Interview of Pierre-Henri Tataranno, founder of Starbagg and Ecommerce-live.net.
Karine Bernasse, Store Commander: Hi Pierre-Henri. You lived a great e-commerce adventure which ended up with the sale of your e-store Starbagg to Sarenza back in 2008. Can you please tell us how it all started?
Pierre-Henri Tataranno, E-commerce Live : I started off back in 2004 at home with a PC and 2000 euros to buy handbags which I sourced in the well-known Parisian textile area called the Sentier. Business was simple: I was buying cheap handbags, I took photos and I then sold them onto my e-store with a commercial margin applied on top. Bit by bit, I managed to build a mid-range portfolio of handbags.
At that time the most important decision was the choice of my technical platform for my would-be online shopping cart.
The choice is wide in terms of open source e-cart (Prestashop, Magento, Thelia, RBS Change, etc), Saas (Oxatis, Powerboutique…), performance-related shopping cart solutions (Wizishop) or even bespoke shopping solutions developped by web agencies. I picked a SaaS solution, which allowed me to concentrate on my core business. At the time Prestashop was not yet born...
When I reached 10 parcels per day, I decided to outsource my logistics to Crosslog, as it became too much to manage single-handedly.
I finally left home to rent offices. I also outsourced my logistics to another service company and hired a small team: a buyer, a logistics manager, a webmaster and a freelance photographer.
When my turnover reached a level which I deemed satisfactory, I started considering selling my business.
KB: What are the main hurdles you stumbled across during the course of your e-commerce adventure?
PHT : Financing my stock proved more and more difficult. Suppliers demand payment within 2 months, whereas my turnover did not keep up with that pace for a number of reasons:
The second difficulty was to constantly increase traffic and sales, whilst maintaining sufficient margins. In the e-commerce business, profitability is largely dependent on your ability to balance marketing spendings and get your emailing base loyal.
Identifying business development opportunities with a real impact to acquire trafic on my website was another challenge. For example, I built partnerships with women's contents editors ; however, it is very difficult to obtain clear metrics and get to know your real ROI on such actions.
KB: In terms de business developement, what sort of initiatives were working well for you, bearing in mind that what worked for your specific business may not work for another since each e-merchant must identify its own winning recipes.
PHT : My marketing mix was a fairly classic mix of SEO, emailing campaigns and above all development of successful partnerships with companies having similar synergies. I was lucky enough to find trafic and prospective customers acquisition opportunities that proved very fruitful.
If I was to order what worked best:
KB : Could you tell us what kind of partnership you were actively looking for?
PHT : very varied from a simple exchange of targeted link, to piggyback mailing, white label, quizzes or even exchanging emailing lists with websites having affinities with mine.
These various partnerships increased my overall visibility a great deal, generated little direct sales but thousands of emails collected.
KB : for our readers, piggyback mailing consists in inserting a document or a commercial offer into a delivery parcel which is coming from a third party company. You often find these in my private selling companies for instance. As regards database exchange, you are referring to symetrical routing I guess whereby you are routing the email design of a partner to your own database and vice versa?
PHT : Yes that's right. No physical exchanges of databases of course.
KB : Is there a more specific partnership that was decisive?
PHT : Yes, I wasn lucky enough to be the price donator for a large-scale campaign organized by French Railway company Voyages-SNCF. Starbagg donated 5000€ worth of bags for their marketing quizz operation, which provided tremendous visibility for my business of course since the quizz ran on Voyages-SNCF's huge database.
Stricking partnerships allowed me to go from 0 to over 100 000 opt-in email addresses in 4 years.
KB : You decided to sell Starbagg at a time when the company was doing very well. How did this happen?
PHT : in fact starting my own company has always been with the aim of reselling when the turnover would be good enough. In 2004, my turnover was about 800 000 euros. I then decided to approach a couple of competitors to make a purchasing proposal. I was the initiating party. Both of them were interested and I chose Sarenza for a very simple reason: they offered to hire back all of my employees.
KB : What practical advice would you give today to would-be e-merchant?
PHT : Advertising is very important nowdays to give your e-store some credit. On average you need to count on a 20/30 spending of your turnover. I started being obsessed with the ROI of my campaigns. My first piece of advice would be to spend in advertising only when it brings you some ROI including a sharp analysis of key words that work well and disregarding those that do not.
Secondly, I would say that you really need to learn how to run your business with performance indicators. They don't need to be complicated at the beginning ; an Excel sheet can do the job. However, the higher your turnover gets, the more important it becomes to turn to professional solutions for your commercial management, acccounting, etc to save time and be more efficient.
To conclude I would say that e-stores that succeed nowadays are those who are not dependent on advertising, either thanks to loyalty schemes or innovative marketing.
KB : Starbagg has been sold for a few years now but we shall save this for a future interview on themed "How to sell your e-commerce business successfully?"