Starting a company without advertisement is like winking to a girl in the dark: you know exactly what you are doing, but nobody else does.
Three years ago Stefan, Pim and I, started our own sunglass company: Funkie Collective. Although it was an awesome experience, we decided to unplug the webshop last month. We just didn’t have the time to keep it running anymore.
In those three years, we weren’t able to convert Funkie Collective into our main source of income, and we definitely didn’t become millionaires. However, considering the lessons we learned, and the fun we had, I consider the project a major success nonetheless.
Underneath you will find the three biggest mistakes we made, and three things that went (surprisingly) well. Learn and give entrepreneurship a try yourself one day!
Funkie Collective is for sale.
Drop me an e-mail if you are interested: firstname.lastname@example.org.
Things that went wrong
#1: Traffic first, conversions later.
I am an absolute sucker for perfection and on-site website optimisation. When starting up an e-commerce company, this can be a lethal combination.
When it comes to online marketing efforts, 90% of our time was spent on optimizing the website for conversions and search engines. The first two years, we spent most time on On-site Search Engine Optimisation (SEO), User Experience (UX) and Conversion Rate Optimisation (CRO).
Although all of these things are great, they should definitely not be your first priority when starting up a company. When making sales is your end-goal, it is important to realize that sales equals the amount of people visiting your website, times the conversion rate.
Sales = Traffic x Conversion rate
As simple as it sounds today, I feel quite embarrassed now I see where things went wrong: the first step in making your e-commerce store work, is generating traffic. Without plenty of visits, it doesn’t make sense to put a lot of effort in increasing the conversion rate. While we were having so much fun optimizing the sales funnel and making our website faster and more beautiful – not a lot of visitors were actually there to benefit from it.
First time six orders in one weekend.
Since SEO is a long-term strategy, most of the times the best way to kick off your project is by pushing traffic with Search Engine Advertisement (SEA). When budget is sufficient, brand awareness might be raised simultaneously by Social Media and Display advertisement.
Note: Social media and Display advertisement are not the most powerful channels for direct selling. With these channels it is often a better strategy to tell the story behind the brand, not pushing too much on direct sales.
Main lesson learned: if you have limited resources to spend, start by generating as much traffic as you possibly can. The best way to do this is using advertisement aimed precisely at your target audience – preferably when there is already an intention to buy.
More often than not, SEA is the most powerful channel to do just this.
#2 Spend less on stock, spend more on advertisement.
Since we were on an extremely low budget, the money was already spent before we even realized it. Despite many calculations, we spent about 75% of our initial investment on stock and about 20% on the platform. That’s right, we were left with just 5% for advertisement.
The reason for this, is the fact we wanted to be a proper webshop – selling at least 10 different models of sunglasses to give our customers more options. However, starting a company without advertisement is like winking to a girl in the dark: you know exactly what you are doing, but nobody else does.
Opening the first badge of sunglasses – with a bread knive.
If we would have a second chance, we would probably start Funkie Collective with fewer models of sunglasses. This would not only increase the amount of money to invest in advertisement, but it also would have increased the focus of our efforts. After all, it takes less time to manage and advertise on five products, than it takes to promote ten products.
#3 It’s not gonna be perfect, and that’s ok.
When we first started out, we planned to launch the webshop in May 2013. In the Netherlands this is when the high-season starts for sunglass shops. However, in the end we didn’t launch Funkie Collective until August 2013 – already missing half of the high-season.
One of the main reasons why didn’t go ‘live’ earlier, was because we wanted to make the webshop perfect. You only have one chance to make a first impression, and we wanted it to be mind-blowing.
Picture of the photoshoot at Kralingse Bos, Rotterdam in 2013.
Thank you, Jasper, Dave, Everlien and Iris for helping us out.
Looking back, I think it was perfectly possible to launch the website in May. We spend too much time on copy for the website and doing photo shoots. It would have been fine to launch the webshop with just a few lines of copy and some basic product photos.
We could have filled in the blanks along the way.
A first impression is not thát important. Leave some space for optimisation and start selling your product as soon as your webshop has the minimum requirements to run smoothly.
Things that went well
#1 The team must be balanced.
When you are alone you move faster, but together you get further. Most start-ups stand or fall by the team it is built with. The team should not only be full of energy and excitement, it should also be balanced.
- A team consisting out of just creative and innovative people, will probably have problems keeping focus on the big lines. Often these teams are not that financially well structured either, there is just too much chaos.
- A team consisting out of just very well structured people, will probably have a hard time to innovate and to differentiate from the competition. On top of that, when perfection is a goal, it will slow down both growth ánd the learning curve.
- A team with just dominant leaders, will have trouble to follow a consistent path. A ship with multiple captains on board, will never sail in a straight line.
The ideal team will contain a mixture of these characteristics, without causing destructive clashes of personalities. Especially in smaller teams, this ideal mixture is rare. Looking back I think Pim, Stefan and me made a good team.
Locked up for two days to make things ready for the summer of 2014.
In the end, our strategic insight was not strong enough to shape the path to commercial success. However, if I would start Funkie Collective tomorrow all over again, I would want to work together with the same people – without a doubt.
#2 Work together with influencers.
Promoting your product is an absolute must. However, when you are starting up a company on a shoe-string budget, you will encounter two main problems:
Problem 1: your reach will be minimal
As a start-up, you probably do not have a large amount of loyal followers – yet. In most situation you will have some, mainly consisting out of friends and family. That will be it. It will cost plenty of resources to get a larger crowd behind your company.
Is one of your friends launching a start-up? Be their first customer if you can effort their product or service (whether you really need it or not). Starting up a company is a lot harder than it looks like, and it will help your friend get through the first though months. Friends and family ordering our first sunglasses helped us tremendously.
Problem 2: the toilet-duck complex
In the Netherlands you have this toilet cleansing product called ‘WC eend‘ (which literally translates as ‘Toilet duck’). For years they had this campaign running in which a guy promoted their product as:
‘The people at WC eend, advice you to use WC eend.’
I call this the ‘Toilet duck’-complex.
Ideally, the promoter of the product should be a different person than the seller. Your marketing message is not even half as strong, if you are both the promoter ánd the seller. Ofcourse you are telling people you have the greatest product in the world, and the coolest brand. The problem is: every other company can do this as well.
People take promotion a lot more seriously when the promoter has no financial interest in selling the product (or at least: when it looks like the promoter has no financial interest in selling the product). And this is exactly the reason why the influencer strategy is such a strong way to sell a product.
First interview for Erasmus Magazine (I am the horse).
Leveraging influencers who already have plenty of loyal followers within your target group, can be one of strongest strategies to leverage your marketing efforts – especially when you’re in an online start-up. It gives you a kick-start, at times when resources are low.
Underneath you will find some examples of Funkie Collective working together with influencers of our target group:
#3 Be likeable and authentic.
There used to be a time webshops were impersonal: it was not common the faces behind the webshop would be shown.
Trust is important to persuade visitors to buy from you, and they simply will trust a person over a website. On top of that, people are more likely to buy from you if they like you. For these two reasons, it becomes important to actually show the visitors who you are, and to tell the story behind your brand.
Increasing your likability with jokes:
‘Cut out for your hamster’
Be yourself, and let the visitors know who they are buying from.
It is not sufficient anymore to just fill in the ‘about’ page. Your website should have a face on it – no matter on what page the visitor lands. Stock photos do not count.
These are the lessons I learned running a start-up.
Feel free to leave a comment at the bottom of this page, if you want to share your own experience.
– First meeting of the Funkie Collective crew in 2013: Stefan, Pim and me –
Thanks guys, it was a pleasure to work with you.