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INTERVIEW WITH NISH & SACH OF SECRETSALES.COM
THE CHALLENGES AND SUCCESSES OF AN ONLINE FASHION STARTUP
Online businesses are booming in today’s virtual vortex, with so many popping up each year that we don’t know where to look first. We were interested to find out what it’s truly like to be one of the first companies to enter this industry and go on to become a huge success. Not only are there struggles to starting something innovative but when you’re a startup during a recession it means there are many challenges and factors facing you head on. SECRETSALES.com are a leading online sales website where you can purchase designer apparel at low prices. We spoke to founders Nish and Sach about their business and how they’ve managed to successfully execute themselves.
What's the story behind SECRETSALES?
“We set-up SECRETSALES.com back in 2007 when it was still early days for buying fashion online. Internet access was still a bit clunky and the iPhone launched 3 months after we started to trade. We spotted a business in France that had devised online flash sales – a very clever way of creating exciting online sales – and jumped to fill the gap in the market to build a British version. We started with a small bank-loan and set up shop in a basement office in Park Royal. It was super boot-strapped and the first year was filled with pitching to brands at trade shows like Bread & Butter in Berlin to work with us on a consignment basis.”
“That’s what makes flash sales so powerful – the consignment model is where we ask brands to ring-fence inventory for a sale on SECRETSALES.com and then we let customers dictate the true demand for those items. If we bought everything, then we aren’t providing a genuine clearance service for our suppliers because we’re restricted by working capital. Whilst today most brands recognise the immense strength of working with us on consignment, back at the beginning it was quite challenging to convince them of the benefits. It wasn’t until the credit crunch hit in 2008 that we had a surge in suppliers reaching out to give it a go. We rode a wave of almost limitless supply of excess inventory until 2010 when we raised a £4 million investment from Brands4Friends, Germany’s leading flash sales business, which enabled us to multiply our trading volumes by five-fold in six months. Later that year Brands4Friends was acquired by eBay for $200 million.”
“Once Brands4Friends exited, we spun off and secured some institutional investors of our own. Three VC funds invested £6.3 million in SECRETSALES.com in 2012 and since then we’ve invested heavily in our team, sales growth, technology and our brand positioning. We’re now the undisputed leader in online sales in the UK and almost double the size of our nearest competitor. We’re obsessive about execution. Today SECRETSALES is a genuinely potent platform for over 1,500 brands in the UK and that’s partly because consumerism has shifted towards smart shopping. The credit crunch was the catalyst, but the rise of smart-devices and internet access has provided customers a lot more choice and encouraged more sophisticated shopping. We’ve become a household brand since we started advertising on television, which was a bold but rewarding move for us.”
What are both your roles within the business?
“When we first started out, Nish focused on technology and the site’s user-experience whilst I worked on developing brand and partner relationships. We’ve always kept our roles separate but share a combined vision for the company. Nish was appointed CEO in 2010 and I have been driving brand relationships, partnerships, our TV advertising and our brand positioning. We’re growing so we both still need to be operationally active in many areas of the business.”
What do you feel you do differently that benefits your sales in comparison to other online shopping companies?
“Customers return to SECRETSALES.com because of the daily excitement of sales shopping – an everyday guilt-free designer pick-me-up – which cultivates a more impulse than rational-led purchase behaviour. This applies to both men and women. Every day we launch up to 15 curated online sales, each with a finite amount of desirable products from amazing brands at ‘drop everything’ prices. The fastest customers are rewarded with the best choice. It’s shopping as a form of entertainment. We have the best brand relationships for our industry and those brands attract the best, most affluent customers.”
“We ask customers to register before accessing our secret sales, so we’ve been able to track customer behaviours, device usage and transactions for over eight years. In 2015 alone we collected over 300 million unique customer sessions. We’re using this data to power our proprietary machine-learning algorithms, which continuously learn and optimise our sales every ten minutes. This is just the starting point for us and we’re already quite a distance ahead of most other retailers, including other private sale websites. The other area we take really seriously is the way we present each brand. We are running seven simultaneous studios daily and can photograph, retouch and upload over 2000 products a day – all at an outstanding quality level.”
When beginning in the business was there anything you stumbled upon which you didn’t expect to?
“One of our direct competitors announced an investment partnership with a large publishing group not long after we’d launched SECRETSALES.com. We didn’t have the cash to compete so instead focused on building a robust business with good unit economics. We worked incredibly hard to create clear differentiators, demonstrating to both brands and consumers that we should be their first choice clearance partner in the UK. By delivering on our customer promise and keeping a clear handle on our marketing, sourcing, operational and technology strategies, we definitely came out on top. To be honest, we learnt a lot by concentrating inwards and not being spooked by what was happening outwards.”
Was there ever any times you thought what you were choosing to do was be too difficult?
“Of course. Growing a company in the depth of the biggest recession in British history has had plenty of ups and downs. Our confidence took a hit when we saw that a lot of other flash sales businesses didn’t succeed in other countries, but when you look under the surface it’s almost always down to failing to execute properly. Nish and I share and discuss our challenges all the time, which helps reduce any burden. Most importantly we’ve been able to recruit and retain a really phenomenal team and we use Google’s OKR’s target-setting framework as a way to give them autonomy to solve the problems we face. Hiring smart, passionate people and giving them the width to think and operate laterally has enabled us to develop solutions to daunting problems like improving customer loyalty without spending money, which we did by launching a really innovative loyalty scheme that our customers absolutely love.”
What do you hope to gain in the future - bigger brands or expansion?
“Both. We’re continuously winning new suppliers and at the same time we’re removing suppliers from our portfolio that aren’t performing. We strive to have the most relevant curation of brands for sale in the UK and, as our volumes have increased, we can afford to be much more selective. We spotted some intriguing patterns in our customer loyalty last year, which is leading us to invest more in customer retention and we hope will lead to a few exciting developments this year ahead. The size of the excess inventory market in the UK for the categories we specialise in is estimated to be around £5 billion in value. We’re still a small part of that and not much of the rest is online, so there’s a huge space still to play for. There are non-shopping sectors we can take market-share from too, including other forms of online entertainment, so it’s all about domestic growth for us.”
Lastly, what piece of advice would you give to a startup or those thinking of beginning an online business?
“Don’t be afraid of getting your hands dirty. Part of the excitement of starting a business is learning new skills and challenging yourself. The more you learn about every aspect of your venture, the better you can run it. Hire intelligence and passion. You can always teach skills and, frankly, in today’s world skills get out-of-date very fast but the right attitude will keep you, your employees and organization thinking ahead of the curve.”