Exciting Commerce // Unlimited

Backcountry Launches Sixth Live Shopping Spinoff

Online outdoor retailer Backcountry is developing into the second largest live shopping player after market leader Woot!.

Since Summer of 2008, Backcountry has started up three additional live shopping branches:

• Last week Wednesday their sixth live shopping site Brociety went online – as a sort of winter version of Whiskey Militia. Whiskey Militia will serve the skater scene exclusively while Brociety focuses on snowboarders.
• Similarly, Backcountry also took the strategy with their biking division. Since the start of Bonktown middle of January, Chainlove specializes exclusively on mountain bike fans, whereas Bonktown takes care of the street riders.
• After the surprising success of the biking site Chainlove, early this year we should see another two bicycle sites launched (see the case study)
• Only last September did Backcountry convert one of its regular online shops to a pure live shopping site. Tramdock continues to orient itself on skiers – but only with one product at a time.
• For another perspective on Tramdock, see a post from Bob Lefsetz’s blog.

The live shopping strategy from Backcountry was a key theme of the third Exciting Commerce organized Live Shopping Days conference held in Berlin recently.

Backcountry had the experience that live shopping offshoots attract considerably more attention with die-hard fans as regular online shops do.  Backcountry thus uses the ODAT (“one deal at a time”) format increasingly as a revenue driver for their regular sites such as Backcountry.com or Dogfunk.com.

Also in terms of revenue growth the QVC sister made massive leaps in the last three years, from revenues of $52 million in 2005 to a last reported $200 million.

Backcountry is currently looking for loads of new employees, amongst others several business analysts to fine tune the business.

Related posts:

• Backcountry Launches Chainlove, Its Third “One Deal at a Time” Site
• Why Backcountry is Expanding its Live Shopping Business

Originally posted in German by Jochen Krisch, translated by Jason Soo.

The Shop Exchange: Pet Product Supplier Wanimo Nabs 3 Million Euros of Capital

The French web-based pet product supplier Wanimo has followed up their 2006 first financing round of 2 million Euros with a second round of 3 million:

Wanimo was founded in 2000 with an angel round of half a million Euros. The pet supplier, which counts in the top 500 of all shops in France, forecasts 8 million in revenues for 2009. In 2005 they turned over their first profitable year with revenues of 2.7 million.

More info in French also available at vnunet, neteco and journaldunet.

Originally posted in German by Jochen Krisch, translated by Jason Soo.

The Shop Exchange: MonShowroom Secures 4.3 Million Euros of Capital

The French online fashion retailer MonShowroom has secured 4.3 million Euros of growth capital, after the 700,000 Euros received in their first round in 2007.

MonShowroom counts amongst the top 500 shops in France, was founded September 2006 and has recently grown their revenues from 1.2 million Euros (2007) to 2 million Euros (2008). According to French press reports, they are planning 5 million in revenues for 2009.

In the press release:

"The success of MonShowRoom.com is based on three key factors that have been firmly grasped by its visionary owners: a leading position as a frontrunner in a fast-growing niche market, a proven ability to form alliances with brands favoured by the fashion-conscious and to pick out the brands of the future, and a careful buying strategy wisely tailored to e-commerce."

More info in French also at vnunet, Neteco and LaTribune.

Originally posted in German by Jochen Krisch, translated by Jason Soo.

A Chat with Boris Wertz

While being in Vancouver, Canada, I had the pleasure of meeting with Boris Wertz, former COO of Abebooks and founder of VC firm W Media Ventures.

A German native, Wertz moved to Vancouver in 2002 when JustBooks, the company he had founded in Germany, was bought out by Victoria based AbeBooks.  Abebooks was recently acquired by Amazon in a long negotiated deal that was rumoured to be in the order of $100 million.
Side note: that estimate was made before the current financial crisis and one could speculate on aggressive last minute negotiations on the part of Amazon.

Through W Media Ventures, Wertz invests primarily in consumer internet opportunities in Western Canada.  His portfolio includes companies such as Suite101 (who last year launched a German version), Indochino, Teampages, Techvibes (a local version of Techcrunch), and TripsByTips (German)).

In addition to managing his investments, Wertz works with Munich based Burda Digital Ventures as their ground zero contact person in Vancouver.  He is also CEO of Edmonton based Nexopia, a social networking site in which both W Media and Burda co-invested.

When asked about business opportunities for the future, Wertz pointed out 4 main areas where he sees promise:

• Businesses such as Indochino which - although at heart a traditional commerce company - uses internet technologies as a lever to change the rules of traditional commerce.
• Niche marketplaces like Etsy.
• New technologies or methods which enable the production of high quality internet content.
• Niche social networks such as TripsByTips or Teampages.

Given his obvious penchant for social networking sites, I dug a little deeper into his opinions. On internationalization, as exemplified by the German launch of Suite101.de, Wertz commented:

“With over 300 million consumers in North America and the same order of magnitude in Europe, both markets are huge and justify separate investment.  And it’s not a double investment since infrastructure such as servers, maintenance, backend functions, etc can be reused”.

On the challenge to monetize such sites, he explained:

“Targeted advertising based on interests and behaviors seems to be the best way to monetize social networks and the recession that we are in for the moment doesn't help this. At the same time, there are additional business models like subscription revenue for premium products (both Nexopia and TeamPages rely on subscription revenues) or selling of virtual gifts that can fill the void”.

Wrapping up our conversation, I was curious to know the reasons for his choice stay and live in Vancouver. Wertz replied:

“In Vancouver and British Columbia in general there are great opportunities.  Lots of talent.  It’s exciting to be part of this scene to help build companies.”

Mass Customization: Indochino Update

After the last article on Indochino last May, Exciting Commerce decided to check up on recent news in an interview with CEO Kyle Vucko.

Indochino produces custom made suits in Shanghai and delivers internationally free of charge within 2 weeks of order.  Typical to leaders in the mail order business, they offer comprehensive customer satisfaction guarantees such as free alterations, free remakes and a return policy.

In a discussion with CEO Kyle Vucko, I asked about the costs of this service level. Vucko:

“The free alteration guarantee, free remake and money back returns are each about 3% of orders. This is actually very good, considering that typical return rates for online apparel run between 18 – 20%”.

When asked why Indochino enjoys half the average return rates of the industry, he commented:

“A custom suit is actually a very meditated purchase, not an impulse purchase which may be the case with other types of apparel. Plus, since we offer a custom fit and good quality control, customers are more likely to get what they expected.”

Meeting customer expectations seems to be supported by the fact that 40% of orders come from repeat customers.

Interestingly, Indochino seems to be not affected by the current financial crisis.  Vucko revealed that business seems to be actually improving, noting that last December was a new record month of revenues, beating the previous record month by more than double.

Vucko speculated that was likely due to the so-called “downgrading effect”.  In the current climate, suit buyers who might usually go to a personal tailor are more willing now to try out more economical online options.

Vucko also revealed some inside details on how his particular industry lends well to the mass customization trend – if you have the right connections.

“Indochino purchases material from end-of-roll suppliers at a very low per meter cost. The limited supply works to our advantage by adding an element of exclusivity to our products.  Each fabric delivery is only enough for about 10 – 100 suits.  The “units available” number displayed on the website is updated in real time and is directly linked to the amount of material we have left.  This has the additional effect of allowing us to change product styles on the website every week.”

To address scalability, Indochino taps into a network of freelance tailors who all basically operate out of the same neighbourhood in Shanghai.

When asked about his strategy for 2009, Vucko stated that he wants to put more focus on the service aspects of the company, such as offering more fashion and suit wearing education on the site.

Indochino was founded in March 2007 in Victoria, Canada by Kyle Vucko and Heikal Gani.
Financing has been covered by an initial angel round of 40,000 CDN followed by a VC round in January 2008 worth 250,000 CDN.  A 3rd round in the order of 1-2 million is planned for end of 2009 or beginning of 2010.