What do you do when local supermarkets are squeezing the life out of your family business? One option is to refocus on an area where these giants can't compete. This happened to Tim and Kevin Slatter and their team who fought back with an ecommerce business called The Cake Store selling imaginatively decorated, mouth-watering celebration cakes together with creations for corporate events.
In early 2001 Tim was co-running a struggling bakery business with a 70 year history and four shops in south London, but local superstores were undercutting his bread prices. It was the inspirational designs of one of our cake decorators, Steven Howard, which helped put us on our journey into specialising in celebration cakes. Steve is now a shareholding director still making spectacular cakes. My brother Kevin runs the overall business in London and I work from Scotland running our website www.thecakestore.com which we launched in October 2001, he says.
The web works best
Now the high street side of the business has slipped into insignificance: We closed our three other shops, leaving just the flagship store in Sydenham, South East London. It makes sense given the greater profit margin and wider catchment of our web operation. Running a shop is extremely expensive - why battle when our customers are either prepared to travel to collect cakes or pay for delivery? comments Tim.
There are 900 different types of cake on offer (all made to order) from simply decorated, corporate logo cakes at 1.45, up to ornate wedding towers costing 900. The total bricks plus clicks turnover in 2007 is headed for over 1.5 million with more than 400 sales per month coming from the web store at an average of 65 each. This is a major turn round for the business that had less revenue and higher overheads when it was a high street only set up.
Ecommerce saved us
To power his ecommerce site Tim went with Actinic Catalog initially and has since upgraded to the Business Multi-User package and most recently to Actinic Enterprise. He has never regretted these decisions: The software is easy to use great for me as I trained as a chef and am not a techie. Plus it suits any product, is really flexible and has scaled with our growth. With my brother doing the photography and me maintaining the site there are few ongoing costs and we are highly profitable. He adds, There's no doubt that ecommerce saved us.
Key to the businesss online success is its search engine placement. However, it was unnerving in the first six months before the promotional efforts took effect and orders began materialising.
Marketing on a shoestring
Their budget for marketing may be small but this approach works perfectly. Tim explains: Our products are made by skilled craftspeople so a steady flow of orders is ideal, with no big surges. We have tried emailing promotions to our customers but this does not really suit our business model, and unless you get the advert just right it is all too easy to get your domain name blocked from in-boxes. Instead, getting regular press coverage, word of mouth recommendation and ensuring our Google rankings stay high are techniques that assure us of solid sales growth.
In addition all product packaging and delivery vans are clearly branded with the web site address. The site now receives over 150,000 visitors each month and of these, enquiries for bespoke cakes run into hundreds but because many are from overseas, Tim has to turn them away: We dont sell abroad, but we do get quite a few orders from abroad ordering cakes to be delivered to relatives in London.
Making multiple channels work
One introduction that proved a big help in integrating the offline and online sides of the business, has been the installation of two computer terminals in the shop in Sydenham, South East London. They are brilliant at showing the customers how easy it is to order cakes online and a great way to display our huge range. There's no paper catalogue to get dog-eared and out-of-date when I add a new design it's live on the terminal as soon as the web site is refreshed, explains Kevin.
Tim and Kevin have also found that although nearly 25% of sales come from the web site, in fact about 80% in all can be attributed to their internet presence. We get a lot of customers who check out our selection online and then call to place an order. Its great because both parties can look at the same cake image and its easy to discuss any changes the customer wants to the standard design, which ensures customer satisfaction. says Tim.
As youd expect with any successful business men, the pair are always looking for new consumers. Their move into the corporate market with mini customised cakes and biscuits has been a huge success. Unlike the majority of the products, these can be delivered nationally as they are courier proof. We introduced these new cakes which can include an edible corporate logo. Its a fantastic tool for marketing as the companys advert is the last thing the client sees as the cake disappears into their mouth! Kevin enthuses.
Development of the online business has gone very smoothly and The Cake Store now employs 36 staff, including 14 cake decorators. Tim, who works from his home in Ayr, Scotland, says the only real issue he faces is, keeping up with demand. Working remotely means Tim can live where he wants to and take an active role in bringing up his young children, while Kevin has someone he trusts looking after the finances and the web site. Tim explains, Each month Kevin emails me photos of the latest cake designs which are instantly uploaded to the web site it's a great example of how the internet can work.
In June 2007 the Slatter brothers upgraded to Actinic Enterprise. Tim comments on the reason behind this decision: Our primary reason was to capitalise on having Actinic developers create bespoke enhancements to our order processing systems. It would have been impossible for us, as a small business, to have commissioned database programmers to create these systems for us as well as integrating it all with our large online catalogue. The price tag for this service is significantly different from the boxed software we bought in 2001, but that decision made an astounding improvement to our business and we expect the same from this latest investment.
Today phone and shop orders account for 75% of the turnover and having the customised, user-friendly screen to enter these offline sales, which also links to the web order system, means order management and reporting are far more efficient as Tim testifies: We now have a back-office system that is more tailored for our needs as well as being integrated with future ecommerce development. In fact, I would estimate that order processing productivity has already increased by at least 30% as a result of the upgrade.
The last word
So what advice do Tim and Kevin give anyone thinking of opening a web store: Do your research. Make sure you have a unique product that customers will want, and above all ensure that orders can be promptly fulfilled to the highest quality.