One-on-one with Nathan on how to start an online business, significant changes within the industry, future trends in online retail and why brand pride can take your business to the next level.
With Halloween just around the corner, and in need of a snazzy new costume for this weekend’s antics, I thought who better to catch up with Nathan Huppatz, co-founder of costumes.com.au.
The company has been operating successfully for over six years and Nathan and his team are renowned as one of the early pioneers within the e-Commerce space in Australia.
When Nathan Huppatz, Brendan Taylor and Ian Slinger first launched their pureplay fancy dress store, they already had several e-Commerce businesses under their belt, but it’s costumes.com.au that has stood the test of time.
It was in 2005 when the three initially decided to strategically start an e-Commerce business together. “We first looked at eBay as it was getting a lot of headlines and it was getting larger in Australia back then.” Nathan says once their research on eBay was done, in terms of sales and turnover, they were really amazed by what they discovered in the sheer high volume.
They then looked to find a niche market they could sell to. “We first looked at the fishing category in Australia and started there. We were pretty much looking for any business in e-Commerce.”
“We liked online. We liked e-Commerce and we liked the idea of starting and owning our own business, and we thought we had the technology and smarts and we’d know how to do it.”
The guys hopped onto Alibaba (which was relatively new back then) and sent off a bunch of emails to manufacturers to source fishing reels at a good price. “We nearly fell over at how cheap they were compared to buying them from a normal store,” says Nathan. “We must have spent only a hundred dollars on six fishing reels and got them over via DHL. We put them up on eBay for 99 cents and no reserve and they sold for a huge margin, even after we’d air freighted them over. So we thought, ok. Maybe there is a bit of a business here.”
The guys then took $2,000 dollars and bought more stock and began selling it on eBay, and Nathan says within eight or nine months, they were turning over a million dollars selling fishing reels on eBay. From there it started growing. They tried selling a bunch of different products and to different niches, including electronics, fitness and music gear. “That started us going on the e-Commerce path, but those businesses were eventually sold.”
Fast track to 2010, the costumes.com.au opportunity came up. Nathan and the boys looked at the costume market and there was only really one major player at the time that was doing a good job. “We knew it was a growing market so we thought we’d find a good supplier and give it a go.”
Six years on, Nathan and his team at costumes.com.au are thriving and see long-term future growth for their online business.
What do you think has been the major game changers in e-Commerce?
Being one of the early pioneers in the e-Commerce space in Australia, Nathan says he’s seen some major shifts in the online retail industry over the years, including, delivery, technology and customer concerns.
“Delivery is getting better and better, with improved options, service levels and a lot cheaper. Improvements in delivery have helped the e-Commerce market grow a lot in Australia, which has been driven by consumers.”
Consumers security concerns have also vastly decreased over the years, according to Nathan, which has driven the online retail space into new territory. “People just didn’t want to part with their credit card details over the phone back then, which has really changed a lot these days. In some cases I think there’s probably a bit of naivety these days, particularly with the younger generation who’ve grown up with electronics. Maybe they don’t think enough about security these days.”
Nathan says the consumer approach to online purchasing and retail has also changed significantly over the past ten years. “People are discovering that they can get pretty much buy anything they like online these days. The range of products available is huge, weather it’s from overseas or in Australia.”
The major change has been technology though, enabling just about anyone to start an online business, with a lot less challenges. “These days it’s just so easy to start selling online. It’s competitive obviously, but if you’ve got a good product and a good idea, where you’re buying something at a good price and you’re smart about what you do, you can be successful.”
“You can set up a website on Shopify or one of those BigCommerce platforms within literally half an hour these days, and transacting and taking credit card details within no time. Alot of red tape and all that fluffle in putting together an online store has now been taken out of the equation, so the technology makes it really easy for people to start an online retail business today.”
What do you think will be some significant future trends in e-Commerce?
“Lots of bricks and mortar stores will develop a sophisticated and mature online branding presence.” In some cases it will be difficult to be remain a pureplay in various categories, according to Nathan, whether its introducing a physical store or having some sort of physical presence like click-and-collect. “I think we’ll continue to see the big brands really pushing hard and doing well in e-Commerce.”
On the retail side, Nathan says personalised or custom made merchandise, including offerings from Shoes of Prey, Tinyme and Mon Purse, will be in higher demand. “I think there’ll be more and more businesses like that, and it will probably be driven by large marketplaces like Amazon, where price is still the main driver.”
“Businesses are trying to do something unique and really tap into their customer and audience, grab their emotion and sell with emotion, so I think the ‘peronalised’ market will do really well.” And who doesn’t like to see their name on print? “As manufacturing facilities improve and as costs come down for that sort of thing, there’ll be more and more of that.”
Where do you see costumes.com.au heading in the next 5 years?
“We’ll continue to grow, we’ll broaden our range. I don’t know if we’ll look at some sort of physical presence along the track, or some sort of partnership. I think our niche is particularly good as a pureplay though, as our large product range is not easy to stock.”
Why do you think costumes.com.au has stayed strong over time?
Nathan says being proud of the brand and business is one of the key reasons why the company has stood strong over the years.
“There’s no magic bullet. It’s a mixture of doing everything as well as you can. When we first started, we’d come off the back of running a bunch of different e-Commerce businesses, and we weren’t particularly proud of any single one of them as we were sort of spread in our product range.”
“I think with costumes.com.au we’ve made something that we’re really proud of, something that we want to tell people about and say this is my business. I think that pride carries through in everything that we do, weather it’s customer service, or the design of the site, the way we pack the product or distribute it. Pride is what has really driven what we do.”
Nathan says he never thought they could have a multi million dollar business selling costumes and fancy dress. “That surprised us. I know lots of other people and successful e-Commerce businesses out there who initially thought what would be a really small niche, only to then realise it’s actually quite a large audience of people out there who want to buy that product.”
Here’s Nathan’s final advice to anyone wanting to give the online retail business space a shot: “Test it. Try it. Look overseas and see what’s working over there and maybe there’s an opportunity to do the same thing in Australia.”