My regular readers know that one of the aims of both Entrepreneur Journeys and this blog is to promote entrepreneurship as way to take control of one’s future. In service of this aim, in 2009 the blog will continue to feature stories of people who were laid off from their jobs and made what is often a confidence-bruising event into an opportunity to pursue projects they were passionate about while creating jobs and wealth. Jimmy Beans Wool is one such example.
Jimmy Beans Wool (JBW) is both a brick-and-mortar store in Reno, NV and an Internet knitting superstore, offering knitters a comprehensive selection of yarns and knitting supplies along with the latest trends. The aim of JBW is to create a knitting community comparable to that of the local yarn store, but with a customer base from Los Angeles to Australia, and to be a resource for knitters looking for inspiration, instructions and project help.
In 2002, during the dot-com bust, when founder Laura Zander was laid off from her San Francisco software engineering job, she decided to open a yarn shop in Truckee, CA after a chance meeting with Lorna Miser, owner of a hand-dyed yarn company. After investing approximately $30,000 from their savings account, Zander and her husband Doug (employed as a software engineer at that point) started Jimmy Beans Wool. Initially, Doug continued his day job while he built their website with an integrated inventory management system and an online shopping cart. After three years, when the online business was large enough, Doug quit his job to work for JBW full time. The company is entirely self-funded with all initial profits being plowed back into the business.
When the business was started the market was ripe and knitting was ‘hot’, with celebrities being photographed on set with knitting needles, and titles like ‘Celebrity Scarves’ and ‘Hollywood Knits’ being published. Soon after the shop was opened, the industry experienced a boom that it had never seen before, giving the founders enough time to get comfortable with the business. Initially the competition was minimal: there were three shops in Sacramento, three to four shops in San Francisco, and perhaps two to three shops in the northern Bay Area. By the end of 2003, there were six to ten shops in each of those areas. JBW went live with their website in August 2002 and had already established a small but growing presence on the web. It was the first yarn store started by ex-software engineers, giving it an edge over the competition because of the in-house software expertise.
Although the JBW site is technologically innovative, it has a local yarn store feel to it. The site’s main challenge is to make online customers feel the personal touch, since knitting is a tactile hobby. The site has incorporated video product reviews, instructional articles and videos, rich content and LiveChat, so that customers can ask employees questions in real time. Online photos and profiles of all the employees are also available so customers feel as if they know the staff. Fast and inexpensive shipping provides online customers with a sense of instant gratification, to make them feel they have made a purchase from the store itself. This emphasis on recreating an in-store experience, along with the advanced technology on the site, has helped JBW shift the focus from in-store to online sales, which now constitute 80-90% of total revenue.
Doug Zander, who has handled most of the website design and maintenance, has filled the database with information about purchases and popular products and is focused on ensuring high rankings. He has written the software for the site as well as the inventory management system, the shipping system and all the other software that is used in-house while managing all paid and unpaid Internet advertising.
According to the National Needlework Association, annual spending on knitting is about $748 million and crocheting is $354 million, bringing the total available market to $1.102 billion. JBW has had most success in the middle market with products that are of high quality and limited availability while still being mid-range in price, although some customers have noted that JBW’s prices can be higher than those of similar competitors.
Since the site has made interactive user experience a priority and is consistently ranked towards the top in most product search engine results, it attracts a large number of tech-savvy, 30- to 50-year-old women from across the US. JBW initially focused more on building inventory, providing customer service, and learning the business rather than growth and advertising. The online portion of the company grew at a steady pace of 15-20% for a number of years. In the past two years the focus has shifted to increasing the customer base and getting the word out through a referral program and PR and marketing and advertising campaigns.
JBW has been profitable since five months after inception, and current revenues are approximately $2.1 million. According to the company, the annualized online growth rate for the past 16 months has ranged from 42-126% and doesn’t appear to be slowing down. As JBW operates in a niche industry, traffic numbers are small with about 150,000 unique visitors and 1.2 million page views per month. JBW has approximately 40,000 customers.
When asked about exit plans, Laura Zander said, “At this point, there is still so much to do and so much growth to be had that we haven’t given much serious thought to exiting. This is something that we’ll be evaluating in the next year.”
Well, Laura, if I were you, I would not sell the business. You have no outside investors, so why give away something that you can keep building and monetizing for a long time yet?
This segment is a part in the series : Deal Radar 2009