The point of difference for products like Google Search and Gmail is that they’re free and help you easily find the information you’re looking for or in Gmail’s case, access and manage your email. In my view these products are better than any of their competitor’s offerings so I use them even though the only customer service offered is Google’s help centre, they don’t offer phone or even email support for these products.
Online media and customer service
The growth of online marketing and customer reviews is increasing the importance of offering great customer service for businesses. It’s now quite easy for anyone to write and publish a review online about any product they’ve used. Many customer’s will search for and read reviews online before making a purchase from a company, whether that businesses operates online or offline. Studies have shown that a primary reason for customers writing bad reviews is receiving bad customer service, so offering great customer service will help prevent those bad reviews.
The growth of search engine marketing means many businesses receive a lot of their traffic from people searching on their brand name on Google. At Shoes of Prey we receive about 15% of our traffic from people searching for ‘Shoes of Prey’. One of the top results from this search is this fantastic review from one of our customer’s who also happens to write a reasonably well trafficked blog. In her review she specifically mentions our great customer service and no doubt that helped prompt her to write the review in the first place.
Our Approach at Shoes of Prey
At Shoes of Prey we’ve taken the Zappo’s approach to customer service, with a few tweaks to suit our business model. With our unique product, allowing women to design their own shoes, our marketing approach is built around PR, word of mouth and social media marketing. To encourage all 3 of these forms of marketing we need to wow our customers so they want to write about us and tell their friends about us, and a key way we do that is through our customer service.
We want our customers to love their shoes, and we don’t want any customers keeping their shoes if they’re unhappy with them. So if a customer’s shoes don’t fit we’ll remake them at our cost, or if they’re just not happy with them for any reasons, we offer a full refund. This is expensive for us to do because we can’t easily resell the shoes as they’ve been made specifically for the customer, but customers really appreciate this policy and we think it’s worth offering.
When we send your shoes we include:
- A handwritten note introducing you to your shoes
- 2 types of inserts to help with comfort in case the fit isn’t perfect
- A photograph of your shoes (we also email you this photo when we ship the shoes to let you know they’re on their way)
- A beautiful felt bag for your shoes
- Some Shoes of Prey business cards you can pass on to your friends if you wish
All this is more than you’d receive from a normal shoe retailer and hopefully adds to the wow factor.
Our first Sydney based employee, Carmen Roche takes care of most of our customer service. On our contact us page we have a short video from Carmen introducing herself as the person who will respond when you contact us. We aim to respond to all emails within 24 hours and during business hours we cut that to 4 hours. We don’t use copy/paste email responses and tailor and personalise all our responses. Carmen has built up a great rapport with many of our customers which increases trust and rapport. Once our email volume gets too much for Carmen and we hire a second person, we plan to have only one of our team respond to each customer so we can continue to keep our emails highly personalised.
Personal responses through social media
Jodie, one of our co-founders, takes care of our social media marketing. She’s recently started adding her name to her posts and comments on our Shoes of Prey Facebook page and since doing that we’ve noticed an immediate increase in responses to her posts. It seems obvious to us now - people much prefer feeling like their speaking with a real live person rather than having an anonymous person write back to them.
Deciding what level of customer service is ideal for your business comes down to the type of product, what you’re offering to the market and the reason you are giving customers to buy your product rather than your competitors. If, like Virgin Mobile or Google that ads up to keeping the cost of customer service down, then that may well be the most profitable approach for you. For a business like Zappos or Shoes of Prey, where we aim to differentiate and wow our customers based on our customer service, treating customer service as a marketing cost where the return on investment should be maximised rather than costs minimised is a better approach.
Monday, December 6, 2010
A couple of weeks ago Saf left the following comment on one of our blog posts:
One day can you please comment on your experience/views about working in a fundamentally technology driven sector without any formal schooling in computer science etc? I'm interested to hear your views on this topic as traditional business graduates (those with commerce/economics and/or law degrees) will be increasingly working in an e-commerce environment as the sector grows?
To give some background, I studied Commerce/Law at The University of Queensland, spent 1 year at the law firm Clayton Utz then 2 years at the retailer Supercheap Auto group before moving into the technology sector to work in an advertising sales role at Google for 2.5 years. I've been working on Shoes of Prey full time for nearly 18 months.
For my roles at Google and Shoes of Prey not having a background in computer science hasn't been a great hinderance, and in many ways my commerce/law background has been very helpful. There weren't many computer science students hired into our sales team at Google. The role required strong customer service, sales and analytical skills all of which people with commerce/business/law type backgrounds are often suited to. There were definitely technical aspects to the role, but these could be learnt on the job and weren't that in depth that they couldn't be picked up relatively easily. When we were interviewing people for our team at Google computer science or a similar background was definitely a plus, but people with that background tend to be more suited to and prefer the software engineering roles at Google.
Co-founding Shoes of Prey has definitely put more technical challenges in front of me, but having Mike, who is a brilliant software engineer as a co-founder means that the technical aspects of the business isn't something I need to focus on, he takes care of it and does that very well. I'm sure there are times when Mike wishes I could help out with the coding, and perhaps having 2 software engineers as co-founders may have meant we launched and developed the business faster, but I'm not sure that's necessarily the case because there are so many other non-technical aspects to our business all of which fully occupy Jodie, Carmen, Vanessa, Qun, Susie and I. And now it's clear we do need two software engineers we've hired Melissa.
My background in commerce/law and my experience at Clayton Utz and particularly Supercheap Auto has given me a range of very useful skills that I wouldn't have if I had studied computer science instead. And starting Shoes of Prey with Mike and Jodie, our skills complement each other almost perfectly. If we were all software engineers I'm sure the business wouldn't have gone as well as it has to date. I think a great example of this is Jodie's work developing our brand and brand name. I think the brand insight, our name and the way we've developed the brand are spot on and this wouldn't have been possible were if Jodie had a computer science rather than advertising background.
I love watching Andrew Warner's interviews with various startup founders on www.mixergy.com and two interviews come to mind that relate to this topic. Victoria Ransom co-founded Wildfire App, a social network marketing platform that is heavily tech based. Victoria and her co-founder both have business rather than computer science backgrounds so they've completely outsourced the development of their product. I can imagine that's a very difficult thing to do, and I'd much prefer to have a developer like Mike as a co-founder but they've clearly had success taking the outsourcing path. Mike Moon and Quoc Bui are both software engineers, however they have completely outsourced the development of all their quite successful iPhone apps. Both of these examples show that it's possible to have success in the space without even having anyone on the team with a computer science background.
To summarise, I don't think it's a hinderance to work in the e-commerce space without a computer science background. If you're able to work with people who have those skills, a commerce/business/economics/law background is just as useful.
What are other people's thoughts on this?
Friday, December 3, 2010
The following post was cross posted on Startup Smart.
I want to encourage online orders from overseas and am considering taking payments in other currencies. Is it possible to do this and, if so, how much time and money does it take? Is it a worthwhile thing to be doing in the first place?
This is a great question and an issue we faced early on in the development of Shoes of Prey.
Is accepting multiple currencies worthwhile doing?
There’s definitely an advantage in being able to accept payments in multiple currencies if you’re looking to sell your product overseas.. Put yourself in a potential customer’s shoes. If you were shopping from Australia on a website that only offered payment in a non-major currency like Canadian dollars or South African rand would you be as likely to purchase as if the retailer offered payments to be made in Australian dollars? Probably not.
Offering payment in a customer’s local currency makes it immediately obvious that your website can sell and ship to people in the customer’s country, so it’s going to help improve the conversion rate on your website.
An alternative is to list pricing in a customer’s local currency, but then charge their credit card in Australian dollars. The problem with doing this is that the customer will likely be charged international exchange fees by their local credit card provider which they may not like. The local Australian unique jewellery retailer Oye Modern take this approach and charge overseas customer’s 2% less than the Australian dollar price so once the credit card fees are added customer’s aren’t out of pocket. This approach is a good one but if you can accept payments in the customer’s currency that’s going to be better.
Is it possible to accept multiple currencies on your website?
It is. The simplest place to start is with PayPal. From very early on in the life of Shoes of Prey we’ve offered the ability to pay in 7 currencies on our website using PayPal. We match a customer’s IP address to their country and only show them pricing in their local currency. So US customer’s see pricing in US$ by default, European customers see Euros and Japanese customers see Yen, and when any of them make a purchase from our website we charge their credit card in their local currency.
The main disadvantage of using PayPal is that their Website Payments Pro product is not yet available in Australia. This means you’ll need to direct customer’s to the PayPal website to enter their credit card details, so you can’t create a single page checkout on your website, which would probably convert a little better. PayPal plan to launch Website Payments Pro in Australia in Q2 2011. The other disadvantage of PayPal is that you’re forced to convert your foreign currency sales to Australian dollars through PayPal and they charge a 2.5% spread for this, on top of their 3.4% plus $0.30 per transaction fee for new businesses. While the final price of 5.9% isn’t cheap, we use them because in our view it’s the best option on the market.
The only bank in Australia that offers a multi-currency merchant facility is the NAB, but unfortunately their product is not at all easy to apply for nor use. We initially applied for a NAB multi-currency facility but after a 2 month application process which included submitting business plans and having to put together a spreadsheet to attempt to understand their fee structure (there are more than 10 different fees involved) we gave up and decided to go with PayPal. The NAB product is also difficult to use. They don’t have a web based platform to access your money so you need to install their 10 year old software on your computer, which of course they charge you for the privilege of using. You also need to sign up separately with a payment gateway provider and manage fraud and other risk issues yourself. PayPal incorporate the payment gateway into their platform and take care of the risk management for you.
We’re of the view that it’s an important service to offer customer’s the ability to pay in their local currency, and we think PayPal have the best product on the market in Australia for doing this. Foreign currency sales make up 50% of our total sales at Shoes of Prey so selling overseas has and will continue to be an important part of our growth.
Wednesday, December 1, 2010
I've been reading with interest the debate around lowering the threshold for GST being applied to imports. At the moment GST isn't applied to imports under $1000. So if a consumers purchases, for example a pair of shoes from an overseas online retailer, no GST is charged or paid. If they purchase from an Australian retailer, like Shoes of Prey, they're charged GST.
A number of prominent Australian retailers including Gerry Harvey, and retail industry bodies like the Australian Retailers' Association and the Council of small Businesses have been calling for a reduction in the threshold for when GST is applied to imports from $1000 to $400.
The calls have come about because Australian retailers are concerned that the higher Australian dollar is resulting in increased competition from overseas online retailers. While that might be true and a reduction in this threshold would help Shoes of Prey, I don't think it's the answer or the appropriate thing to do. Cost estimates have shown that the cost of charging this GST to consumers would outweigh the revenue gained, so introducing the tax would essentially be adding an inefficient bureaucracy for the purpose of protecting Australian retailers.
There are already 2 huge natural advantages Australian retailers have in selling to Australian consumers:
1. There are no international shipping costs, or no shipping costs at all if goods are picked up in store.
2. There is a much faster shipping time, or no shipping time if goods are picked up in store.
These advantages far outweigh the 10% saved by GST not being paid on sub $1000 purchases.
The problem is not that foreign retailers have an advantage in consumers not having to pay GST on purchases under $1000, this is more than countered by the advantages outlined above. The problem is that the offer from many Australian retailers is often sub par and isn't competitive with what consumers are offered in overseas markets. Online retail is simply opening up the retail market to worldwide competition.
If Australian retailers can't compete in that space given the advantages they have with cheaper and faster shipping, they need to look at improving their offer so they can compete. We have some great innovators in the Australian retail landscape, but the lack of competition to date has meant that in some categories like our large department stores and grocery chains and to a lesser extent electrical retailers we have had only limited competition so retailers are used to living large on fat margins and aren't used to innovating. And that's why Australian consumers are shopping overseas, the offer is so much better. A broader range of products is offered, the prices are cheaper because the retailer's margins are lower, and the goods can actually be purchased online - many prominent Australian retailers still have very poor or non-existant online retail offerings.
If Australian retailers want to encourage consumers to spend at home they need to improve their offer and they should be looking at the opportunities online retail is opening up for them to sell overseas. If they don't they're missing a great opportunity and Australia is going to be left with a lacklustre, internationally uncompetitive retail industry.
Monday, November 29, 2010
We're extremely excited to welcome Susie Adams to the Shoes of Prey team! Susie starts today and is joining us in a part customer service, part marketing role. She'll spend about 2/3 of her time working with Carmen and I on customer service and 1/3 of her time with Jodie on marketing.
You might remember Susie's amazing application for the Extraordinary Customer Service and Startup Wonderperson role we hired Carmen for in June. It's one of the best applications any of us have seen in any role for any company and it highlighted so well Susie's amazing creative flair and her deep understanding of our business from having read this blog! We'd kept in close contact with Susie and we're so excited to have her join the team.
Prior to joining us Susie has spent the last 4 years working for Getty Images and Dorling Kindersley as a photo and art editor where she was responsible for the conception, development, shooting and editing of both creative and commercial photo shoots. She's an amazing photographer in her own right having had her work exhibited both domestically and overseas. She has a Bachelor of Photography/Visual Culture from the Queensland College of Art and she'll no doubt be a great help with our photography and video shoots in addition to many other things.
We're very excited to have Susie on board. Susie is our 8th full time team member joining Vanessa, Carmen, Qun, Melissa, Mike, Jodie and I.
Friday, November 26, 2010
- Catching up with Vanessa and Qun!
- Multiple meetings with shoe suppliers
- Meeting with DHL
- Product development including work on vegan shoes, sandals, boots & new leathers
- Working with Vanessa and Qun to systemise more of their processes, like photography, shipping and packing and the notes we send to customers
- We're also heading up to Shanghai for 4 days to catch up with our friend Andy Miller
A key part of the meetings with our shoe suppliers will be planning out our growth over the next 3-5 years. Initially we'd only planned out our sales and growth for the first 12 months. We wanted to focus on proving the business model rather than getting too far ahead of ourselves and thinking 3-5 years out. In some ways that focus was good, but in others it was arguably a mistake because we're hitting the maximum production capabilities of our two existing suppliers, we hadn't given them enough warning about our post 12 month growth.
Fortunately it looks like they'll shortly be able to ramp up their production for us so we want to work more closely with them to ensure they're able and happy to grow with us for the next 3-5 years, and to work with them on how we can systemise our processes to help reduce theirs and our costs and improve on their already very good quality.
It's looking like it will be a fun and productive trip!
Wednesday, November 24, 2010
We're looking for new office space to move into in the new year. We're looking around the Surry Hills / Darlinghurst / Woolloomooloo area in Sydney. We'll likely sign a 2-3 year lease which will mean we'll need to rent a larger space than we need right now, so we'll have some free desks.
We'd love to share the space with some other people working in the e-commerce / retail / fashion / tech startup space. It's still early days so we're not sure exactly what we'll be renting but are any other startups interested in the idea of sharing the space or renting a desk/desks from us? It would most likely work best on a month to month, however if another startup wanted to join us for the 2-3 year term of the lease we might be able to get something bigger and share the lease.
If you're interested feel free to comment below or email me at firstname.lastname@example.org. No idea how much space we'll have or what the costs will be but I thought it was worth finding out if there was any interest.
Monday, November 22, 2010
It seems obvious when we think about it now - people much prefer to speak with a real person they can identify with rather than an anonymous person. As soon as Jodie started signing off with her name, a couple of our best customers, who incidentally we'd recently added to our VIP club as they'd purchased more than 5 pairs of shoes, started asking Jodie specific questions about certain shoes and leathers on our Facebook page. Jodie promptly answered these on the page which encouraged more customers to ask similar questions. The net result has been a lot more customers conversations, a lot more comments and likes and an increase in sales.
Last Thursday a customer asked Jodie if she could post a picture of someone wearing a particular peep toe we have in our designer, because she wanted to see how it looked on a foot. Customers have been making requests like these ever since Jodie started signing off with her name, and we love that they do it. So Jodie and I went into the office the next morning and photographed Jodie in a pair of wedges that a customer had designed with that peep toe. The feedback was amazing. 67 likes, 21 comments and in the 4 days after the post we sold 13 pairs of wedges and quite a few other shoes with that peep toe design, higher numbers of those shoes than normal.
I love this form of marketing so much:
1. Our customers feel comfortable asking us questions like this because they know that Jodie will respond to them, they've seen Jodie in the videos on our site and they know she's responded to questions before.
2. We then post photos of our shoes to our Facebook page in a genuine, uncontrived way. We're not just posting shoes for the sake of trying to sell them, we're posting them because a customer has asked us too.
3. It shows that Jodie, and our business as a whole respond quickly to customer requests helping to build our brand.
4. This uncontrived form of marketing results in a measurable sales increase.
Here's another example of one of the many great conversations from the page since Jodie started adding in her name:
I'm sure this personal interaction is something that has helped Blair (the 16, now 17 year old video blogger we worked with) build the 500,000+ YouTube subscriber base she has. I love how at the 0:43 second mark of the video she did about us she tells people the reason for the band-aid on her finger, it's personal, genuine and people love it.
In other Facebook page news we've just crossed the 10,000 fan mark on our page so we now get to see impression data for our posts. You can see this information in the first of the screen shots above. Note that the data is incorrect on this post because the feature was only just enabled on our page.
Anyone else have any other tips for adding personality to a Facebook page? Has anyone else come across a Facebook page strategy that's had a real impact on how fans use the page?
Friday, November 19, 2010
On Monday this week I flew to New Zealand to present at the Social Media Junction 2 conference in Auckland, and it was a fantastic event. 187 people attended the main presentation day on Tuesday with the goal of learning more about social media and how to use it within their organisations. The group of speakers provided a really interesting mix of social media experience:
Co-founder (with his wife) of the agency TopRank Marketing in the US, Lee and his wife Susan work with lots of small to medium businesses in the B2B space. Lee is the author of the excellent online marketing blog TopRank and he provided some fantastic case studies of how businesses are effectively using social media and talked about the importance of measuring the return on investment (ROI) of your social media campaigns, while remembering that there are also many intangible benefits. My favourite line was, "What's the ROI of having a telephone in your business?" his point being that social media is similar to the telephone in the immeasurability of many of the benefits it can provide.
Simon heads up social media for the Medway council in the UK. The Medway council, like many other government organisations cops a lot of flak and boy have they had their fair share in the social media space! Medway Council have a smart car with camera's on top which finds, photographs then issues tickets to illegally parked cars. It's not the most popular car in the world as shown by some of the Facebook Groups Simon shared with us:
- Medway's Mobile CCTV car should be fined every time it parks illegally!!!
- The Shitty Medway Council SMART CAR with the camera should be blown up!!
- and my favourite group name: MEDWAY COUNCIL ARE FUKIN SHIT !!!!!!!!!!!
This makes our experience with a negative comment on Facebook seem much less significant!
Simon talked through some of the ways they deal with these negative comments. He talked through the important of understanding who it is who is making the comment (it may be someone on the other side of the political divide), what sort of audience do they have (a Facebook page with 20 likes is less of an issue than one with 2,500 likes), and not taking it personally when these things happen - easier said than done I'm sure!
Louise heads up the innovation team at Deloitte in Australia. I had heard many good things about Deloitte's innovative uses of social media before, but I hadn't realised how well they were using it, and for an accounting firm with 14,000 people they have done particularly amazing things to embrace social media within the culture of their firm.
I found their use of Yammer within their firm particularly interesting. We're still small enough at Shoes of Prey that it's not too difficult for us to brainstorm and share ideas with each other, but clearly a firm the size of Deloitte is a very different beast, and it sounds like they've been getting some great results with Yammer.
I had the after lunch speaking spot so I decided to try something a little different to try to wake people up before my presentation, I had the audience do a triathlon in their chairs. First up was some arm waving for the swim leg, some chair cycling then everyone hopped up to run on the spot. We finished with everyone giving the person next to them a recovery shoulder massage. I have to admit I wasn't sure how this would go down but I figured I was in another country so if it bombed no one would know. Fortunately people seemed to get into it. Hat tip to Phillip di Bella who I borrowed this idea from!
I talked through how we've used social media at Shoes of Prey. I went through how The Purple Cow and Buzz Marketing influenced us in developing the custom women's shoes idea which gives us a product and story that people want to share through social media. I talked through our YouTube case study, how we use our Facebook page and adding to Lee's theme from earlier on, how we measure the ROI of our campaigns then adapt and adjust our tactics based on how they're going.
Darren works for the Victorian department of justice and helped manage the Victorian government's response through social media to the Victorian bushfires which tragically killed 173 people last year. Darren talked about the challenges of getting a group of beauracrats to accept that working with social media is the right thing to do. He gave the example of Google asking for bushfire data to create a Google Map that would show people where the bushfires were at any given point in time. Google were told that this data was government data and subject to copyright so despite the Country Fire Authority and Department of Sustainability and Environment websites being down Google weren't able to access this data for a couple of days during the crisis, until cooler heads prevailed.
Darren also talked through some of the benefits of using social media in a crisis. During a crisis, often one of the first things to go down is the mobile phone network which can't always handle the additional call load. People then tend to call 000 becomes inundated. People then turn to the web to access information and key websites can go down. Tools like Google Maps, Facebook and Twitter are all fantastic for disseminating potentially life saving information during times like these as they're built to scale and generally don't go down.
The last speaker for the day was Cliff Rosenberg, the Managing Director of LinkedIn Australia and New Zealand. Cliff talked through the benefits of social networking from a professional point of view. He discussed the distinction between professional networks like LinkedIn compared with social networks like Facebook and those that are mixed like Twitter.
One of my favourite slides from Cliff's presentation was a graphical representation of his LinkedIn social growth showing his 1300 connections and how he came to be connected with them all. It doesn't look like there's a copy online but if I come across it I'll post it up.
I took a lot from the presentations and thoroughly enjoyed the event. The team at Bullet PR who organised the event, Nicholas, Jennifer and Alex were genuinely nice, friendly and a real pleasure to work with. They hosted a speaker's dinner the night before the event which was fantastic for meeting both the Bullet PR team and the other speakers, and I went to dinner with Nicholas and Jennifer again on Tuesday night in a more social setting. Previous events I have spoken at didn't create this same level of engagement amongst the speakers, they were more 'do your presentation and leave'. I think the dinners created a much better atmosphere on the day of the event and I know I tailored my presentation after getting to know the other speakers and what they would be talking about so I didn't cover off any of the same things, and I'm sure some of the other speakers did too which is a benefit to the people attending the conference.
And lastly, the Bullet PR team organised for me to appear on the TVNZ Breakfast Show on Wednesday morning to discuss social media. It's the equivalent of Sunrise or the Today show in Australia and is a fantastic audience for us. I didn't cover anything ground breaking but if you're interested the video is up here.
Wednesday, November 17, 2010
As discussed previously, I already have incredibly low expectations of the customer service I will receive from Virgin Mobile Australia but they've managed to negatively exceed my low expectations again and I think it's a great lesson in how not to treat your customers.
Since the iPhone 4 came out in Australia in August I've called Virgin Mobile a number of times to find out when I could get one. Every time I called I was told they had none in stock and that I should call back another time to find out more. The same message to check back later is posted on their website. I continued calling every few weeks to check in for 3 months until my sister's boyfriend told me he had walked into a Virgin Mobile store in Brisbane and walked out with an iPhone 4! Ok I thought, clearly their phone support team doesn't talk to their stores and their stores have stock which their website and phone team don't have access to. I was obviously annoyed that I hadn't been told this.
So 5 weeks ago I called 2 Virgin Mobile stores in Sydney, one in the city and one in Bondi Junction. Both stores asked whether I was a new or existing Virgin Mobile customer. I told them I was an existing customer and they told me they would put me on the waiting list which was about 4 weeks long.
4 weeks passed last week and I hadn't heard back so I called both stores and was told that I was still on the list but that it was still about 4 weeks long. Then I had a thought, I wonder if Virgin are preferencing new customers over existing customers? So the next day I called the Bondi Junction store back and asked if they had any phones in stock. Again I was asked if I was a new or existing customer and this time I lied and answered 'I'm a new customer'. I was told, 'We're getting some new stock in this afternoon and we'll have a phone for you, I'll call you back later today to come and pick it up.'
What the f&%*!
Excuse my language but I've been a Virgin Mobile customer for the last 18 months and this business is going to preference a new customer over me. Someone who has called up for the first time is going to get a phone that same day and after 4 months of waiting I'm supposed to continue to wait for my phone! There is so much that is wrong with this that I'm not going to go into it all except to say that I hope we never, ever do anything remotely similar to this to a single one of our Shoes of Prey customers, let alone one who has been with us for 18 months, let alone have it ingrained in our culture and business processes that these sorts of decisions are ok.
In fact we recently introduced a VIP club for customers who have ordered more than 5 pairs of shoes - they get lifetime free shipping. And we know many of these customer's names (we should be learning them all) so we can ensure we're going above and beyond our already normally high levels of customer service for them. It amazes me that Virgin are doing the opposite. Clearly they believe that existing customers will keep waiting and they're better off prioritising their limited supply of phones to new customers.
Anyway, naturally the Virgin mobile person didn't call me back when they said they would, no surprises there. I called back the next day and was put on hold, the guy didn't hit the hold button and instead put the phone down on the desk, I could hear him talking to another customer which was fair enough. 20 minutes later he still hadn't come back to the phone so I hung up. I called straight back and yep, the phone was off the hook as I got an engaged signal. I called back more than 10 times that day and got the engaged signal for the rest of the day, he left it off the hook for the entire day! I'm glad I hung up and didn't stay on hold. The phone was back on the hook the next day, I called up and was told the delivery had arrived and I could pick up my phone, which I now have.
The frustrating thing is I am still signing up with this company, for another 2 years in fact. I make a lot of overseas calls and they are the only company to include international calls in their caps. If it wasn't for that I would be taking my business to any other phone company but in the meantime I will take some satisfaction in warning off everyone I can from using them and continue to learn from them by doing the exact opposite of anything they do customer service wise.
One of the many things I find incredible about this is that Virgin Mobile are trashing the Virgin brand. Virgin Mobile is owned by SingTel, the same company who own Optus and they license the Virgin brand. I suppose SingTel's strategy is to profit all they can and if the Virgin Mobile brand gets trashed in the process they can simply ditch it and license a new one. Because they don't own it themselves they're not as incentivised to protect it. If I were the Virgin company, or another company licensing the Virgin brand I would not be pleased with Virgin Mobile's actions.