By the year 2018, the global beauty industry is set to clock revenues worth USD 461 billion, so its no surprise that the leading internet platform outside the US and China has decided to add one more venture to this space.
After successfully building beauty and lifestyle companies such as Glossybox and Dafiti, Rocket Internet has incubated an idea from the mind of Maxime Legardez, an idea that intends to bring convenience to the customer journey of finding and booking beauty & wellness experiences. Customers of Vaniday can discover new services and salons, book appointments and get inspired.
In less than one year, Vaniday operates in six markets, so we sought to learn the go-to-market strategy of the founders, starting with Daniel Khachab, the interim CEO in Australia.
Upon being recruited as the lead for the Australian market, what goals and targets were you assigned and what did you set out to accomplish in the first 100 days?
I am Director of Global Venture Development at Rocket Internet, Vaniday’ s incubator and one of its main investors. In this role I am building Rocket Internet's ventures from scratch and managing their expansion. My most recent project was to build Vaniday in Australia as interim CEO.
When arriving to build a new company, or tackling a new market for an existing company (as was the case for Vaniday), the most urgent task is to develop a vision of what this company should be in the next 5-7 years. Then it is of utmost importance to hire a team that can build the way to reach the vision. Therefore the first and major goal is to assemble a super-star team, where skills and mind set fit the company's vision. The first recruits will have elementary influence on the company's long-term success.
Secondly, there are number driven targets. As Vaniday is a market place, there is a protocol on how to make marketplaces work in the first place.
• Build a strong inventory: The first task is to build a relevant inventory (in our case beauty & wellness salons). This is important for 2 major reasons,
a) the inventory has to reflect what the customer wants. A wide but bad inventory will never attract customers.
b) We face a significant investment from our side when acquiring inventory. The factors quality, location and price will determine whether this investment pays off. Therefore we have quantitative as well as qualitative targets when it comes to inventory.
• Bring the supply online: The product (=website) has to be ready to adequately present the inventory and to provide a smooth and easy customer experience. Mobile plays a significant role in our market, too. KPIs such as ‘onsite conversion rate’, ‘click through rate’, and similar are the numbers which we are optimising for.
• Get demand: As soon as a relevant supply is built, demand has to be generated by kick-starting marketing. General best practices are to spend an initial investment in each marketing channel (online & offline marketing channels), measure results quantitatively until a significant sample size is reached, and then rigorously scale efficient/working channels and cut less efficient channels. We have time targets until each channel has to be adequately tested, monthly growth targets in terms of bookings and also cohort retention targets.
Thirdly, the company has to be set to a grow sustainably over the long-term. There are 2 major factors:
** Internal processes have to be highly scalable, to support aggressive growth and foster economies of scale;
** Team work and company culture have to be initiated and facilitated in order to retain talent and build a ‘constantly learning and improving’ company.
What challenges did you encounter in fulfilling these goals and what advice did the global knowledge network providing in finding a way around those challenges?
The main challenge is hiring a great team from the beginning. Especially when starting from scratch, it is of highest resort to make good hiring decisions; not only to acquire the skills needed to build a certain company but also hire fitting personalities that will work well together. The global network is very beneficial here as it gives access to a great talent pool.
Having a scalable product that works well together with operational processes is a major challenge. This is where the global network was elemental. A dedicated central IT team has the great advantage, in that it can spread best practices very quickly across different markets.
The global network is the main source of our marketing expertise which is extremely helpful during phases of heavy testing, and gives a clear road-map on how to achieve high growth.
When you were assigned the market and business model, what were the assumptions you started out with; which assumptions were right on the mark and which were way off?
We knew that:
a) Australia is a very developed country with a high GDP per capita
b) The majority of the population lives close to the beach and…
c) …spends a considerable amount of time on personal fitness.
These 3 facts led to the hypothesis that beauty & wellness are playing a big role in the average Australian's lifetsyle, which would drive the demand for us.
Our second hypothesis is based on the fact that most tech-companies pursue Australia as one of their last markets on their expansion plans.
We therefore assumed that:
1) Salons will be happy to enjoy Vaniday’ s innovative services
2) Competition will be small
3) We would need to educate potential salons a lot as they are not used to such a concept.
We were lucky that both hypotheses hit the right spot, which gave us an extremely good start.
However, we missed our targets at some other areas: The average basket is way higher than expected, social media is more important than in other countries to drive demand, men play a more significant role in our customer group than in other countries, and mostly: the Australian market is very sensitive when it comes to brand. Salons wouldn’t want to be displayed on the same portal than others, for a range of reasons connected to brand dilution. We learned quickly and found our way around that (see for example the "luxury" section on Vaniday Australia)
As you're part of a network of global CEO's and have access to updates on what the other founders are doing, what are the key differences in how you have approached team management, vendor/supplier acquisition, deal structuring, negotiations etc. in your market?
For us as a team in Australia I can say that no one is has a job here, we are all building a company together, we are laying the corner stones to a future empire. This is what we wake up for in the mornings. We love what we do, there is no such thing as ‘work life balance’, as our work is part of our life. When managing a team, it is of utmost important for me to foster team effort, transparency, extremely hard work, and a highly rewarding culture. Embracing risk taking, end-to-end ownership of projects and a non-existent artificial hierarchy are essential to my management style.
When it comes to supplier acquisition we went strictly the ‘no-sales’ approach. No sales people, no sales materials, no cold contacting. No sales-only partnerships. We came on recommendation as friends looking for partnerships, not for clients. This turned out to be fundamental to the enormous supply growth we had. It takes effort to get the ball rolling, but once achieved the momentum can be outstanding due to the much tighter relations between us and the vendors. It’s a network effect.
We went from the very beginning to collaborate with non-competing business in the industry. This gave us direct contact to top suppliers and also a lot of credibility. In those partnerships it was always essential for me to find synergies, I love to build strong relations that are beneficial for both parties, which is essential to a long-term collaboration.