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“We don’t pay ourselves salaries, so we’re self-supporting ourselves for a year or two years – however long it will take to become successful.”
The team had put every spare dollar into the bank for four years because Mike and Michael knew, even when they joined Google, that they would start a business. They still do consulting work for The Campaign Palace.
“We see this as a longer-term play. At the moment we’re not selling a huge amount of shoes. We’re selling above where we forecast we would be but we see it as a business that will mature in a year or two years.”
He is reticent about being too candid about profit margins because he doesn’t want competitors to enter the market for one-off designed custom shoes. He says the margins are “fairly good” but notes that Shoes of Prey has higher production costs than ordinary manufacturers.
“I’m more than happy for you to write that the production costs are generally 40 to 50 percent higher than [they] would otherwise be because it takes more time.”
And shoes that need to be returned because they are the wrong size are replaced free of charge.
“Usually, 85 to 90 percent of the time we get it right. The 10 percent of people we’ll get it wrong, but we only get it wrong for them once in their lifetime.”
For a traditional manufacturer, it’s easy to get margins of 100 percent or more because all the leather is cut out at once for, say, 20 pairs before the shoes are put together.
“Ours are actually smaller margins than that of a traditional retailer but I guess where the exciting part of the business comes in, is we address so many different niches that are currently underserved.”
People with small feet would normally have to go to a children’s store to buy small shoes. People with large feet, brides and bridesmaids, female impersonators, and transvestites are also lucrative niche markets for Shoes of Prey.
Innovations are arriving regularly. The shoe box, for example, has been spruced up. The original tatty cardboard container has been replaced with an elegant matte-black box with a sliding drawer lined with red-velvet-covered padding. Shoes of Prey includes a photograph that can be pasted on the box so customers can see at a glance which shoes are in which box.
“I think it’s a great activity for bridesmaids and brides to do together. They could have a night where they go around with the computer and drink champagne or whatever and they’re designing the shoes,” enthuses Mike.
Adjusting consumer behaviour remains a problem. Instead of going out on a Saturday to buy shoes that are needed immediately, they want people to approach buying shoes differently. Delivery takes four to six weeks with Shoes of Prey.
“For us, word-of-mouth is so important. We’re only starting to see the benefits now of serving the customers well and then they’re telling their friends, and they’re coming back for repeat orders and things like that. It’s just a very, very slow process.”
The guys have learnt a lot about shoes in the last nine months, so I wonder aloud if there are any benefits to knowing a lot about a subject so dear to the hearts of the fair sex.
“My girlfriend’s into football,” says Mike. “She doesn’t care for shoes much.”
Matthew da Silva writes feature stories to fulfil a dream after working in communications and technical writing roles for two decades. He grew up in Sydney, lived in Japan for nine years and now lives on the Sunshine Coast, in Queensland. He blogs daily at Happy Antipodean.
Start-ups to enter 2012 Telstra Australian Business Awards
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