AWAY's Big Sale, GymShark's Valuation, & an Income Store update
We discuss:
And then we tear down the Gymshark store.
The Unofficial Shopify Podcast
9/15/2020
Kurt Elster: No, for Halloween I got some Jedi robes off Amazon, and unofficial, unlicensed, but very clearly, definitely Jedi robes.
Paul Reda: Oh, are they just like space knight robes?
Kurt Elster: I wish I had taken notice of what the title was, what shenanigans they played there, but definitely unofficial. So yeah, I’m gonna be a Jedi for Halloween.
Paul Reda: In my Star Wars news, so I bought a VR headset. I don’t remember if I had it last week. But my biggest Star Wars games were X-Wing and Tie Fighter in the ‘90s. If you were a ‘90s kid, you were all about X-Wing and Tie Fighter and were a huge nerd, obviously. And so, they’re finally releasing a new space battle game. All right, that’s from Star Trek.
Kurt Elster: It was the closest thing I had.
Paul Reda: Oh my God. And so, there’s one coming out in October called Star Wars Squadrons, which I already was very excited about, and then they just announced it has full VR support, so I’m pretty much gonna be playing Star Wars Squadrons with the VR headset. Never leaving my house ever again. I’m taking October off, by the way.
Kurt Elster: You know, there’s a thing that’s gonna happen that we have to prepare for, that we need those hands on deck.
Paul Reda: Listen, October is never busy. We’re sitting around with our thumbs up our asses all October, so-
Kurt Elster: I think you’re thinking of December. It’s kind of… Actually, it’s funny, like end of September through October and the beginning of November is nuts, like we-
Paul Reda: Even through December 1st is nuts, because people at the last minute are like, “Oh, by the way, we’re doing this thing on Black Friday, could you set that up for us?”
Kurt Elster: The moment though, I really think like the moment Thanksgiving rolls around-
Paul Reda: Oh, yeah.
Kurt Elster: The requests and the work fall off a cliff, because merchants are so busy fulfilling, and then I think everybody collectively just goes, “Eh, the last two weeks of December, let’s just chill.”
Paul Reda: Oh yeah. No one talks to us in December. It’s great.
Kurt Elster: Yes.
Paul Reda: Some people do, because they’re like, “We want to be ready for stuff in the new year,” so they want us to prepare for it. That’s usually good, like long-term projects are December.
Kurt Elster: I like that. It’s just like you’re doing a marathon for eight weeks. You get three weeks off in December.
Paul Reda: Yeah. We just kind of chill. It’s very nice.
Kurt Elster: Yeah. No, we’ve been doing this 10 years. That’s the score. That’s how it goes.
Paul Reda: It is nice. And you know, August is usually dead, so we get to prepare for before it blows up.
Kurt Elster: It hasn’t been the case this year.
Paul Reda: It has not.
Kurt Elster: In years past though, usually you get that back to school summer slump, where everybody goes on vacation because they can, and then that’s the end of it.
Paul Reda: Did I tell you about my new tenant? I decided to rent out part of my house.
Kurt Elster: Oh?
Paul Reda: Yeah. I got a new roommate.
Kurt Elster: Oh? I’m not familiar.
Paul Reda: Yeah. His name’s Lil Squirrely.
Kurt Elster: Okay. That’s an unusual name.
Paul Reda: He’s a squirrel that lives in my wall.
Kurt Elster: And he’s not-
Paul Reda: And he’s not paying rent.
Kurt Elster: And he’s not just like a fugitive you’re hiding?
Paul Reda: No. It’s an actual squirrel that lives in the walls of my house.
Kurt Elster: Are you gonna get the squirrel out?
Paul Reda: I’m hoping.
Kurt Elster: How do you feel about the squirrel?
Paul Reda: I’m not a fan of the squirrel. He’s not paying rent.
Kurt Elster: And where is his residence?
Paul Reda: His residence is the hallway in the wall right there.
Kurt Elster: Have you seen him?
Paul Reda: All right, so I sit by… I have a big front window in my house, and I sit in the window in the morning, drink my coffee, answer my emails, begin my workday. And I look at all the animals romping around my front yard. And there was this squirrel that was just like there every day, and I was like, “Look at him. He’s having fun. I like him.” So, I’ve been looking at him for about a week.
Kurt Elster: Sipping your coffee, admiring your squirrels. Okay.
Paul Reda: Yeah. And then all of a sudden there’s now scratching inside my walls, and anytime there’s scratching going on inside the walls, I never see Lil Squirrely outside, and when I do-
Kurt Elster: So, you don’t. You’ve not actually seen the critter in your walls.
Paul Reda: I’ve never seen him in my walls. I just… I’m making a Sherlock Holmes educated guess here that whenever I don’t see the squirrel, there is scratching in the walls, and whenever I do see the squirrel, no scratching in the walls.
Kurt Elster: Go, go, Gadget deductive reasoning! Have you tried asking him to leave?
Paul Reda: No. Well, usually I like… I bang on the wall.
Kurt Elster: Okay.
Paul Reda: That doesn’t seem to deter him, though.
Kurt Elster: No, he probably is laughing at you.
Paul Reda: If you’re walking down the hallway and talk, he suddenly stops. He’s like, “Uh oh! They’re gonna get me.”
Kurt Elster: They’re onto me!
Paul Reda: Removal guy’s coming tomorrow. Evict my tenant.
Kurt Elster: But he’s really just paying you in property destruction.
Paul Reda: Yeah.
Kurt Elster: And the excitement of knowing that you have a squirrel in your wall.
Paul Reda: Of just hearing scratching sounds in the wall of my house and thinking, “Oh, that’s good.”
Kurt Elster: Geez, what if you find out it’s not a squirrel? It’s like, “Oh, it was a family of angry possums in a turf war with a raccoon.”
Paul Reda: Well, they’ve been very quiet up until like three days ago.
Kurt Elster: Maybe they’re plotting.
Paul Reda: Oh, God.
Kurt Elster: You don’t know. Today on The Unofficial Shopify Podcast, we’re gonna discuss eCommerce, not squirrels. I swear to God. I’m your host, Kurt Elster. I’m joined by my six-foot-five-inch cohost, Paul Reda, and on today’s episode we will discuss an Income Store court case update. Away Travel had a sale last week and DTC Twitter took unusual notice, and Gymshark’s billion-dollar valuation, we touched on that last week. And then we will follow that up with a Gymshark teardown. How fun.
Paul Reda: First of all-
Kurt Elster: Oh boy.
Paul Reda: The height was way off.
Kurt Elster: What’s your actual height? Five seven?
Paul Reda: Yes. No, it’s like six-two. It’s not six-five.
Kurt Elster: Okay, you’re six-two?
Paul Reda: Yeah, what do you… I’m like literally the same height as you pretty much.
Kurt Elster: I’m six feet and I feel that you tower over me.
Paul Reda: All right. I don’t want to steal any height valor here. I am not six-five, so I don’t know where you’re getting that.
Kurt Elster: All right. Well, all right, I correct it. He’s six-six and he’s being modest.
Paul Reda: Yeah. Well, I… Yeah. Me and Shaq. It’s hard to tell.
Kurt Elster: Yes. Yeah. No, you get confusing. Oh my God, it’s Shaq. Oh, wait, you’re not him. All right, so, and then some housekeeping, I got… We got some really good episodes coming up I’m excited about. I haven’t recorded it yet, but one of our best episodes last year was with Ezra Firestone, where he broke down his Black Friday plan. We’re gonna try and do that again. He said yes.
Paul Reda: Cool.
Kurt Elster: I don’t have it on the books yet, but we’re gonna try and get that one in there, and now that I’ve put it out publicly, he pretty much has to.
Paul Reda: He has to do it. Yeah.
Kurt Elster: Yeah. Sorry, Ezra.
Paul Reda: We’re just gonna shame him. Because you know, we can shame him.
Kurt Elster: Yes. Yeah.
Paul Reda: We’re much more powerful than he is.
Kurt Elster: Yeah. No. No. He’s an OG. He’s been doing it like 10 years longer than we have.
Paul Reda: Yeah, I know.
Kurt Elster: I recorded with Stephanie from Asutra. That episode, really good. So good I want to bump it up in the schedule, get it out sooner. And then if you listened to and enjoyed the Nomad Goods interview with Noah Dentzel, you will enjoy the follow up with his marketing wizard, Chuck Melber, where he breaks down some of their marketing successes. So, I got those coming up this year. I’m looking forward to those. I’m excited about those getting published and seeing what people say.
Paul Reda: All right.
Kurt Elster: Yeah. Get excited. I need more excitement from you.
Paul Reda: I’m gonna throw it through your window. I’m right next to the window I’m gonna throw it out of. No, I like Stephanie a lot. Stephanie is an extremely on the ball person. When we had lunch with her at The Bagel Diner at Old Orchard Mall, RIP The Bagel. It’s gone.
Kurt Elster: RIP The Bagel.
Paul Reda: She was just like, “Oh, wow. You’re extremely professional. Should we even be here?” Like I don’t-
Kurt Elster: That was how you felt about her.
Paul Reda: We were pretty much like, “Wait, I think you’re too good for us, ma’am. Like, I’m sorry.”
Kurt Elster: Were you supposed to meet with someone else? Am I at the wrong table? No, she’s great, and the interview was great. The story is great. And hearing how she got connected with Venus Williams blew my mind, because it is not at all what I expected. So, I think people will enjoy that one. All right, in the past we have done three episodes now about The Income Store. My brief experience with The Income Store. And their court case with the SEC, Income Store versus the SEC. Sorry, the SEC versus… It’s like… Oh, Today’s Growth Consultants doing business as The Income Store, I believe is the official case.
Paul Reda: Yeah. Well, here’s the thing. I think we were… I got chastised a little by a for real attorney for not being right about the way I was describing some things. I am not an attorney. I’m just a dude that reads stuff. So, if I was wrong, I’m sorry. Also, don’t trust what I say in terms of your legal advice.
Kurt Elster: Yeah. Take it with a grain of salt. No, you got slapped around for an incorrect explanation of how an LLC works, was what happened. But other than that note, we were not corrected on anything else.
Paul Reda: Okay. Well, that’s good. But anyways, so there’s actually two cases going on. There’s the SEC versus The Income Store, where The Income Store is just like a company, and then whether or not it was a company that should be allowed to exist. And then there is the federal government versus Ken Courtright, a dude we are accusing of committing crimes.
Kurt Elster: I see.
Paul Reda: So, in the case against Ken Courtright, he, in all of his filings, has been like, “Nope, we were a legitimate business the whole time. I’m innocent and I didn’t steal money from these people, and also I could find someone that will want to buy The Income Store, and when they buy The Income Store, all of my investors will be made whole, and therefore you can’t say I committed a crime, did you? Because everyone got some money, so there.” So, he’s really just been taking… He’s not been playing ball whatsoever with the feds.
Kurt Elster: Okay.
Paul Reda: And generally, from what I’ve read, and given the way that the government and the world has gone the last few years, I’ve learned a lot about federal prosecutions, because I’ve been paying attention to stuff. And everyone seems to agree that the federal government doesn’t bring charges against you unless they completely have you utterly and totally nailed to the wall. Just can I talk for five minutes?
Kurt Elster: Just keep going.
Paul Reda: No. So, and the feds, they’re not gonna bring it to trial unless they’re just gonna wreck you, and generally you then make a plea deal with them. So, anyway, in last month, Ken Courtright’s attorneys filed with the court to not be his attorneys anymore.
Kurt Elster: Oh, what do you think happened there?
Paul Reda: So, it’s either one of two things. It’s generally our client… They don’t say why, they’re just like, “We don’t want to be… Some divisions have sprouted up between us and our client and we wouldn’t be the best representation for them anymore, so please let us go.” And so, the question is are the divisions-
Kurt Elster: So, they can’t just quit? They need permission from the court?
Paul Reda: They need permission. Because you can’t just like walk out the door and leave a guy high and dry who’s facing federal charges. Everyone is entitled to a defense in court. But, I mean I’m sure the judge was… I’m sure it’s pro forma for the judge to grant that, but maybe I’m wrong. So, the question is is the division between Ken and his attorneys, his attorneys are like, “Dude, you’re dead. You need to sign a plea deal with the feds and just take whatever you’re gonna get.”
Kurt Elster: Yeah. Take the bargain and let’s move on with our lives.
Paul Reda: Take the bargain, let’s move on with our lives, because this fighting is doing no one any good. And Ken is refusing to do that. Or is it his attorneys are like, “Hello, we would like to be paid for our services.” And Ken is like, “Don’t have any money anymore. Sorry.” And his attorneys are like, “Cool, we’re out of here, because we’re not getting paid.”
Kurt Elster: Both of those theories being entirely speculation.
Paul Reda: Those are both entirely speculation, but those would be the top two reasons.
Kurt Elster: If you were a betting man, you would bet on one of those.
Paul Reda: If you were a betting man, the vast majority of the bets would go onto one of those two.
Kurt Elster: And from experience, I was briefly a paralegal.
Paul Reda: Oh yeah?
Kurt Elster: Yeah.
Paul Reda: I worked at law firms most of my teenage years as a little wiener who had to go run things, and pick up stuff, and make-
Kurt Elster: You were a gopher?
Paul Reda: … check things into courts. Yeah, pretty much.
Kurt Elster: That sounds like a paralegal.
Paul Reda: No. Because I didn’t actually… Wasn’t involved in any legal documents. I was just like a delivery boy.
Kurt Elster: Oh. You should have gone with paralegal. It sounds better.
Paul Reda: No. Again. I’m not gonna steal anyone’s paralegal valor.
Kurt Elster: I see.
Paul Reda: But yeah, anyway, so I’m feeling like Ken is being very… In all of his filings I’ve read, he’s been very obstinate about what was actually going on when everyone seems like they got him. They really got him against the wall.
Kurt Elster: Yeah.
Paul Reda: So, I’m guessing his attorneys are kind of like, “Nah, we’re out of here. Peace out, bro.”
Kurt Elster: See ya. I’m sure he could find… If he’s like, “Look, I want to fight it tooth and nail.” I’m sure he could find somebody that will go along with that.
Paul Reda: Well, he’s gotta pay them, though.
Kurt Elster: Okay.
Paul Reda: And so, if all of his assets are frozen…
Kurt Elster: Isn’t that kind of a scam? Like if the government freezes all your assets and then you have to defend yourself, what do you do?
Paul Reda: I don’t know.
Kurt Elster: Do you take the public… Are you forced into the public defender?
Paul Reda: I mean, I think so. I guess if you have no money. If you’re high enough profile, someone will take you just for the PR, but he’s not high enough profile.
Kurt Elster: Is this thing gonna go on for years?
Paul Reda: Oh, yeah.
Kurt Elster: Oh, geez.
Paul Reda: Yeah. I think so. I mean, if he’s actually… If there’s gonna be motions on either side, and everyone’s fighting over the evidence and all that other stuff, it’s like-
Kurt Elster: Just drags on for years.
Paul Reda: Yeah. This is gonna go on for years. I mean, there’s a woman on… If you are extremely thirsty for your Ken Courtright content, the place you want to look for, there’s a woman on YouTube called Emilia Gardner who I think was involved in a lot… is into online sales type stuff.
Kurt Elster: Oh yeah. She has a playlist on YouTube called Income Store Collapse.
Paul Reda: Yeah, so she’s an ex-attorney. I mean, I don’t know if she’s still an attorney, but she’s also involved in sort of like, “Oh, let’s talk display ads,” and sort of an online commerce type stuff.
Kurt Elster: Now she’s into true crime?
Paul Reda: Well, and it was just like, “Well, I know a lot about online commerce, and I know about legal stuff, so obviously The Income Store is completely inside her wheelhouse, so she… Every once in a while when there’s a cool Income Store update, Emilia Gardner generally posts a video about it, so if you really want to get into it, check out her YouTube feed, which I’m sure Kurt will be adding to our show notes.
Kurt Elster: I did it already. I got a link to Emilia Gardner’s Income Store YouTube playlist, which I appreciate anyone who uses a topic-based playlist, thank you. And one of the… It looks like the most recent video is July 30th, attorneys quitting? Question mark?
Paul Reda: Yeah.
Kurt Elster: Income Store update. So, I’ll link to that one, as well, since it is directly relevant to what we were just discussing. Oh, that’s really cool. Have you reached out to her?
Paul Reda: I have not. We probably should, like make her a guest.
Kurt Elster: At this point, come on. Let someone else give us an update. Okay, so Away Travel, we did an Away Travel teardown. We had fun with it. They within a few days of that teardown going live, they made some of the changes we suggested, and the chances are that’s entirely coincidence, but there’s that 1%... Okay, that one tenth of 1% chance it’s not, in which case I am honored. But it very much is 99.9% probably coincidence. Anyway, they had-
Paul Reda: You really changed your tune, because when I said it was just like, “Yeah, it’s probably a coincidence.” You got so mad at me.
Kurt Elster: I wanted the win and you took it away from me.
Paul Reda: You were like, “No! It was exactly what we said! No! They listened to us.” I was like, “Okay, buddy.”
Kurt Elster: I had time to grieve since then and now I’m willing to accept my hubris. Yes, but so they… I don’t know if you’re aware, there’s a pandemic happening, and that’s really messed up travel, and they’re a travel company. So, if you sell luggage, this is a pretty grim scenario. And they had-
Paul Reda: Yeah. I was gonna say since later on we’ll be talking about Gymshark’s financials, the thought crossed my mind to ask my sister-in-law about it, who works in the financial areas of big companies. She’s currently… She works in the finance department for Airbnb and the other problem is of course her… Things aren’t going so good for her, either, and Airbnb. And of course, San Francisco, with the state being on fire.
Kurt Elster: Yeah. That’s… We have family who live there, and they were giving us updates and sending photos. It’s scary stuff.
Paul Reda: Did you see? It’s literally Blade Runner 2049.
Kurt Elster: Yeah, it’s just like-
Paul Reda: It looks exactly like all the photos.
Kurt Elster: It’s like 3:00 PM and the sky was just red, just blood red, and everything is dark, and sooty.
Paul Reda: Yeah. It’s even-
Kurt Elster: I found it quite disturbing.
Paul Reda: It’s even worse in Oregon. I have friends in Eugene, Oregon, and it’s like… Yeah, it’s straight red sky at like 2:00, so it’s bright red.
Kurt Elster: Jessie, our project manager is in-
Paul Reda: That’s right. Jessie’s out there.
Kurt Elster: Oregon. And yeah, she posted to her stories. It was creepy and sad to see it. All right, so where-
Paul Reda: So, anyway, Away Travel.
Kurt Elster: Away Travel. Yeah. You know, by comparison to insane wildfires, Away Travel’s sale hardly seems interesting.
Paul Reda: Yeah. Well, I ruined it.
Kurt Elster: All right, so Away Travel had a sitewide 50% off sale, and apparently this was big news, because DTC brands are seemingly allergic to sales in general. It’s like it’s very dishonorable to run a sale in DTC Twitter, it feels like. And anyway, Away ran a sale, it was 50% off the entire site. Seems like it might have been successful, because the site went down when they started the sale, when people ran to check it out. And it was reported on this newsletter I read, that I recommend, I like, called Morning Brew, and they said… What did they say? Brandon Lewis, VP of comms and corporate affairs at Away, told Retail Brew the sale is meant to inspire shoppers who may be ready to travel again this fall. And there’s interest: Away’s online traffic increased and recent launches like pet carriers and mini travel kits have sold out. But the sale’s also a chance to offload suitcases after the pandemic flatlined the travel industry.
And in April, Away’s co-founders said sales had plummeted 90% when travelers put worldwide vacay plans on ice. They laid off 10% of their staff and they said they’ve picked up momentum, but they didn’t specify as to much. And then Morning Brew’s commentary was that discounts can instantly jumpstart sales, but Away and its DTC cohorts avoid them, and the argument being that, well, DTC brands, because it’s direct to consumer, is already giving you the best price. Therefore, they can’t do a sale and it erodes brand value.
And they had this pull quote in here from Nik Sharma, founder of Sharma Brands, like JUDY is a really cool one of his. I like him a lot. He said, “I don’t think running a single sale is going to have an impact on the brand in five years’ time, but if it becomes a recurring strategy for brand, then that becomes a different story.” Well, when you can’t sell anything because of a pandemic, you’re running out of options. You gotta turn… You gotta free up cash. And if you’ve got this inventory not moving, it’s costing you money just sitting there. A sale on stuff that you can’t otherwise sell seems like a smart move.
Paul Reda: I mean, yeah. This-
Kurt Elster: I want to defend sales for DTC brands.
Paul Reda: Oh, well this isn’t going to be fun, because this article when you sent it to me immediately got my hackles up, because I was just like, “Stop smelling your own farts and acting like oh, we’re too important for having a sale. You can’t expect that of us.”
Kurt Elster: You know, I never thought I’d get to use this sound effect.
Paul Reda: Oh, do it. There you go.
Kurt Elster: Yes.
Paul Reda: Oh, delicious. I work for Away Travel. Oh, so good. I’m gonna go yell at my underlings now.
Kurt Elster: That’s the finest segment we’ve ever done on this show.
Paul Reda: But yeah, it’s like, “Oh, well, what’ll it do to the brand?” It’s like motherfucker, you’re not Rolex. Rolex has built their entire brand around this and they’ve existed for I think 100 years at this point. It’s like you, you sell boxes. You sell boxes that people carry their clothes in.
Kurt Elster: They sell polycarbonate clamshells that are realistically no different from the $60 Samsonite I got clearance from Amazon many years ago.
Paul Reda: That done down there, that’s my clothes box. Like that’s what it is. That’s my clothes box, what for the airplane.
Kurt Elster: I just throw my clothes in a garbage bag.
Paul Reda: But it’s just like, “Oh, it’s really gonna kill the brand if they have sales.” Like, motherfucker, they have no sales. You can have a sale. You’re not too good for sales. No one is too good for sales.
Kurt Elster: Yeah. If Bentley did a sale, suddenly a Bentley becomes more attractive. But I get-
Paul Reda: And it was like, “Oh, well, they’re doing it to inspire people.” Like bullshit. Bull fucking shit.
Kurt Elster: Inspire them.
Paul Reda: Inspire my fucking bank account.
Kurt Elster: Yes. Yeah. No, I don’t think they sat down and they were like, “Look, guys. We need to inspire people to travel.” No. They’re like, “What are we gonna do? Ahhh!”
Paul Reda: We need money!
Kurt Elster: AAAAAHHHH!
Paul Reda: God. Stop it. It’s like you know, a brand should just sit there and be like, “Well, I’m only gonna eat if you give me caviar.” It’s like, “Okay. Well, if you’re only gonna eat caviar, have fun starving to death.” I’d rather throw a sale instead of starving to death.
Kurt Elster: And that is exactly the situation. You sell suitcases, you sell expensive suitcase… Moderately expensive suitcases. And no one is traveling, and certainly, so no one’s buying luggage. You don’t want to go out of business, so all right, and they’ve shifted to things that they can sell, like pet carriers. So, continue that shift and clearance the stuff that doesn’t sell. I don’t know why there’s this implication that within the realm of DTC, direct-to-consumer eCommerce, that that is in some way a shameful act. To me, that sounds strategic and smart.
Paul Reda: You know what’s a direct-to-consumer eCommerce brand?
Kurt Elster: What?
Paul Reda: Apple. Does Apple have sales?
Kurt Elster: Yes.
Paul Reda: Okay. So, I’m pretty sure you’re fine there.
Kurt Elster: Not often, and they’re light. Those Black Friday sales-
Paul Reda: Back to school sales.
Kurt Elster: They do?
Paul Reda: Yeah.
Kurt Elster: I want like 50% off. Give me. I want AirPods, half off.
Paul Reda: Everyone’s got sales. I mean, sales have existed for what, a hundred years? How long has sales existed?
Kurt Elster: I have no idea. That’s a good question.
Paul Reda: That’s a good question. And you know what you just reminded me of? You know what was… Well, I don’t know if Sears was a… Like Sears. Sears made things, and Sears would send you a catalog. I think Sears was the original DTC brand.
Kurt Elster: I think Ford was the original DTC brand. You could only buy it from a Ford dealership, and they owned the entire manufacturing process, and streamlined it for efficiencies, and the goal was low price, direct-to-consumer product. Cut out the middleman.
Paul Reda: Well, and then I think-
Kurt Elster: Clearly Ford.
Paul Reda: I think Ford should be trading at whatever 20 times earnings is, then. Because, I mean they’re a DTC brand.
Kurt Elster: It is funny to think of that somewhere along the way, eCommerce rebranded itself as direct to consumer.
Paul Reda: I mean, that’s why… The Sears catalog, instead of… They’d send the website to your house and you’d flip through it.
Kurt Elster: Yes. Yes. Yeah, there’s a lot of things that we act like, “Oh, this is new and amazing!”
Paul Reda: It’s not.
Kurt Elster: It’s the same stuff. So many things in our lives, especially in business, it’s just like stuff borrowed from other industries, or stuff taken… that happened so long ago you forgot about it and we just kind of relabeled it and reinvented it for modern age. But no, don’t fear the sale. In their case, it’s choosing between like, “Well, we can sit here and sell nothing, or we can clear out the stuff and use that cash to develop and sell new products.” Then great! Good for them. That should be the story.
Paul Reda: Well, but I mean, I’m just taking it a step further. Anyone listening to this, even… I mean, I know whatever, Pierre Escargot, the CEO of Bentley, I’m sure he’s not listening to this. But anyone who is listening to this, you can have a sale. You don’t need to be going out of business to have a sale. Please, for the love of God, have sales. Because more people will buy your crap. Why is this hard?
Kurt Elster: Yes. And like the-
Paul Reda: Is Bentley French? It’s probably not French.
Kurt Elster: It’s British.
Paul Reda: Damn it.
Kurt Elster: Yeah.
Paul Reda: I should have been like Nigel Huffnagle.
Kurt Elster: Nigel Huffnagle. You know what? Harry Potter. Harry Potter’s the CEO of Bentley.
Paul Reda: Yeah. There you go.
Kurt Elster: Yes. All right. And the Queen is the CEO of Jaguar.
Paul Reda: Wow.
Kurt Elster: That’s the extent of my British knowledge.
Paul Reda: Oh, and that’s why you just sold your Jaguar, because you’re anti-royalist?
Kurt Elster: You know, I still have the Jaguar sitting in my garage, mocking me. Every time I get in the car it calls me a colonist and spits on me. Like, “What? Why did I pay for this?” All right, so the fear with sales is like if you ran sales constantly that it devalues the brand. Unless you’re a real… Unless you’re selling a luxury good where it’s like, “All right. We’re selling this thing at 10X cost of goods sold,” you’re probably not really a luxury brand.
Paul Reda: But I’m even saying luxury brand as in like when we think of luxury brands, like Bentley, and Rolex, and whatever, those are luxury brands that are like, “This is only-“
Kurt Elster: They have a storied history?
Paul Reda: This is only meant to be purchased by millionaires. Come on. So, you’re not one of those, so have a sale.
Kurt Elster: Statistically, probably. Yeah. Maybe someone at Bentley is like, “What?”
Paul Reda: I mean, if you work for Bentley, come in contact with us. We’ll build your Shopify store.
Kurt Elster: I don’t think it’s gonna work. You know what? Don’t.
Paul Reda: It’s hard, because they’re totally gonna want like a product configurator app to configure all the different trims.
Kurt Elster: Which is basically the hardest thing you could do.
Paul Reda: Yeah, those are horrible. I don’t want that job.
Kurt Elster: Yeah. They’re very difficult. I respect people who can build a product configurator. Especially one for a vehicle. Oh my God. No thank you.
All right. So, last time, Gymshark came up and as part of the Gymshark explanation I said, “They’ve got this billion dollar valuation.” And you said, “What the heck do they sell?” I said, “I don’t know. Stuff online.” You said, “Well, they sell a billion dollars worth of stuff?”
Paul Reda: Well, first off, you said it was two and a half billion, which we’ve now learned was definitely wrong.
Kurt Elster: Oh yeah. That was way wrong. $1.4 billion it turns out is the valuation.
Paul Reda: All right, so half.
Kurt Elster: That’s still unicorn status.
Paul Reda: What do you have to do to get unicorn status? What does that mean?
Kurt Elster: You have a company with a three comma valuation. A billion dollar valuation.
Paul Reda: Is that a thing?
Kurt Elster: Yeah.
Paul Reda: I didn’t know that.
Kurt Elster: Yeah.
Paul Reda: All right.
Kurt Elster: Yeah. No, that’s a thing. That’s unicorn status.
Paul Reda: Okay. Anyway, so I poopooed it, and because I will happily say whenever I’m wrong, I was wrong. They sound like they sell some stuff. They don’t sell $2.6 billion worth of stuff, whatever Kurt said.
Kurt Elster: Well, that’s a number I literally… turns out I just made up.
Paul Reda: But he was also correct to chastise me. They are not built entirely on a wing and a prayer of SoftBank and Saudi money. So, I’m willing to give them a little bit more benefit of the doubt.
Kurt Elster: And I think what’s very interesting about Gymshark, it was started by two guys who were 19-years-old in 2012. I mean, eCommerce is such young industry and thing, and to think wow, 2012, that’s a lifetime ago in eCommerce, and two kids who were 19 now own a company with a billion dollar valuation. Oh, good for them. But I was cruising LinkedIn and we had a past guest, Jason Andrew, who is a chartered accountant on the other side of the globe, and he gave us this really good rundown of like, “Okay, here’s how to approach accounting for eCommerce.” That is his entire thing, is being a CPA for bootstrapped, high-growth eCommerce companies.
And I saw he had written a Medium article that was very good, where he’s like, “All right, let’s break this down. Is this valuation legit?” And so, I passed along to you. I did not actually read it myself. Instead, I emailed him, and I said, “Hey, we’re gonna talk about that on the show. Would you mind giving us a dramatic reading of that? Would you mind giving us like, “Here’s the executive summary,” in audio form?” And so, he very kindly did and I’d like to play that.
Jason Andrew: Hey, everyone. It’s Jason here. It’s a pleasure to be on The Unofficial Shopify Podcast. Now, Gymshark is one of the few pure play DTC brands that have officially hit unicorn status. I’m sure there are others flying under the radar, but this is the best case study I’ve personally come across. Now, it’s unique in many ways. Firstly, the founder, Ben Francis, he’s super young. He started the company when he was 19-years-old. But secondly, it was bootstrapped up until the investment from General Atlantic, a rare quality in this environment where every large consumer brand seems to be raising boatloads of money, rightly or wrongly. It is these qualities which make Gymshark so impressive in my eyes.
Now, my accounting firm works with a lot of bootstrapped, high-growth businesses, and what I love about working with bootstrapped founders is that by necessity, they need to equip themselves with strong operating discipline and financial governance from day one. These are good habits for every entrepreneur to build in the early stage as they carry through the business as it scales. Now, many outsiders see Gymshark as a company with awesome marketing and leadership, and I can say that the hype is supported by equally strong financial management. Some key highlights from the financial perspective: Healthy gross profit margins that hover between 43% to 50%. Now, the operating profit margins have remained consistent at 11% to 20% even as the company has scaled. In other words, the unit economics of Gymshark work, which has enabled profitable, sustainable, and healthy growth.
Now, from a working capital perspective, Gymshark’s cash conversion cycle was an enviable 48 days in 2019. Now, compare that to Nike or Adidas, whose cash conversion cycle hovers at 104 and 160 days, respectively. Simply put, Gymshark is a cash generating machine.
In summary, Gymshark is a refreshing case study for every entrepreneur to reflect on. It serves as a stark reminder to those looking to scale their eCommerce business, and the key message is this: You don’t need to raise venture capital to build a great high-growth business. Fund your company with customers. It’s the best way to do it.
Kurt Elster: I absolutely love his takeaway there.
Paul Reda: The end, yeah. The end is the main thing to focus on.
Kurt Elster: There is some bias, and I’ve seen some arguments online where people, bootstrapping versus taking investment, whether that’s private equity, venture capital, whatever it is. And these people fight and butt heads. I think clearly it’s your business, you should do what the heck you want, right? Do the thing that you know is right for you, that you feel comfortable with.
But there was always this implicit thing that like, “Well, if you’re bootstrapped, that’s just a lifestyle business.” And like lifestyle business was very much used derisively. I’ve only recently been willing to accept lifestyle, like we have a lifestyle business. It’s a fabulous business that supports our lifestyle.
Paul Reda: Yeah. I mean, it’s a thing where if we… I didn’t know of it derisively at all, where I was just like, “It’s a lifestyle business.” It’s like this business is my lifestyle. I’m like, “Okay.” Waiting for the bad part.
Kurt Elster: Yeah. Right? That’s silly. But it’s derisive because the implication with lifestyle business is you can’t… It’s not high growth. You’re not gonna be worth tens of millions and you’re certainly not gonna sell your little lifestyle business, that’s cute, for $200 million or something to that effect. Let alone get a billion dollar valuation. And what Gymshark has shown us is that two regular dudes, I mean literally, this guy was a 19-year-old pizza delivery boy who started silk screening t-shirts, were able to grow, bootstrap, so they did not take investment, a business, and then after steadily stacking the bricks in that for a decade, get to… or almost a decade. Get to a billion dollar valuation when they finally did take that investment.
So, it means these things are not… These two approaches are not at all mutually exclusive.
Paul Reda: No. And even if it’s not exclusive, it’s like, “Oh no. You failed.” And I mean, it goes back to our story with Gumroad, with Sahil from Gumroad. Gumroad, he had a bunch of VC money, and he failed at building a startup, and instead, now he just owns Gumroad himself outright, moved to Salt Lake City, and makes like half a million dollars a year by himself.
Kurt Elster: Yeah. I think pretty much everybody listening could live with that business.
Paul Reda: Yeah. That’s the thing.
Kurt Elster: No stress?
Paul Reda: He’s like, “I failed because Gumroad didn’t turn into a $100 million, multi-billion dollar exit for me. All it did was I have a job that I kind of work in my own house that I live in, that is not in San Francisco, and I make half a million a year.” Like, “Oh no!”
Kurt Elster: Yeah.
Paul Reda: Oh no!
Kurt Elster: Oh no! How will he survive? Right? And so, that was kind of… For someone who chose to have a bootstrapped lifestyle business, like we’ve never had debt, we’ve never taken investment, the… and I have intentionally chosen to remain, to have a small team and keep things as simple as possible, because I am risk averse and prone to anxiety, and I don’t like anxiety, so I built the business around a system where it supports-
Paul Reda: It’s all fine.
Kurt Elster: We got a cool place. It’s all good.
Paul Reda: We own houses. We have cars. We’re not scared about paying our mortgage next month.
Kurt Elster: No!
Paul Reda: So, it’s pretty sweet.
Kurt Elster: I live comfortably and largely stress free, and that was my goal. And if that’s your goal and you’re like, “Look, that’s all I want. Simple goals with living an upper-middle class lifestyle.” Absolutely, you could do it.
Paul Reda: I mean, I think we’ve mentioned this before, but we’ve had people approach us that are like, “All right, here’s the move you gotta do now. You gotta triple your headcount, so you need to take out a giant loan and then hire 50 people.”
Kurt Elster: Right.
Paul Reda: “And then find the work to keep those 50 people employed, and then you become a big ass business that’s doing whatever revenue with your new giant headcount, and then eventually someone will want to acquire you.”
Kurt Elster: 100%. We could do that.
Paul Reda: And I’m like, “That’s the worst thing I’ve ever heard.”
Kurt Elster: If we did it, we might be successful at it, and… or we could fail miserably and blow ourselves up. Who knows? But it’s a risk-reward scenario. I have stuck to the level of risk I liked.
Paul Reda: Yeah.
Kurt Elster: And it has worked. Because we don’t have the debt, in the future that could change. I could say, “All right, let’s take the investment. Let’s build a big team. Let’s do the whole thing.” And then set it up so it’s all systems and processes and then we could sell it. You could still change your mind. Even if you’re like, “Look, I’m bootstrapped now. I’m happy now. But maybe down the road I want to change it.” You can absolutely do that, and that’s what Gymshark did, and that’s why these… Gymshark, and these two guys, and having gone deeper into the story, absolutely I respect it and it should be held up as a shining example of what you can do in eCommerce with a Shopify store. They’re on Shopify Plus.
Paul Reda: Back to Gymshark, their money for a second-
Kurt Elster: Dat cash?
Paul Reda: I just want to point out their little sneaky thing they did.
Kurt Elster: Uh oh!
Paul Reda: That he mentions in the Medium article that he wrote about this. So, for the big brands, like Nike, Adidas, and Lululemon, their gross profit margin is like 45% to 50%.
Kurt Elster: Okay.
Paul Reda: Which is like good for apparel. Gymshark is like, “Oh yeah, our profit margin is 70%, because we’re DTC geniuses and this is the magic you get with DTC.” But the little thing that they did when they’re reporting their financial information is they placed their distribution costs, which is like shipping, customer service, running the website, doing all the stuff, like doing all the stuff that would be for Nike, which is the Nike supply chain to ship everything to all the stores everywhere, they are counting that all under distribution costs, which apparently is not part of your gross profit margin normally. I don’t know about this. I’m just reading this in the article.
And so, what they do is they add all that stuff after they’ve calculated their profit, which is what you normally would do. But because they’re DTC, the way that that’s put together for them is entirely different. They need to do all that stuff in order to sell the product, because they’re direct to consumer. So, they have no distribution network. So, really that should be counted as part of the cost of the goods.
Kurt Elster: So, you think they’re misreporting cost of goods sold.
Paul Reda: They’re misreporting cost of goods sold. I don’t think that, that’s what Andrew says in his article.
Kurt Elster: Okay.
Paul Reda: That they’re misreporting costs of goods sold. Because they’re direct to consumer, they have to do a bunch of stuff that balloons their distribution costs.
Kurt Elster: Okay.
Paul Reda: And because of that, when you add all that in, their profit margins are 40% to 50%, just like all of the other companies.
Kurt Elster: I see. But still, even including that, still hugely, wildly successful.
Paul Reda: I mean, again, we’re comparing them to Nike, Adidas, and Lululemon. Billion dollar companies.
Kurt Elster: Yeah. A company started by two guys in 2012.
Paul Reda: Yeah. I’m not saying that it’s like bad. I’m just saying the unicorn has got a little limp in one of his hooves.
Kurt Elster: I understand. Well, as long as we’re on the topic of Gymshark, we should do a Gymshark teardown. Gymshark.com. We’re on Gymshark.com. You’re on the homepage on Gymshark.com?
Paul Reda: I’m on the homepage on Gymshark.org. It’s their nonprofit arm.
Kurt Elster: Oh, okay. That’s the wrong one.
Paul Reda: Oh. Okay.
Kurt Elster: Yeah. You want dot com.
Paul Reda: Dot net?
Kurt Elster: No, no. You don’t want the Gymshark network.
Paul Reda: Dot biz. I mean, here’s the thing. If you’re running a business, you should buy the .biz so people know it’s a business.
Kurt Elster: Yeah. How will they know, otherwise?
Paul Reda: I mean, it’d be stupid not to.
Kurt Elster: It’s ignoring that .com stands for commercial. There’s .store, .shop. There’s a lot of silly TLDs now.
Paul Reda: Well, yeah, because the company that makes the TLDs is the same company that sells the TLDs. It’s like your putting real estate agents could also create land.
Kurt Elster: I see. Yeah. I don’t like the… I’m a simple man. I like the classics. I just want .com, .net, .org.
Paul Reda: .edu.
Kurt Elster: .edu, of course. But I can’t just get one of those. And .gov. Right?
Paul Reda: .su, which I think they shut down.
Kurt Elster: What’s SU?
Paul Reda: That was the Soviet Union TLD.
Kurt Elster: Oh. Now it’s .ru, right?
Paul Reda: Never got used. Yeah. But I think like it was still available if you were extremely cool.
Kurt Elster: Well, that’s the only use case for the plethora of weird TLDs, was so you could try and like spell out a world, do something really cool and nerdy.
Paul Reda: Yeah. I really wanted to get Paul.re, which is Reunion Island, a small island in the Atlantic, I think, that’s a French protectorate. But in order to get a Reunion Island TLD, you have to either be a Reunion Island citizen, or a French citizen.
Kurt Elster: Yeah. A lot of the government ones, they’re like, “Look, stop screwing around with our domain names.”
Paul Reda: It’s pretty much the entire large majority of the island of Tuvalu’s economy is selling .tv TLDs.
Kurt Elster: Oh, really?
Paul Reda: Yeah.
Kurt Elster: I did not… I just assumed it was like .tv.
Paul Reda: No. It’s the country code for the island of Tuvalu.
Kurt Elster: I did not realize that.
Paul Reda: Yeah. And they were like, “We got a gold mine!”
Kurt Elster: How strange. Oh, I love learning just weird ways people make money. That one’s good. Okay. Let’s dive into Gymshark.com. We got… It is a stark, minimal website, with intentional… Even the photography follows that in that they have made the very clear intentional choice of using direct flash, which gives it this very… this harsh, contrasty look. On purpose.
Paul Reda: Who’s that photographer that did that? Terry something? He’s a real creeper.
Kurt Elster: I don’t know.
Paul Reda: All right, forget it. Here’s the thing let’s notice here. No slide show.
Kurt Elster: No slide show.
Paul Reda: It’s just… Well, there is like a weird slide show that’s headlines.
Kurt Elster: I was gonna say I like that. The navigation, and here’s the other thing, what’s the navigation?
Paul Reda: Men’s, Women’s, Accessories.
Kurt Elster: Yeah. Three links. There’s no multiple main menus. There’s no top menu. There’s not any kind of secondary menu. There’s only the main menu and it segments you into men’s, women’s, accessories. And accessories really is like your unisex. This menu exists to, when you have an audience as big and as wide as they do, this is so you can get them to self segment.
Paul Reda: Well, if you hover, it’s a mega menu, though.
Kurt Elster: Accessories is not, but I really like the little animation at the bottom.
Paul Reda: Oh yeah. That’s easy. I could do that.
Kurt Elster: You could do that?
Paul Reda: Yeah.
Kurt Elster: All right. I got a off-road project I want to do that on.
Paul Reda: All right. You’ve been talking about, everybody’s gotta know about this. You’ve been talking about this off-road project for weeks and you’re just like, “Oh! You can’t believe the shit I’m doing!” And I’m like, “I know I’m not gonna believe the shit you’re doing and it’s gonna make me… It’s gonna kill me inside because you got too fiddley with it.”
Kurt Elster: Oh yeah. I got extra fiddley.
Paul Reda: You’re like, “Oh, but it works on Photoshop.” Like, “Well, Photoshop isn’t the website, Kurt.”
Kurt Elster: The text doesn’t render right. Make the logo bigger. Yeah. They have mega menus, but their mega menus are not like crazy images. The mega menus are just three link lists each. That’s it.
Paul Reda: I would actually like a little bit more in this mega menu, or at least make it smaller. It’s too small. First of all, text, too small. Second of all, that white space in the middle, why is that there?
Kurt Elster: Yes. I agree with you. I loved the header. It spoke to like, “Wow, you really thought through this design and it’s gonna be really top shelf.” And the menu is right, the header and the menu were writing checks the mega menu can’t cash.
Paul Reda: Yeah.
Kurt Elster: So, how would we… One of the things that bothers me is of the columns, it’s three columns, the height of column one and the line heights are different.
Paul Reda: Well, yeah. Because they’re all-
Kurt Elster: Catch that?
Paul Reda: Because they’re all uppercase on the left one.
Kurt Elster: Oh, is that why? I don’t know. If we’re gonna go with something this stark, surprisingly, you really need to nail the grid, the vertical rhythm, and get really consistent padding and spacing to make the look work.
Paul Reda: You’re right. It’s all just kind of shoved in there and just let to lie how it was by default. They did no tweaking of it to make sure every row was a perfect, tabular row.
Kurt Elster: Okay, so we’re like simple, plain header good, mega menu-
Paul Reda: Sloppy.
Kurt Elster: Opportunity for improvement.
Paul Reda: Sloppy.
Kurt Elster: Yeah.
Paul Reda: Mildly sloppy.
Kurt Elster: I enjoy… I like this. They have an announcement bar on the site, like, “Free shipping. Shop with Klarna. Easy returns.” That kind of thing. And rather than just have like one big block of text, it’s a scroller. It’s flips through multiple messages. I think it’s a really clean, nice way to do it.
Paul Reda: The photographer is Terry Richardson, by the way.
Kurt Elster: Oh, that’s who you’re thinking of?
Paul Reda: Yeah. He pioneered that kind of look, I think. And it was all gross.
Kurt Elster: I just think Fiona Apple music video in the ‘90s-
Paul Reda: That’s pretty much… Yeah.
Kurt Elster: And that’s what you got.
Paul Reda: That’s very much his style. Yeah.
Kurt Elster: They immediately, right after that hero image, they go straight into featured… A collection with featured products, and it’s men’s new releases. And what I love about that is you got someone to your homepage. They scroll down. They’re now already shopping. They’re immediately shopping. That is what you want. And then if I click through, I’m gonna go straight to a product page. So, okay, once that happens, I’m in shopping mode. The switch has been flipped and it becomes much more likely that I will purchase as a new customer. And if I don’t, well, hey, you have at least… now you’ve got some remarketing fodder. You know what I looked at.
Paul Reda: The hover over these things, it swaps the image. Cool. It’s got this quick add thing, so you could see the sizes. The quick add thing is cool and it totally works. You just click. Click the size and it auto adds it to the drawer cart.
Kurt Elster: Oh, wow. Yeah. If you’re going for pure simplicity, ease of use, it’s hard to beat this. Land on the homepage, scroll down, one button, drawer court opens, your item’s in it, in the correct size.
Paul Reda: I love it. It’s very cool. It’s implemented perfectly. Would love to see heatmapping if anyone actually does it.
Kurt Elster: I would always love to see heatmapping and confirm.
Paul Reda: Because I just-
Kurt Elster: There’s how we think people use it and how they actually use it.
Paul Reda: I know. I just think it’s too soon for someone to actually buy something.
Kurt Elster: But if they’re a returning customer. Again, heatmap. Everything we say, take with a grain of salt. This is entirely speculation.
Paul Reda: Yeah.
Kurt Elster: It’s educated guesses, but-
Paul Reda: I don’t know. I mean, it’s fine. It’s not hurting you. But I would like to see if anyone actually does it or if they click through. Because you gotta see more photos. You gotta see the bigger photos.
Kurt Elster: Yeah. So, scrolling down, we got a big featured image, and then we jump… At the top was men’s new releases feature collection. It does the same thing again with women’s new releases, then another big featured image. So, it looks like we’re breaking up collections with images. And then, all right, big image after that. Featured promo sections, like shop men’s, whop women’s, so they’re really, really trying hard to get me to segment between one of these two categories. And then they finally, they got stuff like student discount, Afterpay, home workout conditioning app, and what I assume is a little SEO segment. At the bottom there’s just a big, or three-line paragraph of text. More than your best workout clothing.
And finally, as our safety net, a newsletter signup. Really simple. Sign up to our newsletter for the latest news and exclusive deals. And a very clean, nice footer that my face in the screencast is totally covering the link lists.
Paul Reda: So, I Googled it. There isn’t one currently going. That Afterpay in the footer made me think about it. First of all, what do we know about… Okay, Gymshark, billion dollar DTC unicorn darling, ultra successful, everyone should try to implement them. One, they’re not too good to offer Afterpay.
Kurt Elster: Yes.
Paul Reda: Even on a $20 t-shirt or tank top, you still can do Afterpay.
Kurt Elster: Free returns for 90 days.
Paul Reda: Free returns for 90 days. I Googled Gymshark sale. They just had a Labor Day sale of women’s 30% off.
Kurt Elster: Okay, so they did have a sale, a traditional ass sale.
Paul Reda: Traditional ass sale. They’re not too good for sales and they are not too good to offer-
Kurt Elster: And yet they’re valued at a billion dollars. How is this possible, Paul Reda? Well, let’s dive into a collection, because their collection page is pretty good.
Paul Reda: Here’s the thing. I found a blog page here. This is from June. They had a sale. The Gymshark sale 2020. Up to 50% off selected lines. All that’s left to do is explore the discounts and prepare your sportswear wish list. But remember, the Gymshark sale will only be around for 24 hours.
Kurt Elster: When you’re doing a sale, absolute… The thing is that you don’t want to always, everything’s always on sale. You don’t want to be Kohl’s, right?
Paul Reda: Yeah.
Kurt Elster: Or Macy’s, where it feels like it’s always on sale and you know, like well, if it isn’t on sale, I just gotta wait.
Paul Reda: Yeah.
Kurt Elster: Versus like Gymshark here, absolutely you want to time box those sales to create urgency.
Paul Reda: I mean, it was 24 hours. How much money did they make that 24 hours? Tens of millions of dollars.
Kurt Elster: I would hope so.
Paul Reda: Yeah.
Kurt Elster: Maybe. I don’t know. It’s an impressive brand, that’s for sure. I’m sure everything they do has dramatic ripple effects. Let’s go to… Everybody loves hoodies. Let’s for a collection go to men’s hoodies.
Paul Reda: All right. Do they have Jedi hoodies?
Kurt Elster: I don’t believe they sell Jedi robes. No.
Paul Reda: Pretty cool if they did.
Kurt Elster: If they had a Star Wars line, I would be very excited. Now we’d be talking. Now I’d be a Gymshark customer. Scrolling down, they’ve got… or in the collection, they’ve got this lovely banner image with the collection titles over the banner image, and these very clear, easy to use collection filters.
Paul Reda: I love these.
Kurt Elster: At the top. They’re not hidden. They’re easy. They work. I’m very impressed by these.
Paul Reda: I love that it’s a bar, which leaves way more room for the collection grid.
Kurt Elster: Yeah. And the way-
Paul Reda: And because the collection grid has more room, that allows the images to be bigger.
Kurt Elster: Absolutely.
Paul Reda: And anytime you can err on the side of the images being bigger is a good one.
Kurt Elster: 100%. And all right, so I’ve got… Scroll down under new. There’s new. I like their little new badge. It’s nice. Critical Hoodie. Dark green. $45.
Paul Reda: I note that they don’t sell 3XL again. I feel very abandoned here.
Kurt Elster: We’ll find you a 3XL hoodie, buddy.
Paul Reda: I don’t want a… Ugh. Sleeves. I get so hot.
Kurt Elster: All right. He’s not kidding. I appreciate that you… I’m on the product page. They use breadcrumbs. I don’t want to like breadcrumbs, but I have found consistently over and over across all categories, breadcrumbs on a product detail page get used. People use them to go back to the collection, or the homepage, wherever.
Paul Reda: So, on the collection grid… oh, okay, so this is a question we get a lot in the group. On the collection grid, the top thing here is this Crest Hoodie, and the Crest Hoodie is broken out into multiple colors, and each color has its own image associated with it. And then-
Kurt Elster: Oh yeah. You’re right.
Paul Reda: And so, if you click through, if you click through the red one, it has size, and then it has the colors, but when you click on the colors on the product page, that is a completely separate product listing. So, they’ve split out each color is its own separate product. We get a lot of questions. We get a question about that all the time in the group.
Kurt Elster: Oh yeah. Yeah. If you hover over it, you can see it’s different links. I’m sure this is like meta field madness, to make this work.
Paul Reda: There’s apps that do it.
Kurt Elster: Oh, really?
Paul Reda: I think. I think.
Kurt Elster: But at the same time, at their scale, they could build a private app to do whatever they want.
Paul Reda: Yeah.
Kurt Elster: Or I’m sure they could call Tobi and be like, “We really want this feature.” Maybe.
Paul Reda: Tobi’s like, “Get out of here. I’m playing StarCraft.”
Kurt Elster: He does play StarCraft.
Paul Reda: He plays StarCraft.
Kurt Elster: The man enjoys StarCraft. Interesting way to lay out the product photos. It is a more editorial style. Instead of thumbnails, it’s like three images across, a big image, and then two images across the bottom. We did something kind of like this on Adam’s Polishes and it worked well. I really liked it.
Paul Reda: Do you have one with a video?
Kurt Elster: The one I’m looking at does not have a video. They have a video?
Paul Reda: Oh, click the different colors.
Kurt Elster: Switch? All right. I’m looking at… I’ll switch to charcoal marl.
Paul Reda: Oh yeah. That’ll have one.
Kurt Elster: Okay. Whoa!
Paul Reda: Yeah. Sick!
Kurt Elster: Okay, so I always tell… People go, “Should I add video?” The answer, like say no more. The answer is yes. Video looks professional. It looks engaging. This, as far as video being executed, is truly phenomenal. And what’s fun about it, the video starts and ends with the guy walking into frame and out of frame. So, it’s got kind of… There’s a fun Benny Hill quality to it.
Paul Reda: How is it like Benny Hill?
Kurt Elster: That they’re messing with the frame.
Paul Reda: You just wanted to hit the button.
Kurt Elster: I didn’t even hit the button.
Paul Reda: This video is 720P, too. It’s huge.
Kurt Elster: But what about their page speed score?
Paul Reda: We’re not talking about that this week.
Kurt Elster: Oh! Sorry. No, that’s… Wow. This product page. This photo layout with the video, truly impressive. It’s really nice. Oh, at the bottom on this one, it’s got a button that says load more images. And then it flips the images to something else. Okay. If I click them… Ah, all right, so then if you click an image, it loads in this really nice lightbox, but it has all your thumbnails down the side.
So, they’ve gone with an atypical layout, which is a risk, but they have executed it so well, entirely mitigates the risk.
Paul Reda: Yeah. They got a little position sticky going on the form, as well, as you scroll down through the images.
Kurt Elster: Yeah, that’s cool.
Paul Reda: So the form’s always there. That’s nice.
Kurt Elster: That’s very.. This site’s very nice.
Paul Reda: Oh, yeah. It is.
Kurt Elster: If I click size guide, they’ve got a nice size guide. Relevant to the product. Tells me… Oh, I could choose between inches and centimeters. And even tells you how to measure. The size guide is on point. And then underneath the add to cart button, it says it’s got Afterpay and Klarna on here. Two financing options. Interesting.
Paul Reda: Interesting choice that the description one is closed.
Kurt Elster: Yeah. The description defaults to closed, so they use an accordion menu for the description, and it’s description, delivery, returns, reviews. The item is new that I’m looking at. Doesn’t have reviews. It’s got a bulleted description, which honestly, I would default it to open. And at the same time, these products are fairly self explanatory.
Paul Reda: Well, these products are pretty much like, “Do you think this looks cool? Yes, no?” And so, the images are the things that sells it.
Kurt Elster: Yeah. I don’t need to be like, “Okay, but how many arms does the sweatshirt have?”
Paul Reda: Yeah.
Kurt Elster: Right? It’s a sweatshirt.
Paul Reda: I think the font is too small, too. Because I’m old.
Kurt Elster: I’m old!
Paul Reda: I need my cheaters.
Kurt Elster: Yeah. It’s 12-point font. It’s tiny. I would… Like if I still want to keep that small look, I’d bump it to 14. But my ideal minimum for font size is 16.
Paul Reda: But let’s go back to the debate, so there’s always a debate in the group about whether you should split out variants by color and make every color its own product. I don’t like that. But-
Kurt Elster: Neither do I. I want it all in one page.
Paul Reda: Gymshark’s doing it.
Kurt Elster: Well, yeah, but they also have a hybrid approach.
Paul Reda: Yeah, that’s true.
Kurt Elster: Where I can pick the photos, like I can choose the other colors from any of the product listings. That’s the difference.
Paul Reda: That’s true.
Kurt Elster: And that’s why we say like well, bundle them together, because you’ve got one listing to promote and I could flip through the colors all on one page.
Paul Reda: Yeah. And so, they did that in that they do have them as all separate products, but the swatches, they still have color swatches on every product page that will lead you to that product.
Kurt Elster: Yeah. And then by doing that, then they also… You can see all of them at a glance in the collection grid. So, they have combined and solved for this problem entirely. It’s very clever. All right, so I’m going with an XL. I’ve selected it. Click add to cart. And it’s got cute little animation to confirm it, and then it opens a drawer cart. The animation is nice, but you could skip it and just have it open the drawer cart. Once I’m in the drawer cart, very minimal, nothing to it, so there’s some opportunity there. Maybe you could add a lock icon to the checkout. PayPal did a case study, supposedly that increases conversions.
I would say they’ve got this free, no-hassle 90-day return policy. That’s a big deal and that’s one line of text. I would have that in the cart drawer.
Paul Reda: Yeah. They can get some upsells in there, too. Like buying a hoodie?
Kurt Elster: All right, I’m gonna click checkout.
Paul Reda: Buy the t-shirt.
Kurt Elster: You’re right. There has been no cross sell, no upsell. Oh my gosh, by the time you get to the checkout, it’s been styled. It is a custom styled Shopify checkout. Very, very rare.
Paul Reda: How did they get these buttons, these things up here that are like, “Information, shipping, payment.” That’s not the standard Shopify checkout.
Kurt Elster: That’s why I wanted you to see this.
Paul Reda: Yeah.
Kurt Elster: Well, they’re on Plus. It’s a custom checkout. But yeah, they have changed, they have custom steps stuck up here. That’s very cool.
Paul Reda: That’s cool. And then this COVID question, that’s great. We’re still shipping. It’ll be contactless delivery.
Kurt Elster: Please keep an eye on our COVID-19 FAQ page, which they smartly did not link to.
Paul Reda: Oh, come on, guys.
Kurt Elster: No. This is a squeeze page.
Paul Reda: Oh, they don’t want to lead them up. Yeah, you don’t want to lead them out of the checkout.
Kurt Elster: I got them to the checkout, I don’t want them to leave to go read an FAQ about COVID-19.
Paul Reda: Target blank, man.
Kurt Elster: Yeah. You could do that. No, this is really good. All right. I’m going to put in… Gonna put my info in. I want to see what the shipping options look like. Matt, you gotta cut that out.
Paul Reda: He lives in Lake County. I’m not gonna tell you what state the Lake County is in.
Kurt Elster: As in like Springfield?
Paul Reda: There’s a ton of Lake Counties.
Kurt Elster: So then, once we get into shipping method, it just says standard delivery, four to seven working days, five bucks. Express delivery, one to three working days, 15 bucks. You would not believe the amount of overcomplicating people do with their shipping when it should just be like, “Give me the standard option and the faster option and that’s it.” And the standard option should ideally be free, probably with a threshold. For them, it’s 75 bucks. We’re below it.
Paul Reda: Yeah. It’s like do you want free but slow, or fast but expensive?
Kurt Elster: Yeah. No, this is good. I was talking to a merchant this week who does not have a billion dollar valuation and had shipping rules so complicated it required a six-page flowchart. And my advice was like, “This is insane. Wildly simplify this for your sake and the customers.” And well, clearly Gymshark did.
All right, so my point is like don’t give people choice paralysis. Don’t tear your hair out with shipping. Simplify it if you can and Gymshark has done a wonderful example of it here. Overall, this site, really… With the exception of the mega menu could be polished up, with that one exception, the rest of this site is quite extraordinary.
Paul Reda: Yeah. No, it’s an extremely good site. Grade A. It was clearly made for young, thin, cool people, and I am an old, fat, loser, so this was not meant for me. I just want to make the font bigger. I can’t read it.
Kurt Elster: It’s too small! I don’t know. I think big fonts help. And certainly, glasses and poor vision happens to people of all ages, Paul Reda. Except for me. I have 20-20 vision.
Paul Reda: Yeah. I was in grade school, I started to go blind.
Kurt Elster: You gotta get that LASIK. Oh, it’s sweet.
Paul Reda: I have an extreme eye thing, like I can’t even see-
Kurt Elster: What? You don’t want someone to take a diamond knife to your cornea?
Paul Reda: I can’t even see eye things happening on TV. It makes me very uncomfortable.
Kurt Elster: And they use a laser to bake it.
Paul Reda: Yeah. I know. I know. You said that they give you like an Ativan or whatever, and I’m just gonna need like a Haldol. I’m just like…
Kurt Elster: When you walk in the door they shoot you with a tranq dart?
Paul Reda: Yeah. I need a tranq dart. Just put me under general and tape my eyelids open, and then just do it.
Kurt Elster: It’s literally a 90-second procedure.
Paul Reda: You don’t even understand. When I go to the doctor and they make me put my head in the machine thing where they’re like, “Number one, number two.” You’ve never gone to the eye doctor. You don’t know. But for everyone else out there, I am like… My eyes are like watering. I’m crying.
Kurt Elster: Okay, so maybe not the best candidate for LASIK. My wife had it done and she was like, “It’s no big deal.”
Paul Reda: I’m sure Julie is not lying.
Kurt Elster: All right. That’s the end of this episode. We’ve got some phenomenal episodes coming up, so you haven’t yet subscribed, please do. And absolutely, oh my God, please join our Facebook group. You can ask us questions or give us unwanted feedback. Whatever your heart desires. Search Unofficial Shopify Podcast Insiders on Facebook and join our group. We would love to have you. And until next time, I hope that your sales revenue goes up and to the right.