An E-Commerce Story: The Evolution of Category Five


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Founding a company creates tremendous learning and growth opportunities for those involved. Jason Shuman, a VC at Corigin Ventures, looks back on his experience co-founding Category Five, a casual men’s footwear brand. Enter Jason:

When I was asked to write about the sales process at Category Five and how sales evolved as the business grew, I thought back to 2012. I couldn’t believe how drastically the company changed in its approach to sales. I’ve crafted this post to share the story of Category Five, the pivots we made, why we made them, and what we learned along the way.

The Early Days: Senior Year of College

As a quick overview, I launched Category Five with my four best friends in July 2012. It had taken us nearly two years to develop the business. In the beginning stage, our aim was to create the most comfortable and durable men’s boat shoe on the market. Instead of launching and battling with the big players in the space like Sperry and Sebago, we focused on empowering our customers to display their personality or affiliation through a custom embossing/heat stamp on the shoe.

Prior to the launch of the company, my team and I spent an entire month recruiting campus reps across the country. That meant we spent 12-plus hour days locating the contact information for nearly every fraternity president at the top 100 colleges. This process, which included emailing each president individually and telling them to forward the email to their respective chapter, was meant to drive brand awareness and draw in applications.

In a matter of weeks, we generated over 500 campus rep applications, hired 120 campus reps, and were ready for launch.

We quickly learned two things from our sales and conversations with the reps:

  1. College students are better at collecting data for your company (e.g. email addresses) than generating sales
  2. We were onto something as sales were strong

During our “MVP” stage, orders took 4-6 weeks to receive — we would send the bulk orders to our Chinese manufacturer to make the shoes on demand and stamp before sending them to the States. However, we learned from customer service data that this needed to change.

We then decided to move our manufacturing to the Dominican Republic. With our raw materials on a boat to the DR and a new manufacturer that refused to stamp the shoes at the factory and send them on demand, we invented a way to emboss the shoes in the United States post-production.

Truth be told, this was a turning point in our business; this meant that we would now be carrying inventory and could turn e-commerce orders around the next day.

Entering Retail: Spring 2013

After we made the manufacturing change and graduated from college in the Spring, we realized that by shipping shoes the next day we were able to shorten the feedback loop from customers, which could drastically improve the customer experience and increase word-of-mouth marketing.

Before graduation, we had reached out to the founders and CEOs of complementary brands. We spoke to Jim Twining at Southern Tide, Peter and Austin at Smathers & Branson and Matt and Andrew at Castaway. Those conversations helped us realize that the specialty retail market/independent stores needed a new casual men’s footwear brand.

Similar to how I imagine Vineyard Vines was able to find a home, we found that independent stores didn’t like how large brands like Sperry had a presence at Nordstrom and T.J. Maxx. In other words, these retailers needed a new brand to help them differentiate, and we felt this brand could be Category Five. Times were about to change.

How to Wholesale: The Tricks of The Trade

Retail is a completely different beast from e-commerce, so it was an adjustment for us to learn. We had to figure out things like what a line sheet was and what tradeshows we needed to participate in. Here are a few pieces of advice to accelerate your own understanding:

Reach Out To Other Founders In Your Space—Chances are that they won’t only give you advice, but they’ll also introduce you to retail partners and perhaps even save you time by providing you with forms that you’d otherwise have to create (e.g. a credit card authorization form).

A Warm Intro Is Key—Identify the retail partners you want to work with and find an introduction. Whether it’s from the 10–20 founders that ym nnou hopefully spoke with, or a friend who lives in the same town as the store, find any intro that you can. One strategy that we may or may not have used was reaching out to retail partners of the Founders that we spoke to and mentioned that they “recommended” that we reach out and meet at the tradeshows.

Road Trip! — Prior to attending any tradeshows we drove up and down the East Coast to meet with the retailers face-to-face. This showed that we not only cared about our relationship, but we also cared about if the store was a good fit and how we would want to be merchandised there. This may not be the most time efficient method, but it’s something that I think every Founder should experience.

Retail Requires Resources— Similar to an e-commerce strategy, retail requires a lot of time, effort and resources. Founders need to think strategically how they’re going to structure their team on the retail side to handle all necessary functions. These tasks include creating line sheets and catalogs, managing accounts, setting up tradeshow sales meetings, designing a point of purchase display, implementing an SKU system and finally, designing a booth. These functions of the wholesale channel require time and attention and must be planned out.

Tradeshows — Tradeshows are going to help you scale. Identify which tradeshows your target clients will be at and then sign up for them. They’re not cheap, so make sure you put sufficient effort into the design of the booth and setting up meetings ahead of time.


The Changes in Sales and Marketing: An Inflection Point

As our wholesale channel grew to nearly 60 stores, we aimed to add independent sales reps to the team. I managed that side of the business and had high hopes for the reps, but soon found that unless you were in the “A” or “B” bag, then these people wouldn’t produce.

Essentially, the “A” and “B” bags are the ones that the sales rep shows first and second. These bags carry the products that he or she believes will provide them with the most income (sales revenue X commission %). When you hire independent reps, make sure you understand where your product will sit with the lines they carry. This is critical.

With sales reps struggling, and independent stores not moving large volumes, we were lucky to stumble upon our best channel yet… e-commerce.

Jeff and Billy, who manage the site, helped it get a lot of traction. We started with a content marketing and customer service focus, and then tested other customer acquisition methods. It turned out that Facebook Ads worked pretty damn well for us and increased our revenue drastically.

With a product that strongly resonated with affinity groups we began testing the following (in large part thanks to an awesome meeting with Andrew Krebs-Smith and his team at Social Fulcrum):

  • Affinity groups (e.g. fraternities, golfers, boat owners, etc)
  • Images
  • Copy

We quickly found that we could hyper-target various audiences and keep our costs of acquiring a customer low. Even with a CPA in the $8–25 range, we were making more profit than wholesale and had the ability to allocate fewer resources to it. At the end of the day, this is what truly pivoted our strategy and took our company in a different direction. A strategy driven by e-commerce.

What I Wish I Considered

In any startup you have a learning curve, but that’s part of the fun. To reduce that curve you should aim to surround yourself with talented and experienced individuals that are as driven as you. But more specific to Category Five, I wish I had considered the following:

Brand is much more than a logo — While I knew that a brand required much more thought and attention than just creating a logo, I didn’t truly think about the impact of a strong aspirational brand. From the tone of voice to the content you push out, tailor every minor detail to your brand. Moreover, focus on your “Why” and come up with a differentiated brand that people can get behind. If you’re able to create a community around your brand than you will grow without even having to pay for advertising. Your customers will be your advertisers. Word of Mouth is Key to Success.

Strength of Value Proposition — Take a step back for a second and evaluate your value proposition. Think about how your product and brand truly sit in the competitive landscape and try to figure out if it is differentiated enough (pending awesome execution, of course). At Category Five we understood that creating a more comfortable and durable shoe than Sperry was a tough sell, so we initially introduced customization. However, that was never going to create a $100 million dollar company. As a result, we started to really hone in on and tweak what our value proposition was. We started working on a proprietary foot bed that would blow other brands out of the water — the goal was to make each style of shoe feel the same from one to the next (e.g. a boat shoe, wingtip, moc, etc). It was a foot bed that felt like tempurpedic out of the box, but a Nike shoe when took a long walk. Our belief was that the combination of the product features, our direct-to- consumer pricing and a stronger brand experience could help differentiate us from the competition.

Growing Sales Requires Focus —  etween being a VC and starting Category Five I’ve seen A LOT of consumer companies. The ones that have experienced exponential growth have all done an incredible job of focusing on one sales channel at a time. And owning it. They’ve mastered the sales channel that they either started with or pivoted to, and have worked tirelessly to build a passionate community around the brand.

The Customer Experience. Details, Details, Details  —  The customer experience will make or break you in the social media age. VCs look at Net Promoter Score as an indicator of how much people love your brand and are willing to recommend it to someone. It’s hard to have a high NPS without an incredible customer experience and that requires a lot of attention. Some of these details include how the box looks and feels, what’s inside the packing, how fast the customer received the order, transparency of the shipping and return process, how the customer service person spoke to me, how easy it was to checkout and much more. I recommend you make an ongoing list of things that will make the customer experience better and implement these things right away.

Some Good ‘Ol Resources

Hands down, speaking to other Founders is the most useful resource in my opinion. However, reading is a great getaway from your day to day and it’ll also help you with your business.

Some of my go-to resources for learning about sales, new tools, or methodologies include StartupStash.com, Tech Blogs (TechCrunch, Re/Code, Entrepreneur and Business Insider) and blogs or podcasts including View from the Seed, Mattermark Daily and The First Round Review. While you could probably spend all day reading, I would really try to focus on what you’d like to learn about and then find articles on those topics.

In Closing

The fact is that starting a company and selling a consumer product is one of the hardest things in the world. Your plans will change over time and you’ll experience plenty of ups and downs along the way. Keep fighting through them and be resourceful. Focus on your brand and your product first. Distribution will come next. If you nail the first two, the latter should come naturally.




Reprinted by permission.

Image Credit: CC by Stan Kemp

About the author: OS Fashion

Open Source Fashion is a community of helpful innovators working within fashion, retail, and technology. We focus on providing valuable business education and uncovering collaborative opportunities for our peers.

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