New Zealand’s online fashion retailer Mode has been through a process of evolution as it honed in on finding an optimal business model. We spoke with Co-Founder and CEO Joel Kendall about this process.
Originally founded in 2007 under the name RetailonSale.co.nz, Mode has gone through more than a simple name change in order to realise its potential.
Joel Kendall co-founded the venture alongside Geraldine Shackleton having realised their complementary skills and attributes. Shackleton, a suburban fashion store owner, was looking to clear sale product and promote her store outside of her traditional customer base. Kendall brought his passion and growing experience in IT, marketing and e-commerce development to the table. Together, they realised they had the right blend of attributes required for an online retail store.
RetailonSale: A Stuttering Start
The idea the pair hit upon was to pitch their site to potential affiliate stores across New Zealand with the hope of providing struggling bricks-and-mortar operations the online channel they so far lacked.
“In amongst a raft of directory-only sites that redirected shoppers to individual shopping sites or physical stores, RetailonSale was the only multivendor fashion website available in the country,” Kendall says.
After a year of working out their business plan and trying to establish exactly who would benefit from the site, the founders originally decided that the site wouldn’t necessarily only sell fashion items, but potentially just about anything. They then went in search of a platform.
“We went looking for a web developer that had built large e-commerce sites that we liked the functionality of,” says Kendall. “We eventually arrived at EstarOnline.”
After that, Kendall and Shackleton allowed six months for business development, web design and product procurement before launch. At this stage, their venture was entirely self-funded.
“The build took about three months,” explains Kendall. “In that time, we sold the idea to other fashion retailers and wholesalers, asking them to start sending product through to us so we could launch with a decent depth of inventory.”
The first real headaches that RetailonSale ran up against involved the website’s back-end. This was EstarOnline’s first attempt at a multivendor-style e-commerce platform, so it was as much an experiment for them as it was for the business’s founders. At first, inventory uploads and order processing was only partially automated, leaving plenty of manual work to be done. Reporting was limited for vendors and account reconciliation at the end of each month was largely a manual process.
“We essentially overcame these issues by paying more for further web development,” Kendall says, “as well as by working full-time on the business in order to take care of every detail for our vendors.”
By contrast, this intense focus came with one serious upshot for Kendall, as he was able to keep a very close eye on new software solutions and platforms as they appeared on the market, as well as doing much of the necessary development himself.
“The second major challenge was selling the concept to nervous retailers,” Kendall explains. “The initial reaction across the board was that their ‘customers would never shop online’ – we had to convince them that it wasn’t their existing customers the site was targeting, but a whole new marketplace.”
Other retailers had been previously sold expensive e-commerce sites that didn’t work for various reasons, and had been “burnt” by the experience. In the end, the pair decided to only take on board retailers that quickly understood their proposition, even if this did entail some added “hand holding”.
The Kiwi Phoenix Rises
Kendall and Shackleton eventually came to the decision that RetailonSale’s original mission and branding was no longer in line with the direction the business was taking them. Beyond this, Kendall had developed enough e-commerce nous that he felt he was able to found an online store on his own hard work, rather than rely on a partner agency.
“We build Mode.co.nz on a shoestring budget,” he says. “We have been able to collaborate with specialist developers as needed, while still managing the majority of the work in-house without much expense. Now, we even offer web design and development services via DecentExposure.co.nz, so we have most of the resources we need immediately at hand. DecentExposure is actually a by-product of Mode.”
The added challenge of rebranding and rebuilding the company’s product lines in order to relaunch as Mode has meant a lot of time and effort on Kendall and Shackleton’s part – and this initially had a negative effect on conversions.
“But now we are adding more product lines to the site and our SEO rankings are climbing,” Kendall says. “We are in a much better place.”
Mode has been rebuilt around a store-to-door business model, whereby products are despatched directly to customers from a range of bricks-and-mortar shops or warehouses across New Zealand. This requires the website to allow vendors to log in individually in order to manage inventory and process orders. While this greatly increases the level of complexity from a back-end perspective, what it allows the customer is flexibility and choice.
“Our store-front customers are able to purchase numerous products from different retailers in one easy transaction,” Kendall says, “then each respective retailer receives the order and despatches direct to the customer. Mode offers fast deliver across New Zealand and a large selection of brand combinations that can’t be found in bricks-and-mortar outlets.”
The site even allows its retailers to create their own ‘store-fronts’, providing a level of branding and brand engagement that isn’t possible short of setting up an individual website. This in turn creates a favourable marketing strategy for Mode, as it is beginning to be seen as very much a multi-label fashion network, rather than a single online shop.
Seeking more information on how to get an online retail venture off to a flying start? See our complete A-Z guide, Power Up: The Online Retail Entrepreneur’s Guide.