Find out how a multi-million-dollar online business is also experiencing accelerated growth with brick-and-mortar pop-up stores offline.
Find out how a multi-million-dollar online business is also experiencing accelerated growth with brick-and-mortar pop-up stores offline.
You know what it's like...
Handling inventory, logistics, and customer complaint issues long after you should be asleep in the wee hours of the morning.
It can feel overwhelming operating a business by yourself or with only a handful of employees.
Now imagine being brought in to do all of this and more at a company left for dead and in desperate need of a quick turnaround. That's the spot the entrepreneur featured today found himself in just a few months ago.
He's on track now to generate millions of dollars in sales this year and sharing his turnaround secret with you right here...
Remember your bachelor or bachelorette party?
While nights like those can be a bit hazy for many of us, the entrepreneur we're lucky enough to be learning from today remembers his all too well.
In fact, it turned into an ecommerce nightmare he'd rather forget.
But what started as a disaster, and founded with just $3,000, is now an ecommerce juggernaut that generates $4 million a year selling just one t-shirt at a time.
What's behind the success?
The founder is sharing the one key decision that changed everything, as well as what he learned from that botched bachelor party, so you can take your online store from rags to riches in a hurry...
Depressed and drinking early …
That’s how Scotty Arellano and Wyatt Thurston describe a dismal moment at their University of Arizona fraternity house three years ago after an entrepreneurial dream of theirs was crushed by the harsh reality of steep startup costs.
“It was going to take more than $100,000 in development costs,” Arellano recalls. “We spent six months sketching out this tutoring business, but it was going to be too expensive to make happen.”
The two shotgunned a beer.
And then another.
That’s when a light went off.
“We shotgun beer all the time, but we always use a key to open the cans which is really gross,” Arellano says. “No one has ever made a beer shotgun tool.”
Turns out drinking and depression can result in epiphanies…
That is until the entrepreneurial hangover hits.
“The first products were terrible,” Arellano admits. “They were huge and could barely even open a bottle.”
Still, Arellano and Thurston threw up a website they say was just as terrible and pronounced themselves in business as Raging Mammoth; seller of what would ultimately become the Sabertooth.
The founders soon got confirmation they were on the right track as a crowdfunding campaign resulted in more than 1,400 backers and $23,000. “It just blew up,” Arellano says. “We beat our goals and decided we should take this serious.”
They ditched the old site for Shopify and relaunched their online beer shotgunning store. “The old site was garbage,” Thurston says a bit sheepishly. “My buddy actually designed it, but it was the ugliest site I had ever seen.”
Raging Mammoth did $4,000 in revenue right off the bat but wasn’t throwing off enough cash to grow quickly and sustain two college seniors who were about to graduate. “We were really bummed thinking we’d have to get jobs,” Arellano says.
But that’s what they did.
They quit the business they started to take a shot at getting rich with a Silicon Valley tech startup. The two moved to California, took an equity stake, and adopted the frenetic pace expected of hot tech prospects.
Raging Mammoth was no longer the rage.
“We lost track of Raging Mammoth,” Thurston says. “We were partners with two other people at the tech startup and had a lot of responsibility.”
It didn’t take long though for the two to understand the ten percent equity stakes they received in the tech startup paled in comparison to their partners. Thurston says he and Arellano were working days, nights, and weekends and seeing little payback.
Then one day there was a blow up at the office.
“We had to take a walk and vent,” Thurston recalls.
On the way to lunch, Thurston began thinking about Raging Mammoth and learned Arellano had been having similar thoughts. “What if we just quit and focus one hundred percent on Raging Mammoth,” Thurston remembers asking Arellano.
A couple of phone calls to their fathers later for approval and the duo had a plan; they’d save all of their money, pledge not to take a salary, and take a stab at reviving the Mammoth.
There was one big problem though.
The two didn’t have enough money for rent in California let alone any left over to grow an ecommerce business.
“It’s not just about drinking,” Arellano says of the Raging Mammoth brand. “It’s about making the fun times we have even better.”
But if fun times were in the cards for Arellano and Thurston they wouldn’t be in California. To avoid winding up homeless, the two packed up and headed for Texas and found the only place they could afford in Austin. Needless to say, the first global headquarters for Raging Mammoth was a mess.
“There were holes in the walls, and it was moldy,” Thurston says. “The floor was about a foot and a half higher on one side, but we were there to grind it out and we did.”
The change of scenery, mold and all, seemed to work. The pair learned all they could, ramped their marketing, and the orders began coming in. “The first month that we brought in ten thousand dollars blew us away,” Arellano says. “That was a lot of money to us at the time, and we couldn’t believe it.”
The revenue record soon doubled.
Then it doubled again.
In January 2016, Raging Mammoth generated $52,000 and was growing so quickly it could no longer keep pace. “We were like, woah,” Arellano says. “We sold out of everything and had no inventory left to sell in February.”
Besides fraternity brothers, the Sabertooth can and bottle openers caught fire among tailgaters and others interested in downing a brew quickly:
“We were blown away,” Arellano says.
The company was shotgunning growth and setting its sights even higher...
“It was a nightmare when we were outsourcing our development,” Arellano says. “It was a chore just to get the developer on the phone to fix a typo in a product description.”
Raging Mammoth ditched its old site for Shopify long before it began its hyper-growth phase but recently upgraded to Shopify Plus, an enterprise-level ecommerce solution for high volume merchants.
Besides saving time and money on development, Arellano and Thurston say Shopify’s robust app store provides them the flexibility to add custom functionality that improves margins and the user the experience. The ability to quickly implement features frees him to focus on what really matters; the product.
For example, of the ten applications Raging Mammoth uses on its site Thurston suggests Notify, an app that boosts sales using social proof, has been particularly impressive. The app can improve conversion rates by highlighting items other customers have purchased and creating a sense of urgency.
“Shopify Plus is 100% the best platform for ecommerce,” Thurston says. “We have loved our experience with Shopify and will never leave.”
Raging Mammoth is also leveraging the ease with which Shopify Plus integrates with agency partners to boost sales. The company depends on its email service partner, Klaviyo, to send targeted email based on user behavior. “We have an entire pipeline of email sequences ready to go,” Thurston says. “We automatically send an email to customers who spend a certain amount or who we haven’t heard from in a hundred days. We’re also split testing messages to see which convert at higher rates.”
The company also has plans to customize and make improvements to the checkout experience to improve its off and online marketing efforts:
“We went from four thousand dollars a month to $52,000 in just a few months,” Arellano says with a hint of disbelief in his voice. “We’re proof you can scale really quickly with the right partner.”
Compared to its 1,300% revenue growth this next statistic might seem a bit modest; Raging Mammoth’s average order value has increased 52% from $21 to $32. Sure, you can attribute the success, in part, to driving more traffic to the site and the addition of new products like apparel, branded merchandise, and beer sleeves.
But what if there’s something more?
The “bro” speak on the company’s website is perfect for its target audience. The company has also mastered the potentially tricky transition of its customers from beer guzzling frat brothers to responsible and employed college graduates by positioning the Sabertooth as a must have for tailgating and other life events that involve alcohol.
But the real reason behind the company’s jaw-dropping growth isn’t something that can be hacked, purchased, or even stolen.
Arellano and Thurston recently had the talk- the one entrepreneurs often have when they’re on their way to becoming millionaires and are confronted with whether to take big salaries now, later, or hold out for a sale and an even bigger payday.
“Our margins are really healthy,” Arellano points out. “Should we start paying ourselves lots of money?”
It’s certainly tempting.
But the choice between putting piles of cash in your pocket or back into a business that, like any, is one bad break away from being gone isn’t black and white though it may seem like it when you hear the decision Raging Mammoth’s young founders made.
“If we paid ourselves now we’d be cheating the business in the future,” Arellano suggests. “We decided to put everything we have into this so that in ten years we won’t even be able to regret buying a bunch of dinners and cars now.”
So this company, born in a frat house, will soon do some hiring.
It’ll also spend big in an effort to never run out of inventory again.
It’s a far cry from Arellano’s job of just two years ago as a pizza server in desperate need of a few extra bucks to make ends meet. Especially when you consider the two people who created Raging Mammoth, which one day hopes to become a lifestyle brand on par with Red Bull, almost gave up on it.
“The coolest thing about this is we were going to quit this company nine months ago when it wasn’t working,” Arellano says.
It's a gamble that turned into $30 million...
Now combine a serial entrepreneur with an itch to shake up an entire industry with a once in a lifetime island encounter with Richard Branson and what do you get?
The answer is a springless mattress that rolls up, fits in a box, and is purchased online by people around the world who are tired of buying overpriced beds in stores where testing a mattress requires you to awkwardly lay down while a sales person gawks.
Oh, and this entrepreneur's key differentiator- the thing that sets his company apart from the pack and could be marketed to make even more money...
He's keeping it a secret.
Ever have a customer drive for hours, camp outside your doors in the cold, and be the first inside when the doors open spending money in your store?
It’s not a dream but a reality for Nate Checketts, CEO of the men's activewear ecommerce company Rhone.
Wait a minute, this doesn’t add up, right?
If Rhone is an ecommerce company there’d be no brick and mortar store for die-hard customer to camp in front of. So what’s the deal?
Rhone is a pioneer in the use of pop-up shops or temporary stores that allow ecommerce companies to establish one foot in the physical world. More importantly, they can be used to establish what are called 3D customer experiences.
They’re the kind that can help you grow at a triple-digit pace just like Rhone …
It's a gut-twisting feeling we've all had at one time or another...
Flipping the switch and taking your site live for the first time or replatforming can be a stressful time laced with anxiety and doubt.
Now imagine the pressure that comes when you know Oprah is watching...
Yea, that Oprah!
That's exactly the spot an ecommerce eyeglass retailer found itself in recently after replatforming with Shopify Plus...
The company is revealing them here for the first time as well as the customized checkout experience that sent conversions through the roof and put a smile on Oprah's face...
That's how it feels when you think you've got the next big thing in merchandise only to learn no one wants what you're selling. You wind up being stuck with a pile of inventory you're forced to discount, dump, or take a huge loss on.
But there's a new way to test and develop products ...
It's actually a simple formula others have used to make millions of dollars in just a matter of weeks.
And the man who discovered it is giving the formula away in today's (festive) post ...
You can't teach an old dog new __________.
I'm betting you filled in the blank correctly and I'll also guarantee you're wrong...
At least if you're talking about The Economist, an ancient media company that was founded in the 1800s.
You though old media was dead, huh?
Well, not only is this old dog learning new tricks, he's teaching those tricks (and a lot more) to the rest of the world as part of a strategy that blends ecommerce with editorial content in ways that create new streams of revenue...
Tradition can be blinding …
If you’ve ever done something better than everyone else — especially for 103 years — the idea of starting over, reinventing how you do it, and getting everyone excited about rebuilding from scratch sounds impossible or even misguided.
Ideas like these are the stuff of wayward dreamers rather than rational doers, right?
But disrupting itself is exactly what Mondelez International, makers of Oreo, tasked Lauren Fleischer to do with the cookie everyone loves to dunk.
Much of the infrastructure would need to be built from scratch. So would the supply chain and logistics.
For the first time ever, Mondelez wanted to sell Oreo cookies directly to consumers by offering a unique customized packaging. And, it all had to be done in just a few weeks …
“There were thousands of reasons this could fail,” Fleischer recalls. “Initially, we saw a lot of ‘negative brainstorming’ with people listing everything that could go wrong. We had to turn that thinking upside down. Instead of simply listing risks, we had to find a way to embrace and solve every potential problem.”
It’s what Fleischer would soon discover about Oreo packaging that would make the task seem even more impossible.
It’s hard to teach an old brand new tricks.
But years before Mondelez even thought about selling Oreos direct to consumers, the company could sense a shift in consumer behavior.
Gone were the days of patient consumers willing to accept what companies create for the masses. In was the on-demand, real-time, and personalized world made possible by technology and revolutionized by a burning desire to stand out rather than blend in.
Today’s consumer is much different from the one buying Oreos a century ago.
“Brands either have to adapt or become irrelevant,” Fleischer concedes. “Selling via ecommerce is not just another channel, it’s a new way to do business and a whole new way for us to sell.”
Mondelez first dipped its toes into customization two years earlier at the South by Southwest festival and conference.
To test whether Oreo might be able to capitalize on trends like on-demand 3D-like manufacturing and customization, Oreo set up a cookie making tool it dubbed The Trending Vending Machine.
The machine allowed people to create their own Oreo cookie based on things that were trending on Twitter. Each trend corresponded to a particular flavor combination and allowed for more than 10,000 custom combinations. The personalized Oreo would then be created as the Oreo lover watched.
“People stood in line two hours for a chance to create their own Oreo cookie,” Fleischer says. “The team knew right then that there was something to this trend toward customization.”
The problem was figuring out how to scale such a dynamic B2C offering. Even more challenging; doing it in just two months …
Oreo is the premier brand at Mondelez and has a history of marketing opportunistically and in real time.
Remember the blackout during the 2013 Superbowl when Oreo knocked it out of the social media park with its Dunk In The Dark tweet? It’s an example of an agile marketing team with an uncanny ability to capitalize on real-time branding opportunities that are still praised years later.
Power out? No problem. pic.twitter.com/dnQ7pOgC— Oreo Cookie (@Oreo) February 4, 2013
But building a B2C startup practically overnight is a challenge even this team wondered if it could pull off.
This is a project that normally would have taken us two years, but we had this entire project set up in just two months.
It started with the formation of a team.
Fleischer was the project lead and began plucking the best and brightest from Mondelez; ecommerce talent, marketers, packaging designers, as well as help from several agency partners.
“We were building a business from scratch,” Fleischer says.
Next, came the formation of a dream.
In what came to be known as The Oreo War Room, Fleischer and her team battled over ideas and whether they could be done in the few months allotted for the project. “It got heated at times,” Fleischer admits. “We basically locked ourselves in there for a week until we figured out a way to say, ‘Yes. We can make this happen.’”
What emerged was a vision dubbed Oreo Colorfilled, a nod to the momentum built from the WonderFilled marketing campaign of the prior two years urging cookie lovers to unlock moments of childhood wonder with Oreo.
The idea was to allow Oreo lovers to personalize their experience with the brand by building their own Oreo packaging on a special website just in time for Christmas.
The plan would call for a series of firsts: the first time …
The team worked with artists to create a black and white design consumers could use as a canvas. Users are able to zoom in or out as they pleased to include or exclude specific characters.
Users can add their favorite color to the packaging, top their Oreo with a holiday-themed accessory, and include a personal message on the package:
Each package is unique, no two are exactly the same, there are an infinite number of combinations.
“The Oreo tool is just fun to play with,” Fleischer adds. “It’s also a really good example of a big brand being nimble, moving fast, and creating something from scratch very quickly.”
The plan was a good one. The goal was to launch the customization project in approximately two months.
Too bad Fleischer and the team had no way to package, ship, or accept payment for their custom Oreo packages.
Mondelez makes millions of Oreo cookies a day. But it has never made them like this …
Ordinarily, Oreo packages come twelve per box. Remember, Mondelez is a B2B company and has perfected supply chain management and bulk shipping methods that allow it to benefit from efficiencies of scale. Afterward, Mondelez relies on retail business partners for the final leg of distribution.
The Oreo Colorfilled project meant bypassing all of this infrastructure and institutional knowledge to begin anew.
This really went against our grain, we just weren’t equipped to make and ship custom orders directly to consumers.
Fleischer and her team couldn’t even make custom orders at the company’s existing facilities. It’s why the crew had to find a brand new place to manufacture, package, and ship the B2C orders.
The Colorfilled team quickly found a warehouse with potential. Two weeks later the warehouse had been transformed into an Oreo cookie factory almost ready for its first ever foray into ecommerce.
“We had to fully change our supply chain,” Fleischer says. “Instead of shipping twelve packages to a box, we had to retool so we could ship one package to one customer.”
The packaging itself, the very portion of the experience that empowered customer customization, would prove to be an obstacle. “Each package needed to contain and protect 36 perfect cookies,” Fleischer says.
If Oreo lovers were going to go invest time and energy in designing their own packaging and be willing to pay more for the joy of doing so, Mondelez had to be sure the packaging would be strong enough to protect the cookies from potentially rough rides in FedEx trucks.
The company also had to ensure the packaging would be cost-effective...
Luckily, a Mondelez packaging engineer sacrificed an entire weekend to save the project. Not only did she design and hand cut a new box that was sure to protect and impress, but she reduced the cost of manufacturing the box by 77%.
The custom Oreo packages were ready to ship safely and cost effectively.
Problem solved! That is until Fleischer and the Colorfilled team encountered a brand new problem they had never experienced before...
“It’s extremely scary thinking about accepting payments,” Fleischer says. “We were worried we wouldn’t be able to finish the project on time because we weren’t able to accept payments direct from customers.”
To sell direct to consumers, Mondelez would need a partner it could trust to protect credit card numbers and personal information belonging to customers. Mondelez had never before required Oreo lovers to provide payment and personal information.
Not only did the Colorfilled team need a partner that could provide a safe and easy checkout experience, it also needed an ecommerce platform that would allow each customer to create a unique product in real time.
To meet both needs, Mondelez chose Shopify Plus, a cloud-based enterprise ecommerce solutions provider for high volume merchants.
It was a relief when Shopify showed us all of the ways it protects the personal information belonging to customers, our onboarding representative, Brian Donohue, has been so patient with us and helpful in alleviating our concerns.
Besides a seamless checkout, the Shopify Plus interface provided Mondelez the ability to offer a level of customization that surprised some within the company. The API offered a set of tools that helped Mondelez offer a functional yet flexible way for consumers to personalize their experience with the Oreo brand.
“You can really customize with Shopify because its API is like no other,” Fleischer boasts. “Every time a package is customized it’s like the customer is making a unique product that we have to build on the fly. Not only does Shopify provide us with the functionality we need, but the Oreo packaging tool is also fun to play with.”
To be able to create thousands of unique SKUs that easily, it was a really powerful value unlock and a reinvention of how we sell that was worth celebrating.
“It might be selfish but I was actually Colorfilled’s first customer,” Fleischer admits with a grin. “I was the first order and sent the first customized Oreo package to my mom and dad!”
It had been a long sleepless night before that first order though.
Prior to the official launch, Fleischer and her team had stayed awake much of the weekend improving the site, adding functionality, and designing the best user experience possible under the time constraints.
It wasn’t perfect and it would still need to optimized, but — when the team officially launched Colorfilled — it figured it could finally rest after an exhausting two-month sprint.
“But it was such an adrenaline rush there was no way I could go to sleep,” Fleischer says.
Equally impossible for Fleischer would be to remain a bystander as the orders began coming in at the Oreo factory she had helped create. “There is absolutely nothing more satisfying than that first order,” Fleischer recalls. “I was actually in the plant packaging orders myself and it was incredible actually seeing them in the boxes we made just for this.”
The orders were coming in so rapidly Fleischer actually had to deactivate the push notifications the Shopify app was sending her phone for each order. “We were getting so many orders my phone was dying every 15 minutes.”
If it seems as if Fleischer and the Colorfilled team were in ecommerce heaven, things were even better for some of the Oreo die-hards creating custom packaging.
In fact, some of the personal messages customers were adding to their customized packages were stunning:
Oreo’s customization project was quickly turning into something much bigger; an opportunity for the brand to play a role in major life events that would be remembered and revered for lifetimes.
“People who love Oreo are co-creating with the brand in ways they never have before,” Fleischer says. “We’re so excited by the response and seeing this level of creativity from consumers.”
“We have a mantra around here and it’s all about being fearless,” Fleischer says proudly. “We market fearlessly which means we’re disrupting the status quo to accelerate growth in ways that are also meaningful to customers.”
That fearlessness is what inspired the Colorfilled team to compete against its century-old parent company and create a brand new D2C experience customers just can’t get in a store.
The Colorfilled campaign has become a guide for future ecommerce growth at the company.
“We have huge ecommerce ambitions,” Fleischer teases. “I have never worked on a project that unlocked this level of childhood joy before. I’m exhaustedly energized because we’ve overcome so much but aren’t resting on our laurels. Doing this just makes us want to do more and do it even better.”
Disrupting a successful company from within, especially one with such a rich tradition, and building a startup culture from scratch is a risky and scary prospect.
It’s one thing to tell the world you’re fearless. It’s another to actually prove it with your cookies.