From side project to success: How Timberbits became an online mecca for woodworkers
Internet Retailing chats with David Lim, founder and owner of Timberbits.
Mark Freidin: How does an architect become the owner of an awesome, predominantly online business selling components to wood turners and hobbyists?
David Lim: I started this business purely by accident, I was actually a semi-retired builder/property developer, in the middle of a law degree when the business sprouted out of thin air. I was not happy with one of the local suppliers that I was buying from. I challenged him a few times about price because it was more than three times the price it would cost me to buy the same product from the US. He eventually got Jack of me and told me that if I thought that he was not doing a good job, that I should put my money where my mouth is and be his competition.
I eventually decided to bring in the goods myself from the US but a few of my friends told me to buy them in directly from the factory in Taiwan. I started with a small order that was only $4,000 with the Taiwanese factory. I sold out of them in two days, so I quickly reordered with a $20,000 order. This was in 2008, I was predominately selling privately through the forums. After a while I moved onto eBay which then increased sales.
By 2009 I was doing most of my sales on eBay, I was treating it more as a hobby than a business. I had statements like “No Pick Up” and “Postage is $20 (even though the item was only listed for $19.99)”, “do not call me – email me and I will respond within three working days”. Things were plodding along nicely until 2010 when I put a $250,000 order through with one of the factories. My wife made me quit my law degree and treat this business seriously. I came to the realisation that this could be quite a profitable niche business if I focused in on it and treated it seriously.
My website was up and running by the end of 2009 and I quickly increased sales.
My focus was three main areas:
1. Best prices in the world – not just within Australia.
2. Best customer service in the world.
3. Best quality products in the world.
I have tried to stay true to these principles but the best prices are getting harder and harder to achieve.
By focusing on these three principles, once customers shop with us, they never go back to the competition. We now have a great customer base which puts us first on the list to shop from.
MF: You seem to have done keyword research on what people look for mostly and you came up with Timberbits and thus the name, so the question is, do you understand SEO well and how important is it for sales? Do you also do PPC (pay per click) campaigns or how do you get traffic to your site?
DL: The Timberbits name came up because I was looking for a .com domain name rather than .com.au. I went through all sorts of names but finally settled on Timberbits because it was unique and the domain name was available. I thought it was good name that described the products that I sell.
I don’t understand much about SEO. I get most of my business not by acquiring new customers. My business is great because my existing customers come back and they come back with friends and family. We get much more business through word of mouth rather than advertising.
Yes we do PPC, but that only started in October last year. I tested PPC in 2012 but found that it didn’t bring in a lot of customers. I stopped using PPC late 2012 when my credit card changed expiry date and Google wasn’t able to recharge my card. When that happened, my sales didn’t drop at all. My attitude was ‘well that’s $1,000 a month that I was saving without any drop in sales.’
What did work for me was the time I spent on the forums and social media being the expert in my field. I made videos and put them on YouTube and helped people out with issues they were having with woodworking. That somehow worked for the SEO but I didn’t find it a chore to do because that was what I was doing even before I running this business.
MF: Your business has had phenomenal growth both online and on eBay. How have you managed the growth, and what have been the challenges?
DL: We left eBay for about two years between 2012 and 2014. I didn’t spend a cent on eBay fees or put up with customers who like to troll and write bad feedback. We do now sell on eBay but only with 20 products from our 2,500 SKUs.
As with any small business, cash flow is definitely the most challenging issue I deal with. Unpredictably of stock turn is another one. Running out of stock is a nightmare because it leads to disappointed customers and also leads to more work for the staff. People will often call up or email us asking when things will be back in stock.
Competition on price is another thing that is definitely a challenge. Online price is often the single most important factor that will lead to a sale/loss of a sale because your competition is only a click away. You have to battle hard with suppliers to get the best price so you have an advantage over your competition.
I have been managing my growth by trying to stay away from the low margin high volume items — have a few of them in stock but use it to keep our competition honest and cash poor by being $5 more expensive than them. Yes they get the sale and they might make about 2 per cent to 5 per cent on the sale, but they have to deal with the headaches of the sale which will inevitably hurt their bottomline. My focus is to slowly grow the SKU count and concentrate on the long tail where the margins are highest.
MF: What are your challenges with technology, warehouse integration, automated picking and packing etc ? What technologies do you use, ie Magento, MYOB, Netsuite, and how do you manage your warehousing?
I use Neto to manage my whole business. I don’t have or use any specialist software to keep track of stock, cash flow or customers. That is all done on Neto. We use no RF scanners or automated warehouse racking solutions. I will probably introduce that to our business when we turn over more that $5,000,000 or need more than six picking staff.
The warehouse is extremely efficient with the aid of pallet racking and 3,000 pigeon holes. Hopefully we will get to 4,000 SKUs by the end of 2016.
We have written small programs to aid the creation of shipping labels and another program that will check the items that are to be shipped to prevent wrong items getting sent.
MF: How many staff have you got in the business at the moment?
DL: We currently have five staff, not including myself.
- One manager/marketing person/customer service,
- One 2IC/understudy of the manger and warehouse,
- One customer service – three days a week,
- One accounts – half day a week, and
- One warehouse/stock picker full-time, one warehouse/stock picker – two days a week.
I work on infrastructure like sourcing new products and dealing with new suppliers, check new listings, re-ordering stock. I work five hours a day, four days a week.
MF: If you had to do this all from the beginning again, what would you do differently?
DL: The journey has been great, I wouldn’t change a single thing. I have learnt a lot in eight years and I am sure that I will learn a lot more in the next eight.