Start-up hoping for Christmas click frenzy
Qannu founders Bridget Speed and brother Andrew Scott. Photo: Supplied
An Aussie start-up preparing for its first online Christmas is promising to slash freight costs from the United States by a third.
As a number of major retailers prepare for their own version of the annual US mega-sale Black Friday starting tonight, online package forwarding service Qannu is hoping its bulk freight service will spark a click frenzy of its own.
Founded by Melbourne-based Bridget Speed, and her brother Andrew Scott, who lives in the US, Qannu claims to be the first "fee free" - ie. no joining fee - service of its type in Australia.
The Qannu website.
Rather than buying items from US websites using an Australian address, buyers here are provided with an American warehouse address where they get one or many items from various websites sent. Qannu then provides a consolidated freight service to Australia.
"That enables us to keep our rates much lower," says Speed.
Speed predicts tonight's sale – and the one being held by David Jones today – will "certainly get some traffic, but I'm unsure whether they'll get the increase they are expecting".
"The Australian retailers don't have the range and the prices that are available online in the US, it's sort of hard to compare apples to apples."
Speed and her brother have combined their skills to start their venture – Speed previously ran Disney Australia's apparel and footwear division while Scott owns a couple of freight businesses in the US and was previously chief operating officer of one of the US's largest logistics companies.
After taking a few years out of the workforce, Speed, a mother of three young children, says the new business also gave her an opportunity to return to retail at a time when jobs were scarce.
"Getting back into it, particularly when the retail environment's like this at the moment, it's not really the market for potential employees," she says.
The job also provides her with flexibility. "People don't shop nine to five so it's good for me, I do a lot of nights and early mornings."
The pair shipped a small amount of footwear on eBay several years ago to test the market. Says Speed: "The footwear was really cheap but the postage killed us."
Their current system allows more flexible pricing – for example customers pay less for lower value items, or when they order a larger number of items. For example one pair of runners can be shipped from the US to Australia for $55 (excluding the price of the runners), while three pairs would cost $75.
About 1500 people have registered with their site so far, and popular buys have included clothing, footwear, cosmetics, electronic goods and equipment for niche sports such as baseball.
"I'm constantly amazed at the things people order and the quantity people order," says Speed. "Some people buy a $25 doormat and one person ordered $10,000 worth of furniture."
"We're pretty pleased with registrations so far. I think with a business like ours, when it's online there's got to be a certain amount of trust."
Setting up the business mainly through Skype and emails, Speed says the geographical distance between she and her brother, who is based in LA, has actually proved quite helpful in some respects.
"Because he's there and I'm here we do quite separate sides of the business," she says. "There's no direct crossovers which I think makes it a bit easier, plus distance."
While Speed says they share a high level of trust, their stakes in the business have been separated where possible. "You've got to clearly document what's been invested, it's all about keeping it above board."
Qannu is targeting one demographic at a time, beginning with women in the 25 to 45 age group. Marketing is being carried out via social media and email, as TV and radio ads might put the business in danger of growing too quickly, says Speed.
"We want to grow the business steadily so we don't get in a position where we disappoint customers."
Meanwhile they are managing the expectations of different generations, including Gen Y, who speed says "want it the next day". Then there are all levels of different shoppers.
"There's a lot of people who don't know much about online shopping still and there are a lot of people who are really savvy online shoppers."
Speed acknowledges that pouring your money and energy into a small business is always a risk, but says "we're trading and that's probably half of it".
"We don't have a fancy office in South Yarra with a receptionist and fresh flower deliveries."
The biggest challenges are now likely to be the ones they can't predict, as evidenced by the recent effects of US storm Sandy, which held up some products being dispatched from the country's east coast.
For now, most of their attention is going into enticing shoppers to take part in Black Friday on November 23. "The sales are unbelievable, that's really going to be a big focus for us, driving people to that date."
Speed says Click Frenzy will probably indirectly aid their start-up.
"I think it does help our cause. People often say 'what's Black Friday?' and we have nothing like that here [until now]," she says.
"I think it promotes that consumer knowledge of having an online sale day."