An amazing year
by Mark Nijhof
The beginning of a new year is always a good time to reflect on the past, and in this case I would like to look back on the Småkassen journey this far. For the impatient among us, here’s a spoiler, it was amazing :-)
When we decided to give this new concept a try we learned from my experience trying to get Snowflake off the ground, and that was to not go all in until certain assumptions were validated. There is no point in building everything to perfection if nobody wants to buy the product, so we decided to to run a few tests first.
The best kind of confirmation one can get is when people give you money for getting the product you are offering. Of course you also want to talk to people, but that is never conclusive, in fact we had spoken to quite a few that said the idea would not work. Thankfully we are rather stubborn and decided that that would not be enough for us to not run a test.
Fake it until you make it
So how would we get people to pay us money for something we did not yet have? When you have a B2B idea you may be able to go to a bigger company and get a deal before the product exists, but that is a lot harder when you have a B2C product like Småkassen. We also considered things like KickStarter but again due to the nature of our idea, you need clothing now, not in 6 to 12 months, we decided that would not work either.
The minimal solution we thought of was to build a proper website where people could order their kassen. It needed to look like a real thing as people needed to trust us to deliver on the promise. We got someone to make a great design on 99Designs.com and started building the website. We made product pictures using clothing we bought in normal webshops and a sample of the trekassen. We were lucky that we got help from 2 interns, Ine and Pinar as they helped us a lot with the website text, finding a proper name, customer interviews and many other details that needed to be figured out. In the end when we launched the website was the only thing that was properly done, if someone would place an order then we would basically just get an email telling us about it, nothing more.
On the 7th of May we launched the website at the end of the day, roughly 4 weeks after we started, 6 weeks after we got the initial idea. Our initial goal was that we would sell at least 1 Småkassen before Ine and Pinar were finished with their intern period, which was 8 weeks.
We used a minimal amount on Facebook advertising to launch the website and t.b.h. we just relaxed a bit not expecting much. So much to our own surprise, half an hour later we got an email, our first customer! And a second not much later! And more importantly, they were not from friends, these were total strangers.
The first Småkassen
So now with actual customers paying us real money we had to deliver. We planned for this of course, we would buy clothing from other shops and put it together, the biggest problem was that we didn’t have those nice advertised trekassen yet (wooden boxes).
Mona especially really hated to have to tell the customer that we could not completely deliver on our promise. But this was a conscious decision, the alternative would have been to order a few hundred of them before we had any confirmation, potentially losing a lot of money if nobody wanted to have them.
They were a bit disappointed, which was good as it meant that this was an important part of our offering, but they didn’t want to cancel.
Going all in
Once we had our main assumptions validated we moved on to putting all missing parts into place, a major one was getting deals inplace with clothing brands so that we could buy products at wholesale prices. We were happy that some of the major brands in Scandinavia trusted us and our idea. Before we had this in place we kept on buying clothing from regular stores (at regular prices), finally we would be starting to earn some money instead of losing money.
We also ordered our first batch of trekassen 200 in total, and we got a small loan from the bank. Now it got serious, the investment into the initial website was something that would not hurt too much, but now it is our skin in the game. Scarry on the one end, but very exciting on the other.
Too much trust
After about 2 months we started getting some issues with customers not paying for their Småkassen (it takes a bit of time to go through the whole invoicing flow). When we started we placed the invoice in the kassen and trusted our customers to pay for it. We didn’t do a credit check or anything. This turned out to be a mistake, because we didn’t do this we attracted the wrong type of customers, or should I say criminals.
We started by doing manual credit checks using Bisnode and that resulted in us not approving about 40 % of the orders. The benefit was that those that did pass mostly just paid on time. A few inkasso cases, but they were the “normal” kind.
Now we have Arvato Afterpay and a better system in place, now people can either pay upfront using Vipps or afterwards using Afterpay. Afterpay takes the risk and does a credit check when the customer orders and chooses Afterpay. If the customer passes this check then Afterpay pays us when we send the kassen to the customer.
We learned a lot from this, at a cost of about 50.000 nok, painful but the lesson is that somethings should be done properly early on. And bad people can act like very nice people when you talk to them.
Where are we now
Now 8 months into our new adventure things are looking great, we have sold 436 kassen in 2017 (this excludes the bad incasso casses) with an average of 58 % subscriptions where the last 4 months this number has gone up to 68 %.
7 customers have already ordered their 4th subscription kassen. About 10 % of the subscription customers stop their subscription after the first delivery, when people continue that number drops significantly.
We are now also about halfway our breakeven point which is an exciting thought as well. So far I have been working nearly full-time as a consultant to pay for our salaries, and Mona has been studying Psychology. This meant that the majority of the kassen were packed late in the evening, some very late.
This year our goal is to start doing this full-time. We need to automate more parts of what we currently do manually, and we should be adding more brands to the collection. And we will start delivering clothing up till 6 years of age. We have some ideas for an even nicer box, both the wooden and the cardboard variant. And perhaps we can start looking at how to start delivering to other parts of Europe. The rest of Scandinavia seems obvious, but Holland and Germany are also very interesting.
2018 will be very exciting for us!
-Mona & Mark