The unconventional lessons of starting a side hustle — and scaling it by 10x through COVID-19
Last September, I started SKIN.TO, a Toronto-based e-commerce Asian skincare business. This blog article will take you through the unexpected learnings I encountered throughout the process, and hope that it’ll encourage those considering pursuing a passion, starting a business, or trying something new as we weather through the current pandemic.
The beginnings of SKIN.TO
If you ask me where my passion for skincare came from, I’m not sure that I would have a concrete answer. It manifested slowly as my skin improved along with my collection of products, and soon enough I found myself trying to convince my friends that sunscreen was the epitome of self-care. I was also dissatisfied with my options for getting Asian products — they either took too long to come, were marked up too high, or had questionable authenticity. I suppose that I saw a market through myself, and the more I meandered over it, the more the pieces of an opportunity came together. The process could be an article of its own, so I’ll skip to the result: An Instagram-based online shop that would combine skincare education posts with complementary products, positioned at the intersection between the immediacy, customer service, and credibility of physical stores, and the convenience and competitive pricing of online players.
Lesson: When looking for a new business idea, you are your own best test market. Think about the value proposition that would make you buy from the kind of small business you want to start.
Keeping it simple
People ask me why I don’t start a website, or use Shopify, or establish an omni-channel presence (whatever that means). While learning the ropes of all these channels would be interesting and create brand legitimacy, I knew that committing to and up-keeping one channel would already be overwhelming, and I didn’t want to risk burn-out by biting off more than I could chew.
A modest selection of 18 SKUs, an Instagram business account, and a week’s worth of product and education posts was all I had when I first started. Everything else I took one step at a time, chancing upon a month of Canada Post free delivery Tuesdays, a few enthusiastic influencers who became my first customers, and a very active Reddit forum to gain my first foothold of a following. Rather than doing a lot of planning, the idea of launching a minimal viable product always appealed to me, and then using feedback and communication loops with the audience to pour resources into the features that matter.
I never stop seeking and mulling over my peers’ and customers’ feedback and ideas, because with a fresh perspective I often am able to see new opportunities. For example — while exploring the option of an online store, I stumbled upon the idea to offer virtual gift cards as a way for people to show support while also giving a socially-distant gift to their friends during the pandemic. This small new feature constitutes about 5% in additional sales a month since I’ve introduced it. Additionally, it’s much easier to pinpoint the features I can afford to forgo once my product is on the market. For example, I quickly learned that elaborate and fancy packaging adds unnecessary costs, doesn’t deliver a lot of value to the customer (they usually throw it out immediately anyway), and actually discourages younger demographics focused on sustainability and environmental impact.
Your value proposition is a shifting being — you never know where small opportunities may lead
When I first started SKIN.TO, I had thought that I had no choice but to be a discount player. When I pitched my idea to friends, they almost all concluded that it could work if I had a distinct price advantage. Since then, I’ve realized that I could move away from delivering unsustainable value through low-margin pricing, and instead focus on the other aspects of growing a consistent and reputable brand. The knowledge and faith in my products, the sincerity of my advice, the speed of delivery, the convenience, and the unparalleled customer service were layers that I built on top of fair pricing that make me much less susceptible to competitive pressures.
“High quality work is no longer scarce — there is an abundance of things to buy and people to hire. What’s scarce is trust, connection, and surprise.” — The Icarus Paradox by Seth Godin
Getting to know each and every one of my customers is crucial to the vision that I aim to deliver. While I do everything to run a simple and efficient operation, I spend the time with customers that e-commerce platforms who nudge customers as quickly as possible through the sales funnel would find perplexing. There is nothing more rewarding than being able to connect with my customer — other than my excel model for sales tracking, but don’t get me started there. I knew that what I wanted was not another shiny online store or transactional website that already exists out there, but a genuine connection with my customers to share on a topic that I love — also, convincing a broader audience of people to wear sunscreen is its own form of reward.
Navigating through COVID-19
And then the crisis that no one expected hit. Back in March when COVID first started, my month ended at a very dismal $500 in sales. At the time, the preferred method of delivery was in-person pick-up, and no one wanted to venture out as uncertainties about the pandemic rose. It was the first time I envisioned the possibility of folding SKIN.TO, and finding a different way to weather through the pandemic was a necessary priority. In hindsight, it was the perfect opportunity: With overseas merchants unable to get goods shipped into the country, Amazon lead times being around a month, and Korean beauty brands closing physical stores and left without robust e-commerce infrastructure, there was a gaping hole in the market left by the pandemic. At the time I had no idea that any of these things would unfold, and what actually brought me my saving grace was my brother who had recently gotten a car — I suddenly had a safe channel to reach my customers by having him drive me to deliveries. I wasn’t aware of the number of people whose barriers to purchase was simply how difficult it was to get downtown. Contactless delivery became such a popular service that by May, monthly sales were 10x what they were in March, and also became an excuse for me to get out of the house and spend quality time with my brother.
Additionally, as I reflected on the setbacks that COVID-19 has brought to our daily lives and how to help people through them, it occurred to me that SKIN.TO was the ideal platform to do so. For example, the “graduation ceremony” for many 2020 graduates is their names flashing up on a screen for 0.5 seconds while they sit on their couches at home, hardly a testimony to the blood, sweat, and tears that went into completing their education. As I started sending congratulatory gift to my graduating friends, it occurred to me that I could help others make the moment more special for their loved ones as well. I offered graduation cookies that customers could send to their friends as part of a graduation gift package, and while I took a loss on the cookies themselves, it was my way of contributing to the community while simultaneously spreading my brand.
The setbacks and the risks
In the process of starting SKIN.TO my attitude vaulted between “this is going to be a failure and I’ll give up in the first month” and “this will really take off and people will flock to me immediately”. What I ended up getting was something in the middle, where in the first few months the bulk of my followers came from reaching out first. I realized that running a business was very different from running a Kpop fanpage, and expecting the same social media growth was unrealistic when the bar for delivering valuable content was so much higher.
If you’re here for the first time, read about What building a 100K follower Twitter page has taught me about social media.
While I believed that the word-of-mouth spread that comes with delivering strong customer value and building a loyal community would show its effects, it was six months later than I expected — six months where I occasionally felt discouraged when growth was not proportional to the effort that I put in. However, I can truly attest that being patient and soliciting feedback to deliver the highest customer value will pay its dividends.
The truth is that even right before something becomes successful it tends to look a lot like a failure — HBR Ideacast podcast
It is often true that some of the biggest risks for a business are the ones that also create the highest barrier to entry. For SKIN.TO it is undoubtedly cash flow. To this day, while my margins are very healthy, I haven’t broken even on cash flow due to the sheer volume of inventory and long days of inventory (i.e. how long an item stays on the shelf) that I’ve come to accept. If my own business appeared in an Ivey case, I would have torn the operating ratios apart — big red flag, recommendation: do not invest in this business. And it’s true that I likely won’t be able to get credit to scale, and inventory size will continue to grow with sales. However, the capital that I’ve put into my business would otherwise be sitting in an index fund. And there’s no index fund out there that gives the return, and fulfillment, I get through doing this.
So what’s next?
I’ve gotten a dozen variations of essentially the same question: Where do you see this going? Do you ever see yourself doing this full time? “Do you have an exit strategy?” — I got this one about 2 months into starting the business and really wasn’t sure how to answer.
I know that a lot of people start businesses because they want freedom from the 9–5. I’m quite the opposite. While I love creating something to call my own, I’m not a particularly risk tolerant person. I could not have the same values and attitudes towards my business and customers if paying rent depended on what is essentially a profitable hobby. As for whether I see myself seeing myself doing this in five years, so much has changed even within six months that this question is impossible to answer. I’ll continue as long as I’m learning, solving new problems, optimizing operations, making friends with my customers, and grasping for new ways to deliver an excellent customer experience.
In conclusion…
I think the sentiment I most want to highlight through the process of kickstarting SKIN.TO was very real fear that it wasn’t going to work. It’s easy in hindsight to go back and justify why the decisions I made make sense, but at the time I felt constrained by limited technical skill, capital, and time, which created a narrow box around a lot of my choices. My mindset for when I put down my first order of inventory — $4000 in products before I had any brand or strategy — was that if I failed spectacularly, the initial investment would be the price of trying something new…and bemusing that I could eventually use up $4000 worth of skincare products… probably.
As you read my story, you’ll find that it seems like a lot of chance encounters were lying around to make this work. While I do feel that I got lucky with a series of windfalls, I’m also constantly on the lookout for changes and opportunities in the environment around me, and I think that this restless vigilance and search for the new will lead to opportunities no matter the situation. Do I think that more issues will arise as I continue to operate? Absolutely. Some are lying in plain sight — long lead times to get inventory means more stockpiling, personal delivery will become increasingly infeasible as volume (and traffic after the pandemic lifts) increases. However, it would also be foolish to believe that solutions that are optimal during a pandemic situation would continue to be viable as things move to a new normal, and I have faith in being able to cross that bridge as the obstacles continue to evolve.
There’s a lot that I want to write about but can’t fit in one article. If you’d like to read more about my learnings, how I came up with my idea or came to the decisions that I did, please give this article a clap or leave a question in the comments below. If you found this article interesting or helped in any way, please share with your friends to spread the message. Also feel free to reach out to me on LinkedIn to talk about starting your own business, and of course plugging SKIN.TO to learn and talk about skincare. And if there’s one thing you should take away from this article — seriously, wear your sunscreen.
