Q&A with pureplay startup Ettitude
After leaving a job with an international retail chain, Phoebe Yu launched pureplay online bedding company Ettitude to make consumption more sustainable. Internet Retailing spoke with Ettitude’s CEO and founder Yu and marketing manager Jess Pang about the startup’s pureplay business model, social media strategy and the importance of sustainability.
(Photo: Yu is seated in the middle, Pang is seated on the right.)
Internet Retailing: What’s your business model and how is it different from the way other retailers in this sector operate?
Phoebe Yu: Ettitude is a vertically integrated e-commerce company. We see ourselves as a disrupter in the bedding industry as most bedding labels are sold through traditional brick-and-mortar stores. We are also the first in the world to use 100 per cent organic bamboo lyocell fabric to make bedding. By focusing on using innovative, multi-functional, sustainable bedding materials, we have distinguished our brand from other major bedding brands you find in department stores.
IR: Why did you decide to manufacture and sell your own product exclusively, rather than have your product sold by an established homeware retailer, or through an online marketplace?
PY: We want to offer high quality bedding at accessible prices for everyone, especially when we spend one third of our lives in bed! We want to simplify the traditional retail model and remove the middlemen. By working directly with supplier, designing in-house and selling directly to customers online, we are able to remove retail markups and brick-and-mortar expenses to pass these savings onto our consumers with a transparent, honest pricing model. Another huge advantage of our business model is that we are able to respond to the market trends and consumer needs to make production decisions and adjustments quickly.
IR: A 2016 report from intelligence firm L2 has predicted the “death of pureplay.” According to the report, online-only retailers are disadvantaged by the high cost of marketing and shipping. How are you addressing these challenges? And do you see the pureplay market struggling in future?
PY: We think having a physical store still involves much more overhead costs like rent, shop assistants and store fittings, whereas a pureplay e-commerce company can easily reach a wider audience without physical boundaries and distance. We are now using Australia Post to deliver orders, and we try to negotiate better shipping costs as the order volume grows. We also put a lot of effort into optimising inventory management to make sure our logistics is as efficient as possible. We are running our own warehouse at the moment, and we are using ShipHero to manage inventory and dispatch orders. We have been doing this for the last four years but we will be outsourcing this to a 3PL next month. We find their service much more cost-effective since they own their courier, we are able to get much lower shipping costs.
Jess Pang: Online marketing actually gives us all the advantages we could have as a retailer. We always start with a smaller budget to test the water of a new channel, then do A/B testing to tweak and refine it to optimise the channel. The low costs of online marketing also allows us to experiment with different channels and use a mix of marketing strategies to make it scalable.
Traditional billboard or ad placement in publications is great for brand exposure but it’s difficult to measure results and conversion. With digital marketing, we can easily target specific customer groups without the high cost of obtaining information about these groups. We can also make use of retargeting pixels, geolocation, Google AdWords to capture abandoned carts. Most importantly, we can measure and analyse the ROI of each ad campaign to gain useful insights.
IR: What’s your social media strategy? Is it more about driving brand awareness or sales? Do you do paid advertising? If so, how did you decide which channels to invest in? Do you use video ads or influencer marketing?
JP: We use social media in general to drive brand awareness, to create an online brand identity and cultivate a community. By creating a conversation with our customers, we are able to engage them to forge a deeper, more meaningful relationship. We often talk back to our followers, and ask them for feedback and to vote on new colours and patterns.
We use Instagram heavily because a picture is worth a thousand words, and now it can reach millions of customers a day! Visual content works especially well with bedding and homeware products because people love looking for interior inspirations from styling images and seeing how they can work different colours into their bedrooms. We use Instagram to post our product images, inspirational images, wellness tips and also user-generated content; we spotlight customers who show us how they #sleepwithettitude and repost their images.
Traditionally, bedding shopping isn’t exactly an exciting activity – it takes hours for customers to compare different brands, fabrics and colours in shopping malls and departments store. There are not many bedding labels that are talking directly to their customers like a friend.
We are also currently experimenting with more video content on social media and YouTube. Moving images definitely help to highlight the softness and silkiness of our fabric.
IR: You ship fabric swatches worldwide, so customers can touch and see the product before ordering. How do you make this feature work for your business in terms of cost?
JP: Sleeping on bamboo is a relatively new concept for most customers. For people who have never felt our organic bamboo lyocell fabric before, they’re pretty much sold once they’ve felt the swatches. For customers who have already decided to make a purchase, the swatches help them to finalise colour choice.
The cost of sending fabric swatches worldwide is very low, they are sent out as letters so they don’t cost much. About 70 per cent of potential customers who request for a fabric swatch end up purchasing an average order value of $150-$200, which already covers the cost of making and sending out the fabric swatches.
IR: While you offer international shipping, your website seems to be targeted at Australian customers, with no other currency or language options. Is this something you plan to add in future? If not, why not?
JP: At the moment, our website detects a customer’s IP address to show them the corresponding currency. We are planning to expand into the US and Asia Pacific market and setting up local warehouses, offices and showrooms. We are also planning to set up different web addresses for different counties.
IR: Your bedding is made out of a synthetic fabric derived from bamboo. Did you decide to use this material for sustainability reasons, health reasons, financial reasons, a combination of factors?
PY: The main reason we use 100 per cent organic bamboo lyocell is that it is one of the most sustainable resources and no one has done that before! Lyocell is fabricated in a closed-loop system in which water is recycled and reused up to 200 times. Traditional lyocell is made from wood pulp while ours is made from organic bamboo, which is a self-regenerating, renewable crop that requires minimal water (less than 1/10 of the water cotton needs) and labour and zero pesticides or herbicides to grow.
IR: What are the e-commerce trends that you’re paying attention to today?
PY: We are not planning to open a permanent physical store at the moment but we are planning to do pop-up shops and concept labs in different states or even countries for customers to feel our fabric on a real bed.
This interview has been lightly edited.