We launched Shoes of Prey in 2009 with the vision that personalisation and customisation were the future of retail.
Great Early Traction
We grew quickly and successfully within a niche customer segment of women who are passionate about customising their shoes.
- We grew mostly via word of mouth and PR rather than paid marketing so our customer acquisition costs were low,
- We had fantastic net promoter scores, our early customers loved our product,
- We were able to grow without raising external capital within this niche, and we did so for the first 2.5 years of the business.
The Mass Market Fashion Customer
A couple of years in we then asked ourselves: “Would the mass market fashion customer also want to customise their shoes?” We conducted market research via our target customer and through strategic partners like David Jones and Nordstrom and the resounding response was “Yes” if we achieved 4 things:
- Reduce lead times to under 2 weeks;
- Simplify the shoe design experience;
- Don’t charge a premium for customisation; and
- Establish distribution where the mass market fashion customer shops.
Delivering for the Mass Market Customer and Scaling Our Operations
Over the course of the following five years we:
- Secured investment from venture capital firms and strategic partners like Nordstrom;
- Established our own factory to speed up delivery and reduce production costs to lower our retail price;
- Re-engineered our shoe design user interface;
- Grew our team to 200 people; and
- Set up distribution deals with David Jones in Australia and Nordstrom in the United States.
It was hard work, our business was operationally complex and there were many challenges, but to the credit of our amazing team we executed successfully in all these areas.
With our amazing team in place, our factory ready to scale, distribution deals with the best possible partners and the needs of the mass market consumer met, the business was prepped to scale into the $100M’s revenue.
Failing to Gain Traction in the Mass Market
Despite all the right trends towards personalisation and our success within the customisation niche, contrary to our market research the mass market fashion customer just didn’t respond as we expected. The customisation niche are creative people who enjoy spending the time to create something unique which they can wear. We learnt the hard way that mass market customers don’t want to create, they want to be inspired and shown what to wear. They want to see the latest trends, what celebrities and Instagram influencers are wearing and they want to wear exactly that — both the style and the brand. They don’t want to invest time in creating a product themselves, and attempts to have them do this, even in small ways, leads to the paradox of choice kicking in causing decision paralysis, in turn lowering conversion rates.
This is logical and these are the mass market customers current behaviours, but our market research indicated they wanted a better option, they wanted to customise. Unfortunately when we delivered the product, we learnt that wasn’t the case.
Attempting a Pivot
So we attempted to pivot to two adjacent areas which leverage our unique one at a time manufacturing capability:
- Serving customers who have small, large, wide and narrow feet. 76% of the female population should be wearing a narrow or wide shoe and don’t because mass produced shoe brands can’t stock these shoes due to the high inventory costs. The challenge here is most of these women don’t know they’re wearing the wrong shoe size, so it’s a big education problem coupled with a complex manufacturing business.
- Short, fast run manufacturing for other retailers and brands. Shoe factories in China generally require minimum orders of 1,000+ pairs per style and 3–5 month lead times for production and delivery. We were able to produce efficiently with minimums of a single pair and delivery times under 2 weeks.
Both of these approaches worked reasonably well however there were two challenges:
- Our business was operationally complex and had high fixed costs, so it required scale to achieve break even; and
- Producing shoes one at a time while also operating our factory legally and ethically — meeting all the environmental, health and safety and labor regulations which the vast majority of factories in China don’t, meant that our unit costs for producing each pair of shoes were higher than mass production Chinese factories.
As with our customisation business, while there were strong early signs that the sizing and short run manufacturing markets might work for us, we weren’t able to clearly prove that these customers were willing to pay us enough at a large enough scale to cover our fixed costs. And with the money we’d raised to date it wasn’t possible to raise a round of funding to pursue these avenues.
What’s my Key Learning?
If I ever find myself in a position where I’m attempting to change consumer behaviour, I will ensure I’ve peeled back the layers to truly understand the psychology of my target customer. While our mass market customer told us they wanted to customise if we improved our value proposition in the 4 areas I mentioned earlier, what they were consciously telling us and what they subconsciously wanted (to be inspired by trends and shown by celebrities and influencers exactly what to wear — down to the style and brand) were effectively polar opposites. We listened to what the mass market customer told us, verified with our strategic partners that they were hearing the same thing, then accepted it.
There are customer research methods that enable you to peel back the layers of psychology to understand what a customer truly wants. While this type of customer research is difficult to get right and the results aren’t always clear cut, if I’m ever attempting to change consumer behaviour again, I will do this.
If we’d been able to understand that the mass market customer didn’t want to customise, we shouldn’t have gone down the path of raising venture capital and instead focused on building a strong but smaller business serving our niche of women who wanted to customise, as we did for the first 2.5 years of the business.
I don’t think the same issues apply if you’re offering a product that works within an existing consumer behaviour framework, so an alternate learning I will take away is to pick a business that doesn’t require changing consumer behaviour.
Thanks to everyone who has either been on or who has followed the Shoes of Prey story over the last 10 years, from our customers to our amazing employees, our wonderful investors, friends and family. While the destination isn’t what we wished, the journey has been incredible.
My co-founder Jodie Fox is currently penning a book on the Shoes of Prey journey, slated for release in 2019. The book will share her experience of the business professionally and frameworks we used at each juncture to take our next step. It’s a very raw and honest view of the world through the eyes of an entrepreneur.