Each week, we seek expert advice to help a small or medium-sized business overcome a key issue.
It’s a frillier version of the adage “carrying coals to Newcastle.” But in selling made-in-Canada lingerie to women in France, Natalie Grunberg is not being superfluous. She’s fulfilling a need.
Her company, Panty by Post, which she launched from the living room of her Vancouver condo in 2009, sells beautifully packaged lingerie through the mail to customers in Canada, the United States and France – the nation that practically invented the concept of lacy underthings.
“In France, the lingerie is beautiful but it’s scratchy,” says the 38-year-old former high school teacher who spent more than a dozen summers at her Canadian family’s second home in the south of France. “There aren’t too many options other than the super-fine and the super-expensive.”
Ms. Grunberg’s solution was to source French underthings in French Canada. Most of the brands she carries are from Quebec, such as Blush, Miel and Change. “I carry my own inventory, about 15,000 worth, with sizes ranging from XS to 4X.”
Lately, Ms. Grunberg, who has no formal training in business, added briefs from Colombia made of the finest European fabrics with hand-sewn embellishments and lace. Some cost as much as $90.
But she offers them for much less through a $35-a-month subscription program that delivers high-end panties through the mail. The company also offers less expensive subscription deals for $22 and $15.
Every delivery is meant to feel like a gift, Ms. Grunberg says: “My shipper wraps each panty in tissue and writes a handwritten note. It’s a personal touch that’s also very chic.”
Ms. Grunberg grossed $25,000 her first year. “I was happy if I got an order a day,” she says.
Six years later she receives about 20 a day, and her annual sales total $250,000. Customers come to her through word-of-mouth and also via coverage in such magazines as Harper’s Bazaar, Glamour and Self. She recently added a men’s line and an online boutique offering other intimate apparel such as bras and socks.
Now she’s wondering whether to turn her business into a franchise operation. “I have had a lot of interest from people in other countries who want to bring Panty by Post where they live,” Ms. Grunberg says.
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Franchisees could host trunk shows in their homes. “The idea would be to have ladies sell subscriptions to their network,” she explains.
It’s a sales model used by U.S.-based Stella & Dot, the company selling jewellery through at-home parties and online. Tupperware did it first.
Ms. Grunberg wonders whether this path would work for her, too. After all, “It’s panties, not jewellery – it’s something intimate. I worry that I might be wasting my time.”
The Challenge: Should Panty by Post adapt its business model and add a franchising angle?
THE EXPERTS WEIGH IN
Solange Strom, president of Strom Group, a luxury fashion-brand consulting firm with offices in Toronto and Paris
Before moving on to panty parties or franchises, there are other things Natalie can do to help grow her brand further. For the moment, it is not clear what Panty by Post stands for, who her target client is and what she offers as a unique selling proposition.
The brand must be coherent, and for the moment it isn’t. For example, she talks about “luxurious French lingerie” but her products seem to be more Victoria’s Secret than upscale, and they are not made in France. Such discrepancies between the messages confuse potential customers.
She needs to really think about what type of company she wants to be, how it will interact with customers and stakeholders, how it will resonate and connect. By building a strong brand, she will be able to grow sales. Her customers will become her ambassadors.
Janet Bannister, general partner, Real Ventures, an early-stage venture-capital fund, Toronto
In-home direct selling might be a very good avenue for Natalie to grow her business. Several businesses have grown very quickly using this model, such as Stella & Dot (jewellery), Steeped Tea (tea) and Heritage Makers (photo books). This model would enable Natalie to grow quickly with minimal capital. In addition, the nature of the product is well-suited to in-home selling.
If Natalie does adopt this sales model, she should not limit herself to selling just the monthly subscription. She should allow people to buy multiple products in order to increase the average sale and take advantage of spontaneous purchases.
She should also test some online marketing and determine whether she can get an acceptable return on investment from this. I would suggest buying some keywords as part of a search-engine marketing campaign, or working with a platform such as Vantage Analytics, which automates and optimizes online marketing.
Kathryn From, former owner and president of Bravado Designs Ltd., a maternity bra and panties company, Toronto
The crux of the business should be the subscription service. Panty parties and home selling won’t work in my opinion because I can’t see how someone can generate 50 to 100 new subscriptions in a month. Not even close. A company like Stella & Dot has big lines, and they are always augmenting those lines with new product so they can resell to the same customers. Once you’ve sold a subscription, you’re done. What else would you be offering that’s new?
I don’t think there is enough here yet to warrant spending any time on franchising. Build the business first.
Focus on digital media. Hire an agency to develop an analytics-based digital strategy. A subscription series is all about the numbers, and driving as many people as you can into the funnel. Develop an ambassador program where your core fans sign up five new people to get their own subscription at 50 per cent off, for instance. Let your passionate customers do the talking – they already do – and see if they will take it a step further. Or get them to buy a subscription for a girlfriend as a bridal shower gift. How cool would that be?
If that seems like a good idea, maybe partner with a bridal website such as TheKnot.com. Also forge partnerships with other subscription-based companies like beauty-products retailer Birchbox, which could include a pair of undies in their boxes with information on how to join Panty by Post. It all goes back to the first point: The value in this business is really about the subscription model. It’s not the underwear, as nice as it may be.
THREE THINGS THE COMPANY COULD DO NOW
Fine-tune your branding
If you build a strong brand, your customers will become your ambassadors.
Try online marketing
Buy keywords as part of a search-engine campaign and see how they perform.
Take on a partner
Join forces with a bridal website or a beauty-products retailer.
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Interviews have been edited and condensed.