Monday, August 30, 2010
From our experience looking at retail store locations, if we choose to go ahead there's a simple decision we need to make. Do we want to pay a higher rent for a high foot traffic store location, or a lower rent for a lower traffic store location. As an example of how much rents can vary, prime space in Sydney's Pitt St. Mall is expected to rent for around $12,000 per square metre per year once the new Westfield development opens. Space literally 50m away upstairs in the Dymocks building on George St. rents for $500 per square metre. We think about 70 square meters would be the ideal amount of space.
We're hoping that we're more of a destination retailer in that people will have heard about us online and will go out of their way to visit our store, so we can rent something not in super prime space. In order to get our share of foot traffic we should aim to be amongst other stores who attract the same target market as us, professional women.
We're also thinking that renting a store with office space attached to it would be very convenient. So we're on the look out. Let us know if you think of any areas in Sydney that would be good for us.
Sunday, August 29, 2010
We've previously experimented with taking our business offline, and we're starting to seriously consider opening a Shoes of Prey store. We get so many email from customers asking if we have a store they can come and visit, and while only a small portion of our sales come from Sydney, there's a lot of interest here and we think there's a good opportunity for us in traditional retail. Speaking with customers in person would be a great way to educate them and help them make a decision on which shoes to purchase, aiding us in overcoming our low conversion rate.
A store would also be a good opportunity for us to use all the great data we have from the shoe designs customers are saving, and sell a range of ready made shoes in store based on the most popular styles and colours.
And finally, a store would give us an avenue to sell some of the returned shoes when we remake shoes for customers after they don't fit the first time.
Traditional retail still makes up well over 90% of all retail sales in Australia, so by only operating online we're missing an enormous opportunity. This has been particularly obvious this week following our story on A Current Affair with literally hundreds of emails coming from potential customers who are unlikely to have made a purchase online before. Obviously we want to help encourage them to shop online and do our bit to help grow online retail in Australia, but many of them aren't comfortable doing that yet. Having them experience our brand and shop from us in a physical store may actually be a good way to then encourage them to buy their second pair of shoes from us online.
There's obviously a cost and a risk in opening a store. A 3 year lease is the standard for a retail store, which locks us in to a significant investment of money. In addition to rent there's fitout and staffing costs, along with the cost of purchasing shoes to stock in the store. On top of that is the significant amount of time we'll need to invest in a store and the opportunity cost of working on other things.
On the plus side, if we get it right and a store goes well, there's no reason we couldn't open more physical stores which, in addition to the website, could be a great way to continue growing the business.
For the last few weeks we've been speaking with real estate agents and looking at some locations in the Sydney CBD and eastern suburbs.
We'd love to hear your thoughts on a number of things:
- What locations do you think would work for us?
- Would you shop or tell your friends to visit a Shoes of Prey store?
- Do you think it's right for our business?
Thursday, August 26, 2010
Last night the 'design your own shoes' story aired on A Current Affair! I can't embed the video but it's available on their website here: http://aca.ninemsn.com.au/article.aspx?id=7950869
It came out really well and we've send some tremendous results since it aired. Although the traffic spike in the first 24 hours looks like it will only be around 15%-20% of what we received the day the Juicystar07 video went live on YouTube, yesterday ended up being a record day of sales for us and today may well beat that again, so it hit our target audience in a much better way than the YouTube video.
It will be interesting to see which works better for the business longer term. It may be that the brand engagement that came from 500,000 people visiting our site from the YouTube video means that has a better result overall and that video did have a permanent, very positive effect on our business which it will be difficult for the ACA story to match. However 1.3 million people would have watched A Current Affair last night and if the first 12 hours of sales are anything to go by, this could work out better.
We'll do a full analysis in a few weeks time.
Tuesday, August 24, 2010
Exciting news on the Shoes of Prey public relations front, last week we filmed a story with A Current Affair and it's featuring on the show tomorrow night! Fortunately it's a positive story rather than one of their famous expose stories. ;)
For those who don't live in Australia, A Current Affair appears on one of Australia's 3 large free to air commercial stations in the prime 6:30pm time slot. It generally has about 1.3 million viewers.
The story is of course about designing your own shoes and will cover both Shoes of Prey and our Australian competitor Princess Chic. It will be amazing for brand awareness, and of our design your own shoes product and hopefully leads to a nice increase in sales. It will be interesting to compare the uplift in traffic and sales to our efforts on YouTube with Blair Fowler.
If you're in Australia tune in tomorrow night, otherwise we'll link to the video when it goes live on the A Current Affair site.
Friday, August 20, 2010
Once our volume picked up we decided to design our own shoe boxes and spend the money to order the shoe box factories minimum of 2,000 boxes. The design we came up with, I think is stunning. The box is made from a high quality, heavy black cardboard. It acts as a drawer and inside is foam covered in silk creating a luxurious bed for your shoes, and helping protect them when we ship your shoes to you.
Since we've introduced the new shoe box, our refund rate has doubled! From what we can work out the reason is because the luxurious shoe box now forms part of the product, and if the shoe box is damaged during shipping customer's are disappointed. The image below is of a shoe box that has been shipped twice, they weren't normally damaged this badly, but they've often had a few dents on them. When our old shoe boxes were damaged during shipping our customers didn't mind as they considered these a throwaway box.
So we're going to develop a new, simple shoe box that sits in between the cheap ones provided by our suppliers and our luxuriously designed boxes. We'll keep the left over luxurious boxes for when we ocean freight a large number of shoes and we can be sure they won't be damaged in transit.
I would never have guessed that increasing the quality of our shoe boxes would be a bad move.
Wednesday, August 18, 2010
A commenter in an earlier post asked what would be my top 10 business books. That's a good question. There are so many out there and while I certainly haven't read them all I had a period of a couple of years where I read a good 30 or 40. In thinking through this question 5 of those books stood out as having had a significant influence on my thinking and what I'm doing now. In no particular order they are:
1. Buzz Marketing, Mark Hughes - This book was the catalyst for starting Darwin Dating. Mike and I read the book and immediately started brainstorming ideas that would fit the criteria. We roped in another friend James Duffy and Jodie and decided a tongue in cheek online dating site for attractive people would be a good way to experiment with the theory.
2. The Purple Cow, Seth Godin - I'm pretty sure I read The Purple Cow after Buzz Marketing, but the theory is similar and it helped keep the concept of being different in our minds and I'm sure influenced our thinking behind Shoes of Prey.
3. Maverick, Ricardo Semler - This was the first book that got me thinking about how important it is for people to love the work they do, because it makes the world both a happier and more productive place. Having read this book, then talking to Mike about his experiences working at Google I had my resume in there quick smart.
4. Made in America, Sam Walton - Sam Walton was the founder of Wal-Mart, the largest retailer in the world. I read this book shortly after starting at Supercheap Auto. Sam's story is an incredible one and it helped ignite my passion for the retail industry.
5. Family, Village, Tribe - The story of Flight Centre, Mandy Johnson - Another great and inspiring retail story. In addition this book got me thinking about how people work best in teams. Flight Centre subscribe to the theory and provide a great case study of how people should work in groups of a similar size to how people have lived for 1000's of years - a family sized group of 5-7 that sits within a larger community or village of 20-30, that is part of a broader tribe of a few hundred.
There are many other great business books out there. What are your favourites?
Saturday, August 14, 2010
Happy employees provide better customer service than unhappy employees, and employees working at companies like Zappos do an amazing job with their customer service.
Employees at Virgin Mobile Australia clearly don't work in an organisation that respects it's customers and aims to provide a high level of customer service, their customer service is atrocious.
Prior to going overseas I checked in with Virgin Mobile's global roaming guidelines to see how I'd be charged when using my phone overseas. Here's a screen shot from this page:
I specifically thought through the scenario of someone listening to my voicemail message and reasoned that given I've been told I'll be charged when someone leaves a voicemail, and when I retrieve voicemail message, I mustn't be charged when someone just listens to the voicemail message. So I left a voicemail message on my phone explaining that I was overseas and to contact me via email.
A couple of days ago I received my bill and I have $74.08 of charges where people have listened to my voice mail message but then hung up and didn't leave a voicemail.
I figured that was either a mistake on my bill, or a mistake with Virgin's roaming guidelines on their website so, while I've got more important things to do with my time, I called them up to explain this to them. I thought I'd get a credit for the charges and possibly even a "Thank you for pointing out this error on our website, we'll fix that immediately". After 3 calls with a staff member and two manager's (who I had to chase up multiple times this week to have them call me back, after bring promised returned calls within 24 hours that never came) I've been told all global roaming charges are undisputable and that even though the website doesn't explain I'll be charged for this, I should have known that when someone listens to my message this is a connection and I will be charged for it, and if I was unsure I should have called Virgin Mobile to check. Instead of admitting their mistake and thanking me for pointing it out I've been offered a 50% courtesy credit.
When I explained the unreasonableness of this situation the first Virgin staff member said she couldn't give me any more credit because it would have to be justified to more senior managers and she could get in trouble if she couldn't justify it properly. Talk about a culture of fear rather than empowering employees to provide great service to their customers!
When the manager's finally called me back I explained all of the above and:
- I shouldn't be expected to call Virgin to ask if I'll be charged for every imaginable scenario that's not listed as a charge on their website.
- It's not reasonable to list every global roaming charge except one, then expect me to pay for those charges.
- You can't argue that a charge you don't explain I'll receive is 'undisputable'.
- I'll take the credit but I'm very unhappy and if I can be bothered to I may decide to follow up with the telecommunications ombudsman.
On this last point I was told that if I plan to do this the 50% credit won't be applied, is that not a threat?
And this hasn't been our only bad experience with Virgin Mobile of late. Jodie organised to have her phone unlocked while we were overseas. She was explicitly told that she wouldn't be charged for this but lo and behold she received her bill and there's a $50 unlocking charge on it, which she then had to chase up and forward on the email correspondence she had with Virgin to have the charge removed. She had also been told she would be notified in a week's time when her phone had been unlocked, but she was never notified and had to follow that up herself.
A couple of days after we arrived home Jodie was calling in to retrieve 2 voice mail messages that had been left for her but couldn't retrieve them. She called Virgin to get this resolved. Instead of trying to resolve the issue and without checking with Jodie first, the Virgin staff member reset Jodie's voicemail and wiped the two messages that had been left by other businesses Jodie was waiting to hear back from that day.
Every few months I'm sent a marketing communication from Virgin Mobile saying that if I fill out a 5 minute survey I'll be given a credit toward my Virgin Mobile account. Twice I've followed the links and answered the first few questions of the survey only to be told that they don't need data from customers on my type of mobile contract so I won't be finishing the survey or getting the credit. Virgin, you know my details and what plan I'm on, please don't waste my time making me read these messages and having me start the survey if you actually don't need information from me.
And my final complaint with Virgin Mobile is that it's not possible to put a limit on your mobile data usage, and their fees for going over the limit are exorbitant. I have a 1gb data plan and a few months ago I went 20mb over, which is not much. I was charged $40. If that happens again I would prefer that my data plan just stops, or at the very least I would receive an email telling me I've reached my data limit but Virgin don't do either of those things. Instead I have to manually keep checking whether I'm approaching my limit. The logical explanation for this is that Virgin Mobile are attempting to make money from their customers who accidentally go over their data usage limits, 1gb excess usage would be a nice $2,000 pay day for Virgin.
If it wasn't for the fact that there are not a lot of options in mobile providers, that I've also had bad experiences with Telstra and Optus in the past, and Virgin is the only mobile provider to include international calls within their caps, which I use a lot, I would be switching mobile providers immediately after these experiences and if a new one happens to launch with even just a reasonable approach to customer service, and international calls included in the cap I'll change tomorrow. I'd love to see iiNet enter the space, they've been fantastic as an internet service provider.
This is also an issue for a company like Virgin that lends it's brand to lots of different operators. While Virgin Blue, Virgin Money and the other worldwide Virgin brands aren't actually associated with Virgin Mobile and may provide completely different customer service experiences, when one of them screws up like this it reflects poorly on their businesses for most people.
Two lessons come out of this for us at Shoes of Prey:
1. We must ensure that Carmen, Vanessa and Qun enjoy their jobs and are empowered to make decisions to make customers happy. We should applaud their efforts to make customers happy rather than have them working in an environment where they fear providing great service to a customer might get them in trouble. I think we do a good job of this already, but we need to keep it at the forefront of our minds so we don't even vaguely start going in the direction of Virgin Mobile's customer service.
2. When we launch with international partners we need to ensure they take a similar approach to customers service as we do so our brand isn't negatively effected in other markets, as is happening with the Virgin brand. Again, I'm very happy with how this is going at the moment, but it's something to keep in mind.
Wednesday, August 11, 2010
Starting on Monday, not only did we produce the new site from a rough prototype, all the way to launch, but we also commissioned a fashion shoot organised in a few days, and shot on the Friday. It was truly a massive week!
Monday, August 9, 2010
In an earlier post I discussed the fact that I don't think I'll finish my MBA. If I had my time again, would I have started one? What's the value that an entrepreneur can take from an MBA? This is something I've given quite a bit of thought to over the past couple of years.
Probably the best place to start when analysing this is to look at each of the reasons people do an MBA.
1. Getting a good job
When I was working at Google's Mountain View head office I went along to a session where some senior manager's were discussing whether it's worthwhile studying an MBA. Some on the panel had studied an MBA, others hadn't and they were all very open and honest with their thoughts. The basic thing they all said is that hiring people for Google in the US they essentially ignored all MBA's unless they were from one of the top 5 schools in the world - Harvard, Stanford, Wharton, Kellogg or Insead. And even then, it was more about what people had done in their previous jobs than whether they had the bit of paper that said they had an MBA. There are a lot of people working at Google Australia who have studied at the Australian Graduate School of Management, so there's no doubt that's not ignored when hiring here, but from what I saw of hiring practices it was certainly more about the person's work experience than the piece of paper with the MBA written on it.
That said, something the managers at Google said was that the networks you get from studying an MBA are all very valuable. These can be particularly useful if you're looking for a career change, particularly when changing industries. Using your MBA network to learn more about an industry, who the good employers are and who the right people are to meet can be very valuable when looking for a new job in a new industry. But unless you're looking to do that, an MBA is not going to be a big help in getting you hired, your work experience is more important.
Of course all of this is completely irrelevant to an entrepreneur as you're goal here is to employ yourself.
2. Learning about running a business
This is clearly an important point for any budding entrepreneur. If you'll be running your own business it helps to have some theory around how to do that.
As I mentioned in my earlier post, the Managing People and Organisations course I took in my AGSM MBA was very rewarding. I learnt a lot about what motivates me, what motivates other people and theories on how to create motivating, exciting work environments that inspire people to perform at their best. Had I not already completed a Commerce degree the Accounting, Finance and Marketing courses would have also be relevant in helping us start Shoes of Prey. So my MBA provided some value on this front. In a comment in the previous MBA post, Steven Noble mentioned a business simulation that he did as part of one of his final MBA subject which sounded like it covered a lot of the strategy side of starting a business.
All of that said, I think the best way to learn how to run a business is just to do it. Investing the time and money you would put into an MBA into experimenting with a startup is probably a better way to go. Tim Ferriss discusses creating your own MBA on his blog. (Thanks Libor).
3. Developing a strong business network
There's no doubt a lot of people get a lot of value from an MBA. My friends who studied at Harvard have glowing things to say about the course there. Warren Hogarth, a good friend from high school is now at arguably the top Venture Capital firm, Sequoia Capital and Scott Griffin is a co-founder of the very successful online accounting firm Etax and is now working on a couple of other entrepreneurial projects, and they both say they took a lot from the course. Harvard is one of the best places to study an MBA in the world, and Warren and Scott both say the people they met in that course, as well as the material and quality of the lecturers are outstanding.
I met a lot of great people in my MBA course at the AGSM, however as I mentioned earlier I met more people studying with a smaller group in Brisbane compared with Sydney.
What do you think? If you're planning to be an entrepreneur is it worth studying an MBA?
Friday, August 6, 2010
Amongst many other things I've read that security badges help to reassure customers, particularly on the checkout page. After looking into the badges quite a bit I have to say these are brilliant, and at times dodgy businesses.
According to their testimonials and what I read on the web, badges boost conversions, particularly on new, lesser known e-commerce websites, so a badge provider's business works, at least from the point of view of the e-commerce website they're selling the product to, and so businesses like ours are going to be willing to pay for these badges. The sales process is relatively easy for a badge business. The costs are also very low. They generally perform a few automated checks then provide a badge. Badges that are out there on other websites act as sales tools (that's how I did my research) and all those links are great for SEO, so there are barriers to entry for new badge businesses. That all adds up to a very good business model.
At times dodgy businesses
I've done a bit of research into the different badge companies and their offers so I thought I'd post what I'd found in case it's helpful to anyone.
US$47/mth for their package of 3 badges. Thanks to our friends at Blank Label for putting us on to Trust Guard.
Better Business Bureau
Unfortunately this one is only available to businesses based in the US or Canada.
E-Commerce Merchants Trade Association
US$499/year - 500 daily page view maximum
US$959/year - 2000 daily page view maximum
Note: In case it's not obvious enough, our blog hasn't earned or paid for any of these badges, they're displayed for discussion purposes only.
We're not yet sure which badges we're going to go with. The Verisign and Truste badges look nice, and would fit with our new website design, however the fact they match the site means they're less likely to stand out compared with the uglier looking Trust Guard badges. Trust Guard talk up all the A/B testing they've done on their badges to come up with the designs you see above, so that might be a good way to go. Arguably we should A/B test a few different badges, but that means signing up, paying and being approved for a few of them.
If you've used any badges like these before I'd love to hear about your experiences.
Wednesday, August 4, 2010
On my last trip to China I met up with a friend of a friend who travels to Guangzhou regularly for work. He works for a sourcing company, they source products from China for retailers in Australia and New Zealand. He studied Mandarin at University in Auckland, then received a scholarship from the Chinese government to study it for 2 years in China. He's very modest but his work colleagues tell me his Chinese is perfect, and judging by the reactions of many of the Chinese people he spoke to that's definitely the case. They were very impressed when he started speaking to them. I think I counted about 5 phone numbers subtly given to him from Chinese girls when we went out for a beer!
When I asked him how helpful it is for his job I expected him to say it was amazing. He said it certainly makes things easier, but it doesn't really help him perform that much better than his non-Mandarin speaking colleagues. He said if he had his time again he would have actually studied something business related. Most people he deals with in China speak English, and where they don't a translator works fine.
The more time I spend in China the more that makes sense. Being able to speak the language would certainly make spending time there easier, but the key people we deal with all speak very good English and for any business dealings where our contact doesn't speak English, Vanessa does a great job translating. Our employee Qun doesn't speak English and we get by just fine with Vanessa translating!
Given the time involved in learning Mandarin, I just can't justify it when weighing up what we will spend our limited time working on. And with technologies like the one in the video below on the way, language is going to become even less of a barrier.
That said, when it comes time to have children, they'll be off to a Mandarin/English school if I have my way! Languages are obviously much easier to learn when you're young and there's no doubt China is going to have a huge influence on the world this century.