Building Noggans — e-commerce clothing business
During my second year of Uni a couple of friends and I were getting ready for a dress-up party and we wanted to wear funky legionnaire hats. We searched online but couldn’t find anywhere to purchase them, so I began speaking to a few friends to see if they knew of any online stores selling legionnaire hats. They didn’t, but there was some interest in this type of hat.
Two friends, Austin and Madi, lived across the hall from me. We loved the Budgy Smuggler model and decided to design a few prototypes. We downloaded Photoshop and started with a topical theme ‘The Tropican’, a pineapple theme ‘The Pineapple’, a party theme ‘The Pong On’, a plain black ‘The Black Magic’ and a plain pink ‘The Pink Panther’. These designs were scrappy.
We sent the 5 scrappy prototypes to our friends and asked them to send it on to their friends in attempt to validate the concept. The response was great — people loved the prototypes. This signal was enough for us to take the legionnaire hat to the next stage so we contacted 5 suppliers in China via Alibaba. The conversation went back and forth for a few months as we tried to get the material, measurements and stitching right. The 2–3 month lead time to ship each sample between China and Australia made achieving speed challenging, but we managed to get an idea of the quality of each supplier.
After selecting one supplier, we manufactured our initial 5 designs and shipped them to Australia. When the samples arrived we carried a table up to the main Uni avenue and made a display in attempt to get feedback from the people that weren’t just our friends.
We made a lot of noise and the amount of people that approached us and provided feedback on the hats was incredible. Each person selected their top 3 and some asked to purchase on the spot. We decided to create a wait-list.
Austin, Madi and I sat down in one of our bedrooms and began white boarding what we thought the business should look like. We needed to turn this into a legitimate and trustworthy product, brand and distribution if we wanted more than just Uni students to take us seriously. We decided to name the business “Noggans” which was a twist of ‘Noggin’ (a slang term for your ‘head’). Perfect for an Aussie funky hat business.
At that point Madi was responsible for design, Austin was responsible for logistics and I was responsible for building the e-commerce store. We each invested $500 into the business which turned out to be the only cash we ever put forward, and ordered our first shipment of 600 legionnaire hats from China. This included 3 sets of 200 hats based on top 3 designs chosen by our potential customers.
We launched on 15 Nov 2016 and filled our wait-list on the first day which was about 200 orders. This was really exciting, then our sales flattened. We plodded along for over a month without much luck, missing what should have been one of the most important summer months for our brand, December.
It wasn’t until late January that we started to realise the power of social media marketing. We started AB testing our products on Facebook and Instagram and demand began increasing, but we needed something more. We decided to collect customer feedback through our social channels which was challenging to keep on top of, but we started noticing a recurring request for an Aussie summer design. Australia Day was coming up so we created the ‘Tinnie Blue’ and took the leap in ordering its first shipment from our Chinese supplier.
From the 3rd month we started seeing an up-tick in sales and by our 4th and 5th month we were experiencing consistent 40% month-on-month growth. We began ordering larger and more frequent shipments to keep up with demand. My Uni room was chaos, the small space between all four walls filled with hats and packaged orders for customers. We started hiring our friends to package the orders on the ping pong table in the common room.
Then a 1000 piece shipment of plastic-like material hats arrived, all terrible quality. We couldn’t sell these, but our customers had already paid for them. We were stuck in a hard place: do we compromise quality and get these hats out to customers so that we can continue selling more and growing? Or do we send this shipment back to China and attempt to get a refund, contact each customer with the news and risk losing them permanently, and stall future cash flow?
Our morals kicked in and we decided on the latter. The supplier initially rejected taking the shipment back and it was difficult to prove the poor quality, but we settled on the supplier paying for half of the next shipment which was larger. To mitigate this risk happening again, we added another supplier and split each shipment between them so they’d manufacture half each. If one failed, at least we’d have 50% of our hats.
I also had to call each customer who had already paid for the Tinnie Blue hat individually. I presented 3 options to each customer: a) wait for the next shipment and have 50% refunded, b) choose another product, c) receive a 100% refund. This took hours, but most customers luckily chose a).
As we got back on track and our social media community was growing rapidly, we realised that investing in localisation would be valuable. We started taking applications for Brand Ambassadors (BA) and wanted them to be aligned with our brand, so the video’s they submitted were hilarious. We ended up hiring 10 BA’s across each Australian state and New Zealand, including an ex-Olympic Volleyball player who loved our product and wanted to rep it. This influencer approach really helped us crack the broader market.
Our team began to notice that we were spending a significant amount of our time on administrative and repetitive tasks, so we wanted to automate as much as possible. Austin automated the hat labelling and recipient process, and we delegated other tasks to casual workers that we hired.
We brought on a designer who produced higher quality designs with less effort, and tried to figure out how we could better meet our customers needs. Our communication channels were messy so we centralised this through a chatbot, and our feedback loops were inefficient so we added a custom hat design feature to the online store.
By the end of our first year we had launched 30 new products including legionnaire hats, kimono robes, slider shoes and t-shirts. We had sold 12,000 items and generated $260,000 in revenue. We had built a highly engaged social media community of 30,000 people. We were receiving orders from Canada, US and France, and had 2 brick & mortar skate shops in Sydney selling our products. This was more than we had ever imagined.
We tried to take our brand to the next level and Austin took the lead on designing a Noggans marquee. We hosted market stalls at Splendour in the Grass and Lost Paradise music festivals. This was some of the most fun I’ve had. We appeared on Sydney’s Nova969 radio show and saw videos on social media of global DJs including Denis Sulta wearing our legionnaire hats.
It was an incredible journey. I learned a huge amount about people, business and much more which I will take into my next ventures.
Things we did well:
- Obsessed over our customers problems/needs at all stages of the journey
- Valued customer happiness over profit. We were always honest and admitted our mistakes
- Built a strong social community and customer feedback loop
- Prioritised new products and features based on customer needs and business ROI
- Strategically partnered with other companies to build out a solid B2C and channel strategy in order to scale
- Complimented each other’s skill sets and personalities well
Things we could have done better:
- Improved founder communication since Noggans was always a side hustle for us, despite also living in different cities after the first 6 months
- Created a competitive moat earlier as competitors with more cash entered the market and created low cost alternatives for our target customers
- Defined success and then mastered analytics earlier to track our key metrics
- Improved lead times in our supply chain and minimum order quantity (MOQ). In the end we had to kill our custom hat design feature due to MOQ constraints
- Improved our customer retention strategies, automated repetitive tasks earlier, more defined responsibilities across the team, better task planning and tracking
If you’ve made it this far, thank you for reading. Please feel free to connect or message me over LinkedIn: https://www.linkedin.com/in/hindsmatt/
Matt
