3. Milan Direct
Monday, March 28, 2011/
Founders: Dean Ramler and Ruslan Kogan
Revenue: $5.84 million
Head Office: Victoria
Backpacking on the cheap around Europe usually involves sightseeing and socialising rather than entrepreneurship, but Dean Ramler returned from his travels with a winning business idea.
While in Milan, Ramler noticed a strong consumer desire for replica designer furniture. Upon returning to Australia, he realised that buying such a piece would cost him $4,000 and that manufacturing in China and cutting out the middleman he could offer similar products to consumers at radically reduced costs, up to two thirds off.
Over a beer with childhood friend Ruslan Kogan, the online tech entrepreneur, Ramler realised that a similar online direct retail model to Kogan could be applied to furniture. The duo pitched in $10,000 each and the business was born.
The concept of selling furniture online may have been new, but Ramler was familiar with the product. His father and grandfather both ran a furniture business and Ramler himself worked at the company “at an age that would probably get us in trouble if we published it.”
“That has been a competitive advantage of ours,” says Ramler. “We spend a lot of time going through factories in China, finding those pieces of the highest quality.”
“I can actually teach them how to improve the quality of the furniture. We’ve improved the process through that. Anyone can package something up and sell it online, but you need to ensure that quality. Around 30 to 40% of our customers are repeat customers, which I think demonstrates our quality.”
The manufacturing process may have gone smoothly for Milan Director, but Ramler admits that there were initial problems with warehousing.
“Customers don’t realise that you’ve used an outsourced company when their furniture arrives or is late – they just think it’s from Milan Direct,” he says. “We’ve moved warehouses a few times. A lot of them are quite traditional and service companies like Ikea that want 1,000 items in each delivery.”
“We’ve got another model that’s the other way around – one item delivered 1,000 times. They had no idea about our requirements so we had to negotiate to find the best warehouse. I enjoy that negotiation as it’s crucial to your business.”
The business made its first million within 12 months and is now nearly up to $6 million in revenue. This figure is set to balloon further in the coming year, with Milan Direct set to sell 800,000 pieces supplied to the London Olympic Games and an expansion to a new, unnamed, country within four months.
“We’ve got a presence in the UK already and we’re tossing up whether to go into Europe or the US,” says Ramler. “We have a lot of customers in Germany who have to pay expensive shipping fees from the UK, so it may make sense to go there. The headquarters will always stay in Albert Park, Melbourne though. That won’t change.”