Wednesday, June 30, 2010

The rapid pace of change in China

Jodie and I have spent the last week in China catching up with Vanessa and Qun and meeting with our suppliers in China to discuss how business is going and work on things like new shoe designs, leathers and materials.

For both of our suppliers, one of the most interesting things they had to say was that they experienced a 50% loss of shoe makers after Chinese New Year in February this year. To attract new staff they've raised salaries by 25% on what they were paying last year. That's a massive change year on year. Many of the shoe makers who work for our suppliers come to Guangzhou from Western China to work for a few years. The workshops provide them with food and accommodation so they're able to save a lot of their salary and generally their goal is to do this for a few years, then return home to Western China and buy a house or a farm and settle down.

Chinese New Year is the time when they all travel home to spend 2 weeks with their family and friends, and this year half of them chose to find work closer to home and not return to Guangzhou. It's normal to have a 20%-30% turnover each year, 50% is extremely high.

Other businesses in China have had a similar experience. Foxconn is a large electronics company based in Shenzhen, near the border with Hong Kong. Foxconn make a lot of Apple's products and employ 400,000 workers. This year they've raised salaries 25% to retain and attract the massive number of staff they employ.

Workers at a Honda factory in Zhongshan near Macau went on strike 2 weeks ago asking for higher pay and the right to choose a union to represent them.

Clearly China's massive economic growth is having an impact on wages. The country's 1.6 billion people are basically fully employed and 100's of millions of them have already moved from agricultural jobs into blue collar jobs in the countries rapidly growing cities. The supply of people is slowing down putting wage pressure on blue collar jobs. The Chinese government recently raised the prospect of allowing the Chinese currency, the renminbi, to float against the US dollar which is likely to see the value of the Chinese currency rise. One of the reasons the Chinese government gave for this is to encourage growth in higher value sectors of the economy like services. This will put additional pressure on wages for blue collar jobs.

This is all a good thing. The average annual wage in Chinese cities is around AUD$5,000 and the countries 1.6 billion people deserve a higher standard of living. That said, these sorts of changes are going to have an impact on our buying power in Western countries. So many of the goods we consume are manufactured in China, and the prices we pay for these goods aren't going to stay low if wages in China rise and the value of the Renminbi rises too.

This sort of change will pose challenges for businesses like ours who manufacture their goods in China. Fortunately we shouldn't face such a big impact given ours is a premium product, but our costs will still rise. Businesses operating at the low end will be severely impacted by these price rises. Hopefully the pace of change isn't so rapid that businesses don't have time to react, but it's something that we, and many other businesses are going to need to keep in mind over the coming years.

If wages can rise 25% in China in one year, the business landscape in 10 or even 5 years time is going to be very different from what it is today.

Sunday, June 27, 2010

Retail startups are rad

I just wrote a guest post over on Steve Sammartino's startup blog about why I think the online retail industry is a great one for startups. Check the post out here.

Thursday, June 24, 2010

Prioritising the work to do in a startup

There is always so much work to do in a startup. I could write an almost never ending to do list of things we could do to improve our business, but there are only 6 of us working on Shoes of Prey full time, so we need to prioritise.

A couple of weeks ago Carmen, Mike, Jodie and I sat down for 3 hours to plan our goals and what we will each work on over the coming quarter. It was a fantastically useful exercise, particularly for prioritising what we should each be working on.

We've set ourselves the goal of doubling our sales for Q3 over Q2, and a stretch goal of quadrupling them. To do this we plan to:
1. Double traffic to our website.
2. Double our conversion rate.

Setting this basic goal then made it quite easy to prioritise the massive number of tasks we each had on our to do list. For every item we simply asked the question, 'Is this task going to help us double traffic or double our conversion rate?' If the answer was yes, this task was in, and could then be prioritised based on the likely impact it would have on our goals. If the task wasn't going to help us achieve one of these two things, it was out.

Something I'd had on my to do list for a while was to scope out shoe suppliers in other countries. Chinese New Year was a difficult time for us this year because basically we had a 4 week period where the workshops weren't making our shoes. Having a factory in another country would help alleviate this problem over Chinese New Year. Given the time it would take to travel to other countries to find a new, high quality supplier, then set the processes in place to be able to work with them, the impact this activity is likely to have on our goals makes it not worthwhile doing just yet, so that activity was cut.

There are so many new shoe styles we could be adding to our site, but given our problem of having too much choice available on our website, is adding new shoe styles going to help us achieve our goals? We don't think it will at the moment, so that's out for this quarter.

Of course some things still made the list that might not have a big immediate impact. We want to continue to improve our packaging and while this will help encourage repeat purchases boosting our conversion rate, it's not going to come close to doubling conversions, but it will have a big impact on our business over the long term, so it stayed on the to do list.

We've now got ourselves a nice list of prioritised tasks, and if we manage to execute all of them well they should have us well on the path to at least doubling our sales for next quarter, and ideally quadrupling them.

Setting a goal then using that goal to prioritise our tasks has worked very well for us. How do your prioritise your work?

Image Credit

Monday, June 21, 2010

For Sale: Darwin Dating

A few years ago Mike, Jodie and I together with another friend of ours, James Duffy, set up a joke online dating website called Darwin Dating.

We'd recently read a book called Buzz Marketing which is about ways to get people to talk about your brand and we wanted to test the theory out. The concept behind Darwin Dating is that it's a dating website for attractive people only, we set it up to be humorous and a little controversial to see if we could get some buzz.

Press Coverage

It worked and with very little PR effort on our behalf the site has received some fantastic press coverage. All this great press lead to literally 1000's of people writing about the site and linking to us online, resulting in some great SEO rankings. At it's peak Darwin Dating ranked in the top couple of results for 'dating website' and 'dating websites' and still generally ranks on page 1 and 2 of Google for those keywords respectively.

Despite all of that, amongst a number of great lessons a key one we learnt from the experience was that dating websites require a critical mass of users in a geographic area before you can charge users and make money. While Darwin Dating has 20,000 members we only have critical mass in two markets, London (5k members) and New York (3k members). We could charge members a fee in those markets, but not in places like Sydney (100 members). As we've since learnt, other dating sites either target specific geographic regions, or group together 100's of niche dating sites like ours that all share the same membership base.

So we've decided to sell Darwin Dating. It's likely to be most valuable to a dating site aggregator, though someone who was motivated to push the PR a little could no doubt get the site a lot more press and improve upon it's already very good SEO rankings, and potentially reach the point of critical mass to charge users, at least in some markets.

Key statistics for Darwin Dating

As at 30 January 2010:

  • 17,353 Members in the database (includes any suspended accounts)
  • 74,311 Emails sent by our system (includes email notifications)

In the 6 months to 30 January 2010:

  • 77,000 visits
  • 4,400 membership applications
  • 10.4 pages per visit
  • 4:17 avg. time on site

Traffic Sources

In regards to the price we'd sell it for, our understanding of the online dating industry is that a free dating website sign up is worth about $3. Based on the last 6 months of data our 8,800 annual membership applications are worth $26,400. There are essentially no costs, so at a conservative multiple of 2 that would value the site at just over $50,000.

We'd love for you to pass this post on to anyone you think might be interested.

Wednesday, June 16, 2010

Careers and risk taking

Catching up with friends I often get comments along the lines of 'Good on you for taking a risk and leaving your job to start your own business, I wish I could do something like that.' Starting your own business is certainly not the most conservative thing to do, but I don't think it's such a risk.

When we started Shoes of Prey, here was the decision making process that Mike, Jodie and I went through:

The best case scenario is we build a good business that we can either continue to work on or sell. We'll have done something we loved and ideally be in a good position financially.

The worst case scenario was that the business failed and we're down $50k in startup costs and a hundred or two more in lost salary, and we would have gone back either to our old jobs if they would have us, or something similar having learnt a lot more than we would have otherwise.

Given we'll work until we're 70 or 80 anyway, what's $50k and a year or two of lost salary now? In our minds the best case scenario far outweighed the worst and we were confident that the odds of the best one happening outweighed the odds of the worst. That seemed like a good bet to us so we did it.

Another thing we did that looks like a risk on face value is Jodie leaving her job to work on Shoes of Prey full time. This does mean Jodie and I have no salary at the moment, however having Jodie work on the business means it's more likely to succeed. Things are currently going well but if that were to change and the business fail, we should hit that point sooner meaning we can move onto something else earlier than we would have otherwise saving Mike and I additional salary that we would have lost otherwise. So it's really wasn't a big risk having Jodie join us full time at all.

A few of my friends work in legal roles, don't enjoy them and plan to leave, they just haven't worked out what they want to do yet. I actually think they're the ones taking the biggest risk. My first job out of university was as a lawyer. I was having a career chat with one of my mentors and he explained that he had been a lawyer for 10 years, he really didn't like it but he had a mortgage and had settled down and gotten married. If he left his legal role to do something else, his salary would halve because his skills were so specialised. He'd left leaving something he didn't like until too late, and now he was stuck with it.

Going down that path is a big risk for a lot of lawyers who don't like their jobs and afraid to look for something else. It's said so much that it sounds cliched, but it really is true, you only live once and work takes up a huge amount of your time. It's worth putting in the effort to find something you like doing, and as I see it, the risk of falling into the trap of spending your life doing something you don't enjoy is a big one that is best avoided.

As I see it, if you plan for it properly, starting your own business is a lot less of a risk than it might first appear. I'm keen to hear other people's thoughts on this.

Image Credit

Saturday, June 12, 2010

Hiring Interns

Recently, we started looking at hiring interns. We are pretty excited about working with some young, fun, motivated students.

But, so far we have been learning some lessons that have been time consuming and frustrating, and therefore they are absolutely worth sharing.

The first really tough thing is that it seems that no-one has published any quick-guide on how to do this. I can only guess it's because there are concerns about the "giving of advice" - but really, this is just such a barrier in terms of cost and time for small businesses. C'mon government - give us a cheat sheet!! Anyway, here's a bit of a recap of our experience to date so that if you have to do this, you'll have a few handles to get you started more smoothly and quickly!

The Fair Work Act calls an internship a "Vocational Placement" so don't search the term "Internship" - you won't find a thing that's relevant to you what you're really looking for.

Section 12 defines Vocational Training as a placement that is:

(a) undertaken with an employer for which a person is not entitled to be paid any remuneration; and

(b) undertaken as a requirement of an education or training course; and

(c) authorised under a law or an administrative arrangement of the Commonwealth, a State or a Territory.

So this seems pretty simple, right? Well, what really got me hung up was (c) - how do I know if my taking on of an intern is authorised? and, after 3 hours on the phone with the guys who wrote this - it seems like no-one else knows either, and I'm the first person to ask the question. Yikes. I'm currently waiting for a call back that was promised 6 weeks ago now. I suspect that they're just making sure that they have a thorough response?? :S My guess here is that this is the responsibility of the educational/training institution. I'll post back if/when I hear more on this.

Other things on our radar have been:

- Defining the scope of work: using the resource as best possible and making sure that your intern gets the experience that they have signed up for.

- Confidentiality agreement: protect your assets. Simple, but necessary.

Have you hired an intern? Did you run into any of the problems above? How did you manage them?

Image Credit

Tuesday, June 8, 2010

Blogs I read - I'd love your suggestions for more

I love reading, particularly blogs. I read about 1-2 hours a day, mostly using Google Reader on my iPhone when I find myself with some spare time or lying in bed before going to sleep. Jodie bought me an iPad yesterday and after playing with it last night I reckon my reading is about to pick up another notch or two.

In alphabetical order, here's the 60 blogs on my Google Reader subscription list. It's a bit of a random collection of entrepreneurial blogs, blogs from startups I've come across, friend's blogs and a few shoe and fashion blogs thrown into the mix. It's also random in that I don't always remember to subscribe to new things I come across, so I know there's a lot of good stuff I've come across before that I haven't added in here.

Now I've got an iPad I'm keen to add to this list as I've been finding myself running out of posts of late. If you write a blog and you think it might be of interest, please post a link in the comments, I'd love to check it out. And if you've come across any blogs that fit in the general theme of this list please post it too. I'm particularly interested in blogs by people who are running a startup or business that's along the lines of this blog, or anything good in the retail and online retail space, but I'm open to anything if it's particularly well written and good.

...My heart's in Accra
Adspace Pioneers
Asia-Pacific AdWords Agency Blog
Boehmcke's Human Condition - chris dixon's blog
Come Together
Current draft
Dave Marsdon's Blog
Food. Fashion. Ferrets.
Founder's Blog
Gawker: Valleywag
Gentlemen's Corner
Get Elastic Ecommerce Blog
Good Business and Marketing Online by Clare Lancaster
Groublogpon - The Serious Blog of Groupon
How to Change the World
Insight-Driven Retailing Blog purpose is to bring traditional retailing
John Quiggin
Lessons Learned
Manolo's Shoe Blog
Mobile CRM Japan
Naomi's BLOG
Ned's posterous
New Rules
Occam's Razor by Avinash Kaushik
Official Google Blog
Paul Kedrosky's Infectious Greed
pity the cool
Polka Dot Bride
Retail Trends
Ross Hill
Royce Fullerton online accounting
Seth's Blog
Shoes of Prey
Signal vs. Noise
Socialnomics - Social Media Blog
Springwise | New business ideas from around the world
Startup Blog
Sticky Stimuli
Style Observer
Tales from the Casbah
The Next Web Australia
The Proper Blog
The Retail Bulletin Blog
Uneven Distribution
World news |

What are your favourite blogs?

Image Credit.

Saturday, June 5, 2010

Welcome to the Shoes of Prey team Carmen!

A month ago we advertised for an 'Extraordinary Customer Service and Startup Wonderperson' on this blog. We had thought that maybe we'd get a few applicants, perhaps we'd need to advertise on a jobs website and we set ourselves up for a fairly lengthy process before we would find the right person for the role.

Wow, were we overwhelmed with the response! We had more than 20 applications, most of which were incredibly impressive people who we could have hired immediately. We couldn't believe it. The most impressive application I had ever seen for any role anywhere came from Susie who included a full to do list for a day of hers at Shoes of Prey. The list showed she had clearly read through this entire blog and has an unbelievable understanding of the role.

So with applications of this calibre we put a lot of our other work on hold and got interviewing. Mike was in Japan so Jodie and I interviewed 17 people over 2 weeks.

Our mindset of being able to hire nearly all of the applicants didn't change at all, in fact interviewing people only made the decision even harder. We had so many people who exceeded the criteria we'd set out for who we wanted to hire and it was an incredibly hard decision.

In the end though, we couldn't go past Carmen Roche. Carmen has a bachelor of Arts and a Masters in International Affairs from Columbia University. As a graduate she spent 7 years working in the marketing team at Accenture, followed by 2 years at the US Treasury Department as an International Economist. She was 2/3 of the way through a PhD in law focusing on Trade and Development when she had her first child. She's been out of the workforce for a couple of years taking care of her two young boys and was looking for a role out of the traditional corporate space that could offer her the flexibility to work from a mix of an office and at home. She's fluent in Spanish and also speaks French reasonably well.

Carmen obviously has a lot more experience than the role we advertised requires (as did a lot of the candidates). So we've rethought the role and once she ramps up, the plan will be for Carmen to essentially replace me in managing all of our operations. I'll then focus more of my time on business development.

Carmen started with us this week and we're extremely excited to have her join us. Welcome to the team Carmen!

Thursday, June 3, 2010

The Australian Online Retail Industry Awards

We're extremely humbled to be announced as a finalist in 4 categories in the inaugural Australian Online Retail Industry Awards (ORIA). We're in the company of some amazing pure play online and multi-channel retailers, here's the categories we're shortlisted in and who we're up against:

Best New Online Retailer
Sponsored by PayPal
Clive Peeters |
JasonL |
Birdsnest |
Trixan Body |
Shoes of Prey |

Best Use of Technology
JasonL |
City Beach |
Metro Cleaning Services |
Shoes of Prey |
Jeans West |
Trixan Body |

Most Innovative Online Retailer
Sponsored by Manhattan Associates
Shoes of Prey |
Domino's |
General Pants |
Sportsgirl |

Best Online Retail Marketing Initiative
Shoes of Prey |
Red Balloon |
Personalised Plates Queensland |
DealsDirect |
General Pants |

The full list of nominees across all categories is here. We're the only retailer to be shortlisted in more than 3 categories!

As we mentioned in an earlier post, it's fantastic that online retail industry groups, websites and awards are starting to be put together in Australia, and we're honoured to be a part of this.

Cheers to online retailing in Australia.