While most retailers are working harder than ever to survive the recession, online kitchenware retailer Everton says business has never been better – and it’s all largely thanks to Network Ten’s reality television show MasterChef.
“It has been absolutely huge for business, because not only are we in a recession when people spend more time at home cooking, but MasterChef has increased the focus on that practice and has pushed people’s interest into doing it properly.”
“It was the best form of advertising anyone can give you. Every shot there is a pan or a mixing bowl that would inspire someone to buy.”
Pritchard says the site, which offers kitchenware ranging from knives and pots and pans to electrical appliances, has never been doing better.
“Internet businesses are going to do well in the downturn. People research more when they have less money, and they’re going to spend that money carefully. Just from that alone you get more visibility, and internet businesses are becoming more cost-efficient at the same time. It’s a good place to be in a downturn.”
Everten recorded $2.78 million in revenue during 2007-08, with Pritchard saying that 2008-09 results have seen “growth consistent with previous years”. Growth in 2007-08 was over 65%, which indicates revenue of more than $4.4 million.
Pritchard moved into kitchenware retailing after becoming burnt out working in the IT industry.
“I found myself sleeping under the desk one night. That was the end, it just wasn’t worth it anymore,” he says. He quit his job, and joined his parent’s kitchenware wholesale business in Queensland.
Pritchard’s parents had sold kitchenware his entire life, giving him exposure to high-end kitchenware brands and products. He used this experience to set up his own store in the Hunter Valley.
But he wanted more. Using his IT experience, he put himself to work developing his long-time dream of an online retail store, which he says has “much more potential” than traditional bricks-and-mortar locations.
He says kitchenware provided the perfect platform to launch an online business because of the industry’s stability.
“Kitchenware is a very stable market. Trends are pretty small and slow – your standard knife doesn’t change very much. You might get a 5% increase in sales in a recession year and a 5% increase during a boom, so there’s always demand. But the internet makes everything much more volatile.”
Pritchard says he was careful not to make the mistakes of other online retailers, which he says do not have enough experience outside of an online environment in order to succeed.
“You get retailers who don’t understand the tech side of things, and have a good product range, but they lack a good design element. Then you have the opposite. Combining those two elements is the key for an online store to be successful. You are IT-based, but essentially a retail store.”
Pritchard says some of these mistakes can include expanding your website’s offerings and product range too quickly.
“If you think of a normal retail store, you’re limited by your space, and because of that you need to focus on the best-selling items in your store. Online retailers are not limited by space. If you look at something like Deals Direct, they just add products with warehouse space and the temptation to grow thin is there.”
“But that doesn’t make you a better business, you lose the concept of who you are and it hurts your brand. The more focussed you can be, the better you are at what you do.”
The online kitchenware retailing market isn’t the largest industry around, but already Pritchard is dealing with some competitors. Peter’s of Kensington and Victoria’s Basement both sell kitchen goods online, with the former being Australia’s 55th most popular site.
But Pritchard says he isn’t too concerned, and doesn’t view them as direct competitors with his business.
“Peter’s is a department store, not too focussed on kitchenware. Victoria’s Basement is the same. I think if you got to the sort of size to compete with those guys, you’d have to have very good methods and techniques of narrowing people’s focus down. Kitchenware, they offer 5% of what I do.”
With Everten banking on reality television and the recession, is there anything setting the business back?
“I’ve got good relationships with suppliers, but they don’t understand the online market. They’re extremely nervous, even from the tech bubble when there were stories of people going belly up. They don’t see it as an opportunity, they see it as a risk, and educating the marketplace has been difficult.”
Pritchard says the perception of online retailing in Australia is nowhere near what it is overseas, and that Australian investors simply don’t want to be involved in online retailing.
“If you look at particularly the US, online is a huge market. Shops over there have a good history of working online, but I think Australia became particularly affected by the tech bubble and nobody’s done it since.”
“Venture capitalists just don’t understand online retailing. We are way behind the rest of the world, where we normally pick up technology very well. But online retailing hasn’t taken off as quickly as it ought. If you talk to investors, they say, ‘you’ve got product and warehousing and logistics, therefore you are a retail business’. It’s hard to convince them otherwise, because they view this as scary.”
Pritchard says as the business continues to grow, issues will continue to become harder and harder.
“I think the challenge of converting to a medium sized business from a small business will be a challenge, and we’ll start looking for a mentor, someone who’s done this before. I understand kitchens and IT, but as you get bigger your margin for error becomes smaller – we have to do it right the first time around.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
