Facts and Figures
The Business is an Apple Watch band business and brand, selling premium leather watch bands through its online store. The parts are sourced from various suppliers, then assembled in-house and stored and dispatched from a fulfillment center. Even with a limited offering and little marketing, The Business has proven to fulfill the need of a specific niche. Daily operations require little time. In the past months, a new website has been built on the Shopify platform (including relevant apps), a fulfillment partner has been found and a Zendesk support system has been setup. The Business now has all the groundworks in place to scale.
Maintaining the business:
- Customer support (1-3 hrs/wk); about 7 tickets per week. Most are about shipment information. The owner takes this as a chance to make customers advocates of the brand by delivering high quality and personalized answers/solutions.
- Planning and purchasing new inventory (0.5 hrs/wk); sourcing of the parts has been done. For The Business’s current products it just a matter of reordering the parts in time. The parts are manufactured in China and the lead times can be between one to two months.
- Administration (0.5 hrs/wk); the basic bookkeeping needed for quarterly Dutch sales taxes.
- Assembly; the parts ordered from the suppliers need to be assembled before they can be brought/send to the fulfilment warehouse. This only needs to happen very sporadically. It takes the owner about 10 hours to completely assemble and package 200 straps.
- All orders are fulfilled by a third party and thank you emails, order confirmations with invoices and emails with tracking information are being sent to the customers automatically. If products are out of stock, people can sign up to a back-in-stock message, which can be sent automatically when inventory is replenished.
Growing the business:
Because of time constraints due to his full-time job and other responsibilities, the owner feels there are a lot of growth opportunities left unexplored:
- Marketing, (1hr/week). Reaching out to vloggers, bloggers, Apple news/tech websites, influencers, content creators. Recently an affiliate program has been set up. This could be helpful for the promotion activities.
- Business development, (0 hrs); currently no time is spent on business development. There are interesting options to explore such as partnering with web shops and resellers for other sales channels. Potential partners are reaching out to The Business every now and then.
All tasks are performed by the sole owner-operator. Bart spends about 6 hours per week working on the business.
Customer Profile and Segmentation
The Business’s target market is 25 to 60-year-old male Apple Watch owners. The customers live in Western, English-speaking nations. About 40% of our customers are from the US, 25% from the UK, the rest is coming from countries such as Singapore, Canada, Hong Kong, Australia, Netherlands, United Arab Emirates, Switzerland.
The Business’s products are also being bought as presents.
Paid advertising has been very limited during The Business’s lifetime. Currently, only some Google Ads are running for the new and old brand name. Potential customers are reaching the website mostly via articles or comments. Some links are available in the Sales Memorandum. The owner thinks that there are opportunities here.
The Business is capturing emails by offering a 10% discount to those who subscribe to the newsletter. Emails have only been sent on rare occasions but see a good response.
Customers are also retained by high-quality customer support.
- The store has been set up with efficiency in mind. Minimal effort is needed to run the day-to-day operations of the business.
- Fulfillment is outsourced to a relatively small fulfillment partner, close to Amsterdam (Netherlands). This partner houses the inventory of a number of small-/mid-sized web stores with growth potential. They are very supportive and cooperative and always open to special wishes in terms of packaging or shipping options.
- A Zendesk support system has been setup. All customer tickets from various channels (website, email, Facebook, Twitter) arrive in a clear, unified inbox. If applicable, customer order details are automatically retrieved from the Shopify store and displayed next to the ticket. A number of macros is in place with template answers for common topics (which are not covered in the FAQ on the website.) It is easy to grant access and manage additional support agents. So, in case the ticket volume increases, it is a small effort to hire an affordable customer support agent (who can work remotely, and for a few hours per week).
- The Business can in principle be run from anywhere in the world. There is no need to be close to the fulfilment center.
- The fixed costs are very low. They consist of Shopify + app fees and a fulfilment storage fee. In total this is about $120 per month. Return rate is only about 3%.
- There is a strong potential for growth. The Business has proven to fulfil the need of a specific niche. After the developments in the past months, The Business now has all the groundworks in place to scale.
- Recently a professional photographer/influencer has completed a photoshoot. Some of the photos have been added to the website on AUG 25. These lifestyle photos are a good addition to the clean product photos and hopefully help with the potential customer’s purchase decision. These photos are also useful for other PR pushes, such as Facebook and Instagram. The photographer is also willing to work as a content creator.
- A new video from a tech vlogger with >100K subscribers will go live soon, and Instagrammer with >50K followers (and who does not do any other promotions) is going to post 4 photos over the next 3 months.
- Marketing/exposure; relatively little has been done so far. A few ideas are offered in the next section.
- Business Development; partnering with other webstore and resellers to sell The Business’s products through their channels, such as currently done with Cult of Mac.
- Fulfilment by Amazon: exposure and quick/convenient delivery options for customers. In fact, it seems like people are Googling for The Business’s products on Amazon as it has even become a recommended search term in Google.
- Expand product offering: straps for 38mm Apple Watch; other leather styles; other strap designs; straps for other (smart) watches; add butterfly clasp option/accessory (upsell).
- Demand for Apple Watch straps is quite seasonal (Google Trends). The straps are more in demand in the second half of the year, peaking before and after Christmas. The buyer can still benefit from it this year’s peak.
There have been two events in 2018 that have negatively impacted sales and are worthy to highlight:
1.Moving all inventory to the fulfillment center (mid-Jan 2018)
Before inventory was store in the fulfillment center, the straps were assembled ‘on demand’. Even with low stock of certain parts, it was still possible to display a lot of strap variants as in stock (for instance: with only one black connector pair, still the black options for all straps could be shown as in stock). By storing the straps in the fulfillment center, there was less flexibility and all straps needed to be pre-assembled. In the beginning stock was relatively low and for some variants, no stock was available in the beginning. This impacted sales.
Besides that, a mistake was made when entering the inventory amounts in the warehouse software, resulting in a bestseller variant (top 3) appearing as out-of-stock for two months (mid-January to mid-March).
At the end of February, Apple Inc. reached out to me. They expressed their enthusiasm for our products, but they also asked us to consider a name change as the current one included the letters ‘apple’. The actual legal ground for this request is probably somewhat debatable, but after consulting some legally skilled acquaintances, I concluded it would be best to honor their request. After some brainstorming sessions, the new name was chosen, and the .com-domain was acquired.
It was okay to keep selling the old stock with the old branding, and to redirect the old domain to the new website.
During this period, I asked all suppliers to put production on hold for open orders. I did not want the old logo to be embossed/engraved in the parts at this moment. Only after the new name had been chosen in mid-April, production could continue. This caused quite some SKUs to be out of stock for a while (March, April, May).
As of May 1st, the new name has been used. This impacted SEO in the first few weeks. The Business seems to be recovering now. I think it is key to start generating backlinks to the new domain.
A more detailed Sales Memorandum (PDF) with links and names is accessible after signing the NDA. Please click "find out more" to be redirected.
- All inventory yet to be assembled: approx. $1,740.
- Social accounts
- All inventory (cost price) in a fulfilment center: $7,540
Post sale support
This is support provided by the seller when transitioning the business to a buyer.
About the Seller
Bart is bright and business minded and constantly on the outlook for challenges. He has completed a bachelor’s in Econometrics and Operations Research in The Netherlands and obtained an MPhil in Management Science & Operations Research at the University of Cambridge. Bart also spent a term at Stanford University, where he took classes in Technology Entrepreneurship. Currently, Bart is working as a data scientist at myTomorrows, a venture-backed startup aiming to disrupt the pharmaceutical industry.