Jane Cay is the founder and chief executive of retail business Birdsnest. The company, which is based in the NSW town of Cooma, operates a retail store and award-winning online store, which has been praised for its particularly clever navigation and high level of customer services. Revenue at the online store is set to double this year, taking revenue for the entire business to $5 million.
Today, Cay talks to us about avoiding the discount trap, the advantages of running a regional business and the secrets of online customer service success.
We’ve heard a lot about the weather affecting retailers this summer. How did you guys fare?
It was our best summer ever. I think with online you see a huge jump in online shopping start around September and heading into Christmas, so that’s where we saw our most explosive growth in that September to November period. In fact for us, November was a stronger month than December, which is not normally the case in retail. But being women’s clothing it’s more about the events than it is about Christmas. Also I find customers can be conservative about when deliveries might take place, so orders tend to drop in that week or two heading towards Christmas just in case there are any delivery dramas.
Having a retail store and an online store probably gives you quite a unique feel for what customers are thinking. Is the sense of caution more noticeable in the retail area?
I think the caution is probably across the board. It’s just that they’re spending a greater percentage of their money online, so online appears to be growing. I feel even our local customers are spending more online in general. We had a lot of comments – and so has everyone, even the local hardware store – where customers say, “Yes, we’ve done all our Christmas shopping online”. They probably haven’t spent as much as they would in another year but more of a percentage of it went to online.
Have you had to use any tactics in the retail store to get people to open their wallets?
I guess our tactics are really always about having the right product at the right price and providing great customer service. I think marketing gimmicks don’t necessarily work. Obviously the more local events that you can have where you invite customers into the store and have special evenings the better, but that’s all around your customer service and treating people as individuals. I think that works in any medium. Online we do that through our personal notes to customers and understanding our customers’ buying history and their relationship with us. In store it’s the same thing. As much as possible we know people by name – it’s having personal relationships and delivering and being consistent.
How have you approached discounting?
We’re pretty conservative with our discounting, we don’t like to jump when the department stores jump because they tend to jump way too early. They can also negotiate different sorts of trading terms with suppliers, where obviously suppliers are taking a huge hit for the discounting that those stores do. We just base it all on performance. So we have a cycle – once an item that’s been on the floor or online for a certain period of time, if it hasn’t performed to a level that we prescribe, it starts being discounted. It might start at 20% off and eventually go to 50% until we sell it.
So there’s no sort of panic discounting which we seem to have seen from some retailers recently?
We really avoid that. We try to be very strict with ourselves not to panic.
Is that it is happening with some competitors?
Oh, absolutely. We could not believe it when retailers went on sale before Christmas. When that happens, you might get a store manager or someone panic and say, “Jane, everyone’s on sale and do we need to do it?” And we all sit around and we always come up with the same conclusion – no, we’re running our own race here and so we try and remain consistent in that we really only base it on our own performance.
Aside from the weather the other big issue in January was the Retail Coalition coming out against the GST threshold for overseas purchases.
Which was huge publicity for overseas retailing, wasn’t it?
It certainly was. As someone who is on the fence with a foot in the retail and online camps, what was your impression?
Well I guess my impression of the overall thing is that those complaining should be concentrating on their own online retail strategy. I just felt that all these companies that were criticising what was happening didn’t have in place a really strong online retail strategy, in which case they would be benefiting from this online revolution as well. Of course, what this has achieved is that we’ve just educated the Australian consumer that wasn’t aware that they can go and actually buy all of these things overseas at a lower cost. My take on it is we probably do need to look at how to address the GST issue.
Can we talk a little bit about how Birdsnest got started and which came first, the retail store or the online store?
Well, I think it’s always been in my blood. I studied a commerce information systems degree at the University of New South Wales. I always wanted to do commerce but I actually managed to get a scholarship which meant I had to major in IT. At first I was like, you’re joking, but I just fell in love with it and I was fascinated with all these concepts of knowledge management and eBusiness. When I completed university I joined the IBM eBusiness consulting team because “e” was everywhere and all I wanted to do was be part of this online revolution. So I joined the team and at that time all the major companies were grappling with how they were going to adapt to this new online world. I got to work with the likes of Sensis, 3G Orange Hutchison, Macquarie Bank, all these businesses who were dealing with how the web was going to affect their strategies.
Then I fell in love with a farmer and so that’s how I ended up in rural New South Wales. I guess I just wanted to get into my own business and I ended up in retail. I saw the massive gap in online retail and thought right, there is no reason why we can’t do this from here. We convinced a few big guys like Esprit that we could represent them online exclusively in Australia and once we had those brands behind us, people trusted those brands and then they learnt to trust us.
What have been some of the challenges in building particularly the online customer base from a regional area? Or doesn’t it matter?
I don’t think it matters at all. In fact, I think there are a lot of advantages in being regional. For starters, we kind of go under the radar. We were able to access a whole lot of brands because we could have then in the retail store and then extend that to the online retail store – but if we were based in Sydney getting access to those brands could be quite tricky. We have the same postal service as Canberra and really Google don’t care where you are, as long as you’re relevant.
Have you mainly spread the word through online channels?
Yes. We have also done quite a lot of offline advertising as well in places like The Land, because I guess we understood the country customer. Word-of-mouth has been probably our strongest form of marketing – 70% of our revenue comes from repeat customers and they’re obviously telling their friends. I think that’s how a lot of our loyal customers come about.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
