Sramana: How have you ran your sales operation? Do you have telesales or some sort of sales force?
Maria Haggerty: We are putting a lot of focus on growing our business this year, which has resulted in us developing our first real marketing and sales program. Up until 2012, every customer that we have brought on has come via word of mouth or because of a relationship we had.
Sramana: What do you need to do to facilitate growth and expansion from this point?
Bill Follet: We leased 250,000 feet in a new warehouse. Over the years we were able to expand within the warehouse. Our first expansion was 50,000 square feet. A few years later, in the recession, a company went out of business and we were able to take over its 100,000 square feet. That has allowed us to bring more business online.
One of our growth techniques is to pick customers who have good marketing, management, and product lines. If you give those kinds of companies good service, then your company will grow. Most clients who have come to us have doubled in the first year or two.
Sramana: Where is your sweet spot? Are you servicing some of the larger companies, or do you focus on the mid-market?
Bill Follet: We are into mid-market, although we have had very large customers. Our larger customers have sales outside of e-commerce. A mid-market company will actually have higher volumes of e-commerce sales in terms of packages shipped per day. That all takes space for the fulfillment company, and if any of those e-commerce mid-market companies grew too large, they would leave us. There is a line you can cross which makes it more feasibly to do it in-house.
Sramana: What is the smallest company that you cater to?
Maria Haggerty: We have some companies that are very, very small. We look at the management team and their marketing plan to determine if we take that startup. We look to see who is funding them. If they are backed by a reputable VC, then we will assume that they are well vetted. Ideeli is a great example. They came here doing very little volume, and their existing provider was causing problems. They came to us through a relationship that we had developed over the years. We brought them in during Christmas and that has turned out very well.
That model is cut and pasted for companies like Birchbox. We don’t require companies to be a Johnson & Johnson if they have a robust plan. One of the things that is important for us is to choose our customers wisely. Our growth is tied to their growth. If they don’t grow, then we become stagnated.
Sramana: In e-commerce there are a lot of businesses which do very well without venture capital. We have case study after case study of companies that have gone to a $100 million without outside financing.
Maria Haggerty: I would agree with that. From our perspective, clients who have been backed by good VCs have turned out to be good clients. If you are not backed by a VC but you have a smart team that is putting in its own sweat, then we would evaluate their marketing and business plan. If a VC exists, that’s just another data point.