Ten tips for winning online - Luke Howard-Willis, Torpedo7 SWITCHED ON CEO
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COVER STORY
SWITCHED ON CEO:
Ten tips for
winning online
Luke Howard-Willis, Torpedo7
22 Start – technology in business Quarter One 2011
SWITCHED ON CEO// LUKE HOWARD-WILLIS
A Hamilton mountain bike rider turned his sporting interest into a
multi-million online venture, not just in New Zealand, but in Australia
which now accounts for at least 50% of the income. Buoyed by his
proven flair for success, he has expanded into other online ventures.
By Nigel Horrocks
Y
oung, forward-thinking, entrepreneurial Luke Howard-Willis founded Hamilton-based
online retailer Torpedo7 (www.torpedo7.com) in 2004. His stated aim was to give the
bike industry a shake-up. He complained that such goods were over-priced, the range was
limited and customers did not have a lot of choice.
Now customers in both New Zealand and Australia can buy bikes, components and
accessories online from a company that is roaring along, and a copybook example of how a budding
entrepreneur succeeded in finding a niche online. Torpedo7 is ranked as one of the fastest growing tech-
nology businesses in the Asia-Pacific region, driven by the core bikes and accessories site, along with
several successful add-on sister businesses such as 1-day, 1-daytee, 1-daycellar and 1-dayout.
The 31-year-old has expanded into other online e-commerce ventures and sniffs huge opportunity in
Australia and New Zealand, if it’s done right. “We have a lot of plans on opening up new web businesses.
Some you’ll see in the next few months,” he says. “Others will be rolled out in the next year or so. “One
thing is certain. We see a lot of opportunity in New Zealand and Australia and we’re in an aggressive
growth mode so we are full steam ahead.”
Spotting a business model
The background as to how Howard-Willis’ venture started is a classic example of how a customer
explores present online and mail order offerings and sees a gap in the marketplace. At the time he was
heavily into his mountain bike riding, and, as part of his interest, was reading a lot of the US bike maga- >
Quarter One 2011 Start – technology in business 23
COVER STORY
CEO GADGET WATCH
iPad / iPhone
Luke Howard-Willis loves Apple
products and a couple of new Technology is a key area in the
additions to his collection have business that we are constantly
revolutionized his world. “I’m
loving my iPad at the moment, investing in as it is an area we do
but my iPhone 4 I cannot live not want to lag in as it would be
without. They’re both amazing
business tools.” detrimental to the future of the
business.
zines that had mail order advertisers in them this was disappointing, it was encouraging at the and brings a wealth of experience to the com-
selling bike product at great prices. same time, as it showed that if they could pull pany. I read about business extensively and have
“Comparing the prices to New Zealand, I this off, then they could be on to something. So done for many years. “
discovered it was very worthwhile as an indi- Torpedo7 was launched with no traditional mar- In the early days, he did everything from
vidual to purchase from these mail order com- keting at all, which he said had actually proved sourcing products to dispatching the orders and
panies in the US, which I did along with many to be an advantage as they really had to work handling customer service. Now with 100-odd
of my friends. It didn’t take long to figure out hard at getting the word out. It allowed them to staff, he is not one for flash titles and describes
that if we could offer the same product in New experiment in non-traditional activities which his role as Strategic / Marketing Director. Many
Zealand at the same or similar prices to what the lead to word-of-mouth marketing. who ponder setting up an online business are
US mail order companies where doing, then we Torpedo7 would be his first experience on attracted by the thought you could potentially
could have a lucrative business idea. So that lead the net and what he saw happening at the time run the business from home. Not having big
to a lot of research overseas to see what supply online with US stores encouraged him, although storefronts means lower overheads. Howard-
I could get especially on brand product, and it he admitted New Zealand seemed to be still in Willis quickly provides a reality check on what is
also meant that to get to the pricing required, we its infancy with online e-commerce activity. involved to make it work.
would need to parallel import key brands. After “We do have some very high overheads. This
researching various retail methods, we decided Learning the trade is especially so with staff numbers and those key
that online would be the best way in order to Howard-Willis has a natural instinct for people that you need to run a successful online
capture the whole of the New Zealand market.” what works but he did do a four-year business e-commerce business – a customer service team,
Then came a first harsh lesson in how exist- degree. He says even with his natural talent at website development team, IT team, photogra-
ing competitors can get nervous about the sud- turning a buck, a degree is something you need phy team, buying team and the list goes on with
den emergence of new players in the market to do as it teaches you disciplines and research all the specialized key personnel. However, the
encroaching their territory and approaching skills. advantages with online come with having a busi-
things differently. “We attempted to launch “Everything else that I have learnt has come ness that you can quickly cover a whole country
Torpedo7 in a local bike magazine but once they from reading books, and the people that I asso- without having to put dollars behind bricks and
saw our advert and the pricing on product, they ciate with.” The most important of his “associ- mortar as traditional retailers do.”
chucked us out of the magazine. No-one in the ates” is his father. “My father has been in vari-
bike industry would touch us and they said it ous businesses for many years, so I have been A smart approach
would destroy the New Zealand bike market if brought up discussing business at the dinner Technology is as important an ingredient to
we proceeded ahead.” Howard-Willis said while table. My father is now a key part of the business any online success and being of a generation that
24 Start – technology in business Quarter One 2011
SWITCHED ON CEO// LUKE HOWARD-WILLIS
grew up with technology, Howard-Willis knows
how important it is to keep current and continue
to push the boundaries.
The granddaddy of online retailers, Amazon,
formed in 1994, learnt early on that pumping
money back into the business and developing
clever technology to make customers enjoy the
shopping experience better encouraged loyalty,
a bigger customer spend and a closer offline
shopping experience. One of those early “smart”
technology moves Amazon perfected was to
prompt other buying suggestions (“You might
also be interested in..”) based on what the cus-
tomer had bought previously, what the customer
had been looking at in that visiting session or
based on what other people who had bought
that item had also ordered or shown interest in.
Amazon’s business approach was not to expect
a profit for the first five years and to plunge
money back into technological advances so that
it future-proofed the business against competi-
tors. For a while, some stockholders grumbled
about that strategy, saying they were not see-
ing the company achieve profitability quickly
enough. It’s a different story today. In the latest
quarter, the online retailer's net income climb 16
per cent, beating beat analyst expectations.
“We are on our 3rd generation web-
site, “says Howard-Willis, “The latest version is
allowing us to go well into the future, whereas
the previous website limited our growth. We
have our stock system, accounting software all
working live with the website and operate a near
paperless system for all orders.
“We have some key systems people within
the company, and we put a lot of dollars back
Getting culture right
in to create some pretty amazing technology
Taking on staff meant developing a deliberate
systems to help the company handle the growth company culture that would help the business thrive.
and ever increasing order numbers. Technology Howard-Willis is proud of the cultural approach, which was documented in a
is a key area in the business that we are con- book given to each staff member and also published on the company’s website.
stantly investing in as it is an area we do not
It lists the company’s core values as:
want to lag in as it would be detrimental to the
1. Deliver amazing service.
future of the business.”
Being an online retailer, functionality of the 2. Be passionate and determined.
website is crucial. His approach is that classic 3. Do more with less.
line about keeping it simple. “When we design 4. Be adventurous, creative and open-minded.
our sites or add additional functionally I’m 5. Work hard, play hard.
always pushing for it being simple, clear and 6. Creative a positive team and family vibe.
concise.” Howard-Willis confirms anecdotal
7. Be humble.
evidence that online customers are shifting to
8. Do things our way.
mobile –and that m-commerce is going to be a
significant part of future online businesses. It 9. Do it once, do it right.
means those businesses need to start planning to 10. Don’t take yourself too seriously.
be in that space. He says the mobile side of his >
Quarter One 2011 Start – technology in business 25
COVER STORY
Luke’s 10 tips for online business
iStart asked Luke for his advice for successful online businesses.
Content — Keep It Fresh: speed you into the income-generating phase that ences’ needs and expectations by setting up online
Make sure the content on your website is everyone wants to get to as soon as they can. surveys, focus groups, face-to-face interviews, or
changed regularly, weekly if possible. That’s espe- usability tests.
cially true of the homepage, so visitors feel there Site Functionality — Go For Easy:
is actually someone behind the website paying it Look at which sites generate the most traffic Incremental Redesigns — Small Steps Work:
attention. and build a similar site. Visitors will then be able When it comes to redesign, bigger isn’t always
to quickly and easily navigate through your site as better. Major over-hauls every two to three years
Service — It Matters: they will be familiar with how it functions. often generate a lot of resistance from customers/
Service is extremely important when run- visitors and can even upset your most fervent us-
ning a website as visitors miss out on face-to-face Site Speed — Keep It Quick: ers. That’s why some major names on the web, such
contact. Give them confidence in dealing with you Restrict each page of your site to a certain size. as Amazon and EBay, don’t redesign their websites
by exceeding their service expectations. If you are People are usually unwilling to wait too long for a anymore. They prefer to roll out any major changes
emailed by a visitor, get back to them straight away page to load. Note that the size includes all images slowly so they don’t disorient or lose their custom-
— don’t leave it till tomorrow. and other objects that make up a page. ers. Another benefit of the incremental approach
lies in the cost; usually small changes can be imple-
Email Database — Make It Grow: Layout — Flash Isn’t So Cool: mented quickly by your team and cost less.
Develop and grow your email database so Try to stick to certain standards when it comes
you can communicate with your visitors regularly. to arranging the elements of a page. Place a menu Monitor Your Website Traffic
When sending out email communications to your on top or the left side; a search text field also on — Listen To The Feedback:
database have a reason for doing so, and make top or the left side; a footer with contact informa- Review your website statistics to see how visi-
sure it will be something they will respond to. You tion, sitemap and so on at the bottom. A three- tors find your website and what keywords they are
don’t want to waste your time or theirs. column layout is typical if a lot of information is to searching. These statistics will tell you if paying for
be presented at the same time. inclusion in an industry specific directory is worth
Leverage Existing Tools the annual fee and if you should update your con-
— Don’t Reinvent The Wheel: Research — Don’t Change For The Sake Of It: tent to include more information on specific terms.
When starting out, I’m a big fan of using exist- Do your homework before jumping into a web
ing platforms, frameworks and the like if they can redesign project. Find out as much as possible
enable you to get your core idea completed faster about the current state of your website by analys-
and cheaper than going it alone. Using a good ex- ing web traffic data and feedback from users. Also
isting framework will save time, money, effort and take the time to learn more about your target audi-
26 Start – technology in business Quarter One 2011
SWITCHED ON CEO// LUKE HOWARD-WILLIS
Torpedo7
Stats at a glance
We made, as a company, the // Began 2003 with www.torpedo7.co.nz
// Based in Hamilton
conscious decision that we were
// Expanded to Australia 2006
not going to participate in the
// Around 150 staff
recession, and went forth and // Turnover this year should be around $80m
continued business as per usual. // Online ventures now include 1-day.co.nz/.
As soon as we made that decision com.au, 1-daytee.co.nz/.com.au, 1-dayceller.
co.nz, 1-dayout.co.nz
some pretty amazing business
opportunities came our way.
business is definitely seeing growth with each ting in the saddle before purchase and then not for. So he created 1-day.co.nz (http://www.1-day.
month showing a further increase in traffic via being able to come in to a physical shop if there co.nz/) , a site which offers participants three
mobile. He launched an iPhone app and has are any teething problems. However, that person products at midday every day in a cheap deal that
further developments for it in mind. may well be a returning customer for all ongo- lasts only 24 hours.
ing parts and accessories. So how did he get over “It has proven so successful and grown amaz-
Going Trans-Tasman such customer service worries? “When we started ingly quickly now being the larger of the two
Some New Zealand entrepreneurs have tried Torpedo7 it was focused around parts and acces- companies in terms of sales and website traf-
expanding into Australia and run into headwinds. sories (P&A), and still to this day those areas fic. 1-day has expanded into sub-sites 1-daytee
Around half of Torpedo7’s sales are now from equate to 95% of our business. We quickly under- (T-shirt deals), 1-daycellar (wine deals) and
Australia with the company running its own stood that selling 2000 x cycle shorts or 1000 x recently 1-dayout (voucher deals) which has
Australian site. It was the fact that Howard-Willis bike tool sets was so much easier than selling one grown itself very quickly with some impressive
noted that 10% of the sales to the original New bike and the margins in doing the P&A was far numbers.”
Zealand site where coming from Australia that better. So in essence we have specialized mostly
made him ponder a wider reach. This was hap- on the P&A, which are also far easier to stock and What recession?
pening even though the company wasn’t even dispatch as they are generally smaller.” The Torpedo7 story is not just a positive
being promoted in Australia. “So we decided to story about how a few dedicated individuals can
launch a .com.au website with all the prices fixed Impulse buying strongly grow an online business from scratch,
in AU currency and the sales in the first month Fuelled by the success of Torpedo7, Howard- but provides inspiration that those thinking about
jumped from 10% to just over 40%.” In view of Willis picked up the idea for a potential new dealing in specialized goods can rise above the
the failure of other Kiwi sites moving into the standalone. Torpedo7 had been running what swirling uncertain economic times that so often
Australian space, how did he achieve that sort it called “First in, First Served” weekend pro- discourage people from even giving it a go.
of success and what lessons has he learnt? “We motions and found they worked really well. “I With turnover this year at around $80m,
did our research, started slow and didn’t put a expanded on this idea by thinking that with this Torpedo7 has continued to show year-on-year
lot of capital behind it. With online, there is the model we could sell anything. As long as the growth. Howard-Willis says it’s all about think-
advantage of opening up in another market eas- product and pricing were attractive, then people ing positively and not buying into the bad news
ily with little cost associated so if things are not would impulse on the deal.” filling the business pages of the media. “To be
quite going to plan, then you can easily and cost In a variation of the often-famous “back of an honest if you looked at our figures, you wouldn’t
effectively make changes to adapt to the market envelope” business idea, his story is that the idea even notice a recession. We made, as a company,
conditions.” came to him on a long airline flight back from the conscious decision that we were not going to
Torpedo7 has now expanded beyond selling Taiwan and the concept scribbled on the back participate in the recession, and went forth and
just bikes to other outdoor sports such as moto- of an Air New Zealand serviette. He says he had continued business as per usual. As soon as we
cross and snow sports. One issue, for an online been swamped with offers of products to put on made that decision some pretty amazing business
retailer selling such goods, is that some who want Torpedo7 but they were products that didn’t quite opportunities came our way which we have ben-
to buy a bike may be a bit nervous about not sit- fit into the action sports category the site catered efited from substantially.”
Quarter One 2011 Start – technology in business 27
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