SMART COMPANY : Torpedo 7 – Well-geared For Success

In an environment that has curbed consumer spending and left many retailers reeling, Hamilton-based sports equipment specialist Torpedo 7 is still gearing for growth that over the past few years has hit annual rates of up to 600 percent.
While it made the 2009 Deloitte Fast 50 list (for the fourth time running) with more modest 225 percent growth, the company has evidently hit on recipe for sales success that harder economic times have scarcely dented. And it’s already duplicating this via another online venture.
So what is the recipe for successful online retailing?
Total focus, according to company founder Luke Howard-Willis.
“I think the best thing for us is that we’re totally focused online as opposed to lot of people who have retail store and think they need to do online as well. Online is all we do – we don’t have to support anything else and it enables us to cover the whole country from one location.”
It’s been just five years since the commerce graduate and keen mountain biker set up the company to fill what he saw as frustrating gap in the market for well-priced bike gear. The choices back in 2003 were either to buy online overseas or wear the mark-up charged by local bike shops.
While the business initially focused on this specialised niche, it’s now extended into other sporting gear, has built solid sales base in Australia and launched new website, 1-day, whose limited special deal premise is already hitting the hot spot with impulse buyers on both sides of the Tasman.
“Once we’d got comfortable with the biking side of things and were doing pretty well, we moved into snow and into motocross and when that built up the database we decided to do 1-day which has its own separate database. We’ve been able to grow quite strong database so we can grow other businesses and other product lines out of that,” says Howard-Willis.
The company now employs around 90 staff and the only bricks and mortar involved are two bulging warehouses in Hamilton and Melbourne. Website technology is obviously crucial and is continually evolving aspect of the business. It’s now onto its third generation – and this latest iteration, says Howard-Willis, has largely been built in-house.
“We’re always experiencing growth of traffic flow through and having the servers to cope is an ongoing issue. We fix one problem and the bottleneck moves to another, so there are quite specific technology issues – and because we are leading the industry, there aren’t too many people we can learn from. It means that there is fair bit of experimenting, trial and error, just to get that whole side working well for us.”
Much of the initial investment for the company went into professionally-
built website and stock management system geared for growth. There is also constant monitoring of how the site is being used, how customers find it and what key words are used for searching.
That’s because behind the high-tech sales delivery system lies an old retail maxim: customers are king. Providing the best customer service is at the heart of the enterprise – and that means not just peddling top quality at great prices but making the whole process positive experience. The site has to be easy to navigate and use; the products have to be available when wanted and delivered, where practicable, within 24 hours.
“The challenge we have dealing with New Zealand and Australia is that we have quite large markets covering the whole country. So it’s about getting our systems streamlined enough to get through flood of orders and try to work it so people get their orders the next day.
“Other mail order services take week or two to get goods through and people lose faith and trust so we’ve always tried to keep our deliveries as fast as possible to really give people the convenience of buying online.”
Establishing good partnerships with reliable courier services is part of the process and Howard-Willis says the company went through few before it found the right ones – both here and in Australia.
“It’s been quite challenging to find the right one with the right track-and-trace technology so customers can know exactly where their order is.”
Maintaining the right levels of stock for each product is also something of an evolving art. Pre-Christmas, the 6000 square metre warehouse in Hamilton was bursting at the seams, Howard-Willis says.
“We just have to plan what we think we can do. I’m quite happy if we plan and sell out of product in shorter timeframe – though you think we could have done this much more. It’s always challenge and it can be hard to get wholesalers on-board to sell product in the quantity we need. Bringing stuff in from overseas also has its issues in terms of timing and funding required.”
Unlike many bricks and mortar stores where the emphasis is on not getting too much capital tied up in stock, the online model needs to be stock rich to get the high volumes of sales, he notes. And buying in bulk helps keep down the costs for customers.
Perhaps the best evidence that the company has its customer service side sussed is its growth – because that has been largely dependent on word-of-mouth marketing.
“We don’t do lot of traditional marketing so we rely heavily on word-of-mouth. We push that through using the database to talk to friends. But mostly it’s about what we can achieve on price. We make sure we have the best price around so people talk to their friends about that – creating value for the customers has really worked for us.”
The nature of the market niche has helped.
“It’s quite clubby. Pretty much when you go riding, you’re doing it with group of people so if you’ve just got good deal on tyres, say, you tend to tell your mates in that group who then maybe ride with another group and the word spreads around pretty quickly.”
It’s also growing niche with events like the recent Great Victoria Bike Ride in Australia easily attracting 5000 riders. And although the Australian market is bigger one, the company will stay headquartered in New Zealand for the foreseeable future, says Howard-Willis.
“It’s more expensive to run business across the Tasman and because we’ve developed good relationship with NZ Post, we can shift stuff from here to Australia at very good rates and in very good times.”
Neither are there any plans to expand the business further afield.
“At this stage we’re keen to expand into different online ventures, but we’ll keep concentrating our efforts in these two markets.”