Local pureplay retailer, Costumes.com.au has been around for three years, but a recent rebranding effort has positioned it to compete even more strongly in the fancy dress space.
Starting an online retail business requires a head for retailing practices and strong technological aptitude. Luckily for Nathan Huppatz, his career has enabled him to achieve that balance, eventually leading to the launch of Costumes.com.au.
Having worked on both sides of the e-commerce fence, so to speak, Huppatz has developed a solid offering, with a recent rebrand in May this year. Aiming to be Australia’s premier destination for all things dress-up, the site is only three years young, but has already grown into a multi-million dollar business.
Power Retail recently interviewed Huppatz to find out a little more detail on how he fast-tracked a quirky retail niche concept to began staking its place in the local market.
Launched: May 2013
E-Commerce Platform: Magento
SEO: Bespoke SEO, In-house
Can you walk me through the concept for Costumes.com.au and initial development phase?
We launched the costumes.com.au brand in May this year, although the business existed on another URL before that. We began the business in around 2009 but only as a small, part-time thing. At the time we had recently sold our online fishing tackle business Tacklemania and were busy building ecommerce sites for others as part of the Directshop brand. We always wanted to get stuck into another e-commerce business ourselves again and about 18 months ago we made a business decision to cut back on consulting and development and focus on costumes. We added many more suppliers and brands and saw immediate growth.
What market need was the concept designed to fill? Has this changed over time?
In the very early days we only had few suppliers, mostly in the lingerie/bedroom costume range. But a few years ago we shifted to adult and childrens costumes, focusing on branded or licensed products. We knew the size of the party supplies market was large and that costume retail was growing. We also thought there was some room for improvement in the online offerings around and this was encouraging. So over the last 12 months in particular we have been able to refine our range. We know our customers better, we know what they like and are moving confidently forward.
What particular challenges were involved with setting the business up in the first place?
The early challenges are the same for everyone and we have been down this path before. Good growth early on can be easy as you start from a low base and may not need warehousing, staff and all the other costs that go along with it. But after the first 12 months we needed to expand and scale. The marketing and channel growth isn’t too difficult (we have 10 years ecommerce experience before this venture) but we were growing without debt too, so there is a balancing act to manage costs and cashflow whilst maintaining the triple digit growth that we have had.
Effectively managing inventory and purchasing of a large range of products is probably the toughest, but we rebuilt our ERP backend early this year and think we have that one nailed now. Our next challenge is really maximising our marketing and customer acquisition strategies now that we are not limited by capital thanks to some investment in the business.
Also, ensuring ongoing profitability is key. We may sell one day, so the books need to keep looking healthy!
Triple digit growth is very good, especially without taking on debt. What size is the business now?
Yes, you can tell we have all been working very hard! We have a great team, a skilled team. our management team has lots of experience.
We don’t give away exact turnover numbers but it is a multimillion-dollar business, and we are profitable. We are expecting more strong growth this year.
What is your specialty/point of difference?
We have worked hard on our brand and our website. We think it stands out in our vertical. We sell a similar range of product to our competitors so we need to be able to offer more in other ways. We have a fantastic range which is larger than most competitors. Our site is designed to make it very easy for customers to find the perfect costume (and we have more great features for the site coming soon…)
What does your product assortment look like, where is it sourced and how do you go about sourcing product?
Our product assortment is pretty large (8,000+ items). This is sourced from many different manufacturers and distributors. It is a comprehensive purchasing and inventory system. We buy direct where possible, but of course you need to buy large volumes of stock to do this.
What is your favourite tech solutions?
Our site is powered by Magento (we have been developing with Magento since it first came out). It is scalable, flexible and powerful. It allows us to offer much more functionality than any ‘out of the box’ system and we have done quite a bit of customisation. We can also integrate with a lot of different systems
What do you outsource and what do you prefer to develop yourself? What’s the rationale here?
We don’t outsource much. If we do it tends to be for tasks that we aren’t that great at. Design is the obvious one. All of our development and marketing is done in house. We work with Jason Mun from Bespoke SEO too. We know SEO fairly well but to have someone on call that lives and breathes it is very important.
What does your current marketing mix look like for Costumes.com.au? What gets the best ROI and where are you planning to increase your investment?
We put effort into comparison shopping, eBay, Adwords and SEO mostly. Recently we have put quite a lot of effort into SEO (in the design and planning of the new site for the costumes.com.au brand). The next 12 months will see us focus more on paid marketing channels. ROI from all marketing is pretty strong at the moment, but organic return is improving well.
How does the future year or so look at the moment? Do you envisage any major challenges? Are there any developments in the pipeline you’re happy to share with us?
We are pretty upbeat about the next 12 months. A move to a larger warehouse is on the cards at the moment as we have run out of space again. The next move will give us some room for growth! We have a lot more stock coming and some great new website features coming soon too.
If you could offer your younger self one piece of advice at the beginning of your e-commerce journey, what would it be?
Learn from others, attend conferences and spend time understanding online marketing. Oh, and don’t understimate how much hard work it is to build a successful business. Staying small in your garage can be a profitable and good thing! Going from $500,000 per annum to $5 million per annum takes a lot more work.