The story of Nelly.com: Ecommerce insights from Jarno Vanhatapio
This spring, I attended a workshop hosted by a very inspiring person: Jarno Vanhatapio, founder of Nelly.com, the largest online fashion retailer in the Nordics. This is his story:
Back in 2003, Jarno Vanhatapio was getting tired of his job as a construction worker in Norway. For three years, he had dreamed of putting up his own business. He had some experience as an organizer of school discos and knew basic html programming, but other than that, he had no experience of importing, e-commerce or business (and he was not that interested in fashion, either).
Jarno thought long about his options, and finally decided to start selling underwear through a web site, which he dubbed Nelly.com. The rationale was simple: a small underwear parcel would fit in the mailbox, making delivery easier. He found cheap underwear suppliers in China, and started running the business from his small studio, which was soon crammed up with cardboard boxes containing bikinis and boxers.
When Christmas was approaching, Jarno saw his sales starting to grow exponentially. After that, it never really stopped. Running the business was a constant struggle to keep up to demand, to have enough products in stock and to convince suppliers that they would eventually get paid.
After three years, the company had a turnover of around 20 million Swedish krona (approx. 2.5 million EUR) and had become the largest online underwear retailer in the Nordics. The difficulties with the supply chain were however putting a big burden on Jarno’s nerves, and when the large Swedish media group MTG made an offer to buy 90% the company, Jarno couldn’t refuse.
After securing the supply chain and getting new financial backing, Nelly.com could start expanding its business even more. Today, Nelly.com has 11 million monthly page views, 850 different clothes brands and a yearly turnover of 816 million SEK (approx. 100 million EUR).
The story shows how new, emerging technologies have made it possible to succeed for anyone with a fairly good idea, and more importantly, the will to implement it.
Here are some of the observations on e-commerce Jarno Vanhatapio wanted to share with his listeners:
- Co-creation is great. Modern technology and social networking makes it a cheap and efficient marketing tool. For example, you can put up a design on your Facebook page, and simply ask people if it should be produced or not. It is also easy to let people submit their own designs.
- The business is going to consolidate. Only a few big actors will be able to serve the variety-seeking mass markets, having both the logistical capabilities to handle high inventory turnover, and the analytical expertise to make the most out of big data.
- Payment and ordering processes are getting easier. You won’t be asked to type in your credit card details over and over again. Also, companies will be able to evaluate whether you are creditworthy or not.
- Classical advertising is slowly dying. As of today, 25% of Nelly’s traffic comes from fashion bloggers/affiliates. An advice he gives to fashion retailers in particular to have at least 50% of your marketing and sales department working with social media.