Shoes of Prey is an online retailer that allows women to design their own shoes, which are handmade and shipped globally.
The business was co-founded by husband-and-wife team Michael and Jodie Fox, along with Mike Knapp, all of whom met while studying law in the early 2000s.
Shoes of Prey was launched in October 2009 and has since seen its twist to the standard retail model bear immediate fruit.
So much so, in fact, that the business recently won the Best Online Strategy Award at the 2011 StartupSmart Awards.
Michael Fox talks to StartupSmart about creating a point of difference in the highly competitive world of women’s shoes.
What inspired the idea for Shoes of Prey?
We came at the idea from two angles. Firstly, Mike and I were working at Google but were keen to have a proper go at a start-up after experimenting with [previous start-ups] Darwin Dating and Swift City part-time a few years before.
We were thinking about good industries to be in. I had developed a passion for retail while working at Supercheap Auto prior to Google and after spending some time in the UK and US with Google, I’d seen firsthand how far behind the Australian online retail market was, so we figured that might be a good industry.
Through Darwin Dating, we’d seen that a concept that people wanted to talk about was not too difficult to market. PR pitches are much easier if the story is innately interesting and people like to tell their friends about interesting things.
We figured with the growth of social media over the last few years, this impact will only grow. So we wanted a product that was unique, different and that people would want to talk about.
Secondly, on holidays to Europe, Jodie would always organise 24-hour stopovers in different Asian cities so we could visit some local stores where you can custom design shoes.
She’d design the shoes in the store, then we’d head off to Europe and the shoes would be waiting for us when we got home to Australia.
On subsequent trips, friends were asking Jodie to design shoes for them too. Clearly, women loved the concept of being able to design their own shoes and word of this idea had spread easily amongst Jodie’s friends.
In December 2008, while taking a break over Christmas, these two ideas came together and we decided that an online, store where women could design and order their own shoes, might be an interesting concept to explore.
To get to where we are now, we spent the next four months putting together a business plan and talking to as many people as we could about the idea to get their insights.
How was the business funded?
We self-funded the business out of our savings and invested around $75k to get the business up and running. We’ve also only drawn a minimal salary since the launch so there has been a significant opportunity cost.
Why did you decide to start up online?
Mike and I had both worked at Google so we were heavily involved in the tech/online space so an online business matched our skill sets nicely.
We liked online retail as an industry because we could see it was going to grow rapidly in Australia and a custom women’s shoe business matched Jodie’s advertising background and love of fashion.
How did you pitch the idea to potential customers and generate interest?
A key idea behind the concept was to come up with something unique and interesting that customers and the press would want to talk about without us pushing the concept.
We’ve been fortunate that women love the concept of designing their own shoes, and they love our product when they receive it so the concept has naturally spread.
We help this along by focusing our marketing efforts on PR and word-of-mouth/social media marketing, particularly using Facebook and YouTube.
How did you establish relationships with manufacturers?
This was a difficult one. Most shoe manufacturers we spoke with wanted a minimum order of hundreds of shoes in each style and colour.
We want to produce our shoes one at a time with each shoe being unique. We were fortunate that we were approaching suppliers during the global financial crisis so they were receiving fewer orders from their normal customers.
This meant they were more open to experimenting with something new and working with us.
What challenges did you face while building up your delivery service?
This was also difficult when starting out with low volumes. We met with a number of different suppliers and decided to use EMS as our initial delivery partner.
Once our volumes grew, we switched to DHL who offer a fantastic service but require some volume before they’ll give you a good rate.
We experimented with an intermediary company who collate orders and then ship with DHL to get a volume discount, however we quickly found that they weren’t the most ethical of delivery partners.
They were charging us a 2kg volume weight rate for our parcels of shoes, then opening up our packaging, cutting the shoe box down so it was smaller and only paying DHL a 1kg volume weight rate.
Customers’ shoes were then getting damaged and the packaging obviously looked terrible when it arrived. Working directly with DHL has proven to be much better.
How many staff do you have?
Twelve direct employees, then an additional nine in our partner offices in Japan, Russia and the Netherlands.
What are your revenue projections for the year ahead?
We’ve got some fairly lofty goals; we plan to grow revenue eight times over the next 12 months.
Is there anything you would have done differently?
If we had our time again, we would have been a bit more aggressive with our growth targets early on.
We started the business with relatively modest goals so we probably didn’t push things as hard as we could have. That said, faster growth introduces additional risks so we wouldn’t have wanted to push too much harder.
What’s the biggest risk you face?
The biggest risk for us is that a major existing women’s shoe player enters the space and invests a significant amount of money into developing a design-your-own women’s shoe business.
We’re attempting to mitigate this risk by growing aggressively and focusing on developing the areas that we view as our competitive advantage, namely our online shoe designer, manufacturing processes and our relationship with our customers.
Why do you think you won Best Online Strategy at the StartupSmart Awards?
We’ve taken a traditional industry, women’s shoe retail, and developed an online strategy to innovate and offer customers something they haven’t been able to do before – design their own shoes.
We’ve then used online channels like Facebook and YouTube and developed online marketing strategies, which have brought millions of women to our site to design shoes.