Monthly Archives: June 2013

China Odyssey begins

Next week we are travelling to China for a few weeks. Typical tourists we are starting in Shanghai and working our way to Beijing over a few other stops (Chengdu, Xian etc).

It has been pretty difficult to book tours with kids, and I think there is a real opportunity here. Freyja is 15 and DJ is 12 so not looking for too many Panda trips but most of the well known tour operators don’t allow kids on their trips.

Pretty short sighted I think, but will report back on the one I did find (online!).

TV Creative

The team at Diet Chef have spent the last two days (and weeks of planning before hand) shooting our new TV ad.

Well done to the whole production team for getting everything done on time. My daughter, Freyja came along on day one of shooting thinking it was going to be really exciting like the movies – we soon knocked that out of her!

Explaining to one of her friends younger sisters (about 11 years old) the hierarchy of production we explained that the producer worked with the director (who was in charge) and there was only one person more powerful than the director – who was that she asked?. The CLIENT! I said, she turned to her mum and said – “When I grow up I want to be a client” then I can boss my friend about who wants to be a director!!”

On a serious note, you must ensure that you are getting exactly what you want out of any TV ad, and using the creative team to help deliver that. Make sure you shoot as much footage as you can, otherwise getting the team and equipment back to the same location will be an expensive exercise.

Here’s a few photos from the two days

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Crammed into a shop!

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The monitor – you will watch this a lot!

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Lighting is very important

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Spend as long as possible on casting

And launch…

On the 30th March I met with a great guy called Ryan. he run’s a company called Flavourly.com, which is a really early stage startup in the food sector.

Three months later (that isn’t that long you know) the following has happened:

Investment

We invested in the business to take it to the next stage, this was a bit of a risk, but sometimes you meet someone that needs some help and you want to help out, it isn’t just about the financial investment.

Strategy

We spent a few days thinking about the strategy and problems that the consumer and producers in this segment have. We looked to other businesses in this space and Ryan did some market research and a competitors review.

Website

The technology platform was OK, but we wanted it to be great – and really scalable with the order flow that was planned (a lot!) so we moved this to a new platform.

Suppliers

Probably a hard thing to do but Ryan was tasked to find some lovely suppliers to work with that could handle the launch campaign – it started running today on Groupon

To be honest I didn’t do much of the above, apart from the odd coffee here or there.

But the journey begins here, good luck to Ryan and the team, I am glad to help out.

UK Retail sector penetration

It started with DVD, music and other consumer products but online retailers (and in fact retailers on the high street!) that focus on these segments have dwindled.

Adoption of these purchases has happened, most consumers will but products like these online and have for the last 5 years. Amazon owns this market and if I want to buy a book, DVD or CD I always use Amazon, it just works

So I picked up a really interested graph in Ocado’s annual return. This is 2010 so a little out of date but a good dataset point.

If you are setting up online you really want to focus on the areas where online retail penetration is low, this gives you a great chance to grow and compete against the main stream retailers.

In Grocery we have to remember that the convenience of having your Groceries delivered is different from being in a link between Health and Beauty and Grocery – this is where Diet Chef sits

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Cash isn’t an excuse…Go Do

I have been thinking a lot about the fear factors that sit in front of entrepreneurs who start businesses.

The fear of failure is top of the list, we hate the thought of failing – especially in public.

The issue now comes when you have removed some of the excuses, I listened in my 20’s (a long time ago) to some great tapes (yes before CDs) on sales performance. The difference between a good sales person and an average one is someone who commits and puts the excuses to the back of their mind

This is probably best expressed in Glengarry GlenRoss a 1990’s film (before any major CGI – so there was a story!) based on the story of four real estate salesmen.

One of the main characters Alec Baldwin talks about the prize of sales.

So one of the major reasons companies use as an excuse for selling is the lack of funding. As of yesterday 18 companies had that excuse removed, they were given over £700,000 to allow them to succeed. So guys, watch this video and make Alec your boss for a few weeks.

That’s a really good example of #GoDo

Finally, we all believe in you and know you can succeed, don’t let the quality of leads be an excuse….

Using your suppliers to help your funding gap

Anyone that understands working with multiple retailers appreciate that this channel gives you fantastic scale and distribution, but it immediately creates a funding issue for most companies.

So you have struggled to get your product developed on a shoestring, protected it in some way, honed your pitch and then hit the phones.

Any buyer in retail needs to maximise the amount of money they make from their asset. Each sq foot of space is measured to maximise revenue and profit. Most people forget how expensive it is to run a retail operation, lots of fixed costs and incredibly competitive.

So if you are a retailer, your cash flow is imperative. You have invested millions of pounds in infrastructure, land, people and marketing. Online retailers although slightly less capital intensive have very high customer acquisition costs and switching costs are virtually nil for the consumer.

So although traditional retail moans about online retailers “eating their lunch” it was pretty much the same for small high street retailers when the consumer switched to the convenience of supermarkets.

So even as an online retailer cash flow is a very important thing, you need to recycle your marketing dollars as quickly as possible to allow you to continue to grow.

That’s where your suppliers come in. In the food industry Tesco, Sainsbury’s and Asda have taught manufacturers that in return for volume (which drives efficiency in a manufacturing business) you need to offer good terms. In small retailers, pro forma or 30 days credit is the norm – switching to multiples 45, 60 and 75 days seem more likely.

And that’s just the start, normally paying for returns, complaints, stocking or listing fees, early payment discounts all drive extra margin and cash flow out of the manufacturer.

So online retail has a great advantage, they can get close to similar terms (perhaps 45 days) and let the supplier avoid all the other “fines” to help improve their margin.

All you need to do is liquidate all the stock you buy in less than 45 days – and life will be good!

It’s that easy, but do that and your supplier will be pleasantly surprised by being paid and also getting another order

Buying from China or overseas

Lots of startup companies are worried about China, in some ways I think they should be, but in others it is remarkably simple to get products made there.

I have just completed a 15,000 item order of promotional items from China.

It was probably one of the easiest purchases that I have ever made. Initially I researched a number of manufacturers, using Alibaba to check them out.

I then sent a few emails, got some quotes, paid for samples to be created and paid for the samples by Paypal.

Two weeks later provided artwork, approved testing (these are not really toys but thought testing was quite important) and paid for 20% up front by bank transfer.

The company I used had been fully audited by a number of suppliers and I was happy having reviewed their documentation that they were a good ethical supplier.

I priced and arranged freight from Shanghai and the items will be leaving in a few weeks, all custom made for me (Thanks to Davies Turner for helping).

100 of the items are on the way by air freight and should be here by Friday.

Amazingly simple and no meetings, lots of email and fantastic service from our supplier in China.

Update: Meet the Diet Chef Bear team

Diet bear at Wimbledon

Diet bear at Wimbledon

What an inspiring day!

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I was lucky enough to spend the day helping judge the Scottish Edge Funding awards at RBS Conference Centre today.

It is truly amazing that we had the opportunity to award over £700,000 to fledgling businesses in Scotland. There was no equity involvement, but the businesses that received the funding will really have a fantastic opportunity to get going, live their dreams and grow.

We truly have a fantastic well networked support system in place, that shows risks can work. John Swinney took the risk of taking a relatively small amount of money and get it directly to the businesses that desperately need it. This is the true area that there is a funding gap, but more there is a confidence gap that Scot’s suffer from about failure

I believed today we closed that confidence gap quite a bit.

Well done to everyone that took part.

Why I love QVC!

We were lucky enough in 2009 to just get a call from a lovely buyer at QVC UK. One of the team had seen our advert on TV and believed we could work with them to bring Diet Chef to their audience.

Apart from the excitement (OK we had watched the cringy apprentice shows when they sell on TV shopping) we thought we should find out more and took a trip behind the scenes at QVC to find out more.

The first thing we found out is how professional the operation is, QVC is by far the market leader in the UK and have invested over the last 20 years in the UK, they have a hugely loyal customer base that love them.

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There are a few principles of home shopping you should learn. You are measured by how the customer respond to the offer and it is LIVE TV so you need to have a deep product understanding and be able to explain the benefits really well. They also work hard to ensure that the product is selected, quality checked and priced to reward the loyal viewers, they trust QVC to ensure it is great value.

Finally they offer a fantastic money back guarantee, which anyone in direct sales will tell you helps get the product into customers hands at low risk to the consumer. So ensure your product works or it will come flying back to you!

Luckily Diet Chef and QVC have a great partnership, they are long term partners of ours and after 3 years I think I understand how they like to work.

I have to say I love the ability to explain our products on live TV for over an hour at a time, it is great for really understanding the product