Website Closers® presents a Smartwatch Accessories Brand that has taken full advantage of the ever-growing smartwatch market. The brand currently offers 5 products for sale, with watch straps driving the majority of revenue and other accessories, like cases and stands, making up the remainder. Top-selling products are a silicone watch band and an elastic nylon watch band. They have garnered praise and a loyal following for features such as breathability, durability, stretch, panache, and their ability to quickly and easily be swapped out with different colors and styles.
All products are sold under the brand name through its Shopify-built website, and SKUs are stocked in the United States at a 3PL partner.
Customers are primarily based in the United States and Canada, but the company also enjoys sales in the UK, Australia, and Europe. These regions are burgeoning in market share and present an enormous opportunity for expansion.
The products are sourced via a sourcing partner, who manages the relationship with manufacturers in China. This is done to streamline operations and minimize the workload. When the need for more inventory arises, or the brand is looking to launch new products, the owner sends the relevant information to the sourcing partner who handles the order and the inbound logistics. Inventory orders are placed four times annually, which includes restocks and new product launches. The order is paid for prior to production, and the shipping cost is covered at the conclusion of production when the products are ready for shipment.
The business maintains varying levels of stock depending on SKU velocity. As the company has operated primarily during the pandemic supply chain era, it has historically stocked 6 to 12 months of inventory depending on the SKU. There are no significant working capital requirements. The cost of goods is meager compared to cash flow. Advantageously, the products are small and don’t take up a lot of room in storage, so erring on the side of caution and ordering more than necessary has not been a costly endeavor. An additional benefit of the product size is that air freight is not dramatically more expensive than the ocean alternative, meaning unexpected shortages can be topped up in short order.
Products are shipped from a 3PL warehouse. Inventory is held in two warehouses—a primary warehouse in Georgia and a secondary in California. The main warehouse stocks all SKUs, and the secondary stocks only a handful of best-sellers for faster shipping to the west coast of the US. Square footage requirements are incredibly reasonable, and even a small office, as little as 250 sq ft, would suffice as the products are small and don’t take up a lot of room in storage. On average at the time of writing, 22 orders are shipped daily.
The business sells consistently throughout the year, with typical peaks during Q4 and the holiday shopping season. Apple releases a new version of the Apple Watch each September, surging demand for the brand’s products. The typical customer for the business has historically been women between 35 and 65. They spend, on average, $46 per order and have a lifetime value of $53. The repeat purchase rate is around 30%.
The digital marketing strategy is pure direct response marketing, and brand building is a byproduct of direct response marketing. The goal is to have someone see an ad, click on the ad, and complete the purchase on their first site visit. This is primarily accomplished through scaling and optimizing Facebook ads at the top and middle of the funnel and through email marketing towards the bottom of the funnel. From a Facebook standpoint, the focus is on engaging video creatives that hit on the features and benefits of the product and the value offered as a brand. The company has witnessed tremendous success with User Generated Content, Influencer Generated Content, and more traditional product video ads.
From an email marketing perspective, the strategy includes comprehensive automation flows, as well as campaigns for new product releases, sale events, marketing to specific audience segments, and community building. Automation flows cover all areas of the customer journey, from the first-time contact information is received through purchasing for the first time and then subsequently engaging regularly. In terms of campaigns, revenue is driven primarily through new product releases and sale events. Blog-style emails are also sent, with topics around Apple Watch tips and tricks, new features, software updates, and the like to deliver value to customers and keep them engaged.
The ROI on Facebook ads is 1.5-2X, while the ROI on email marketing is 48-50X and comprises about a third of revenue.
The owner works around 25 hours weekly on the business. His tasks include all principal functions of the company outside of customer service and fulfillment, including marketing, finance, and inventory management, as well as new product development.
Two part-time contractors handle customer service, social media scheduling, ad hoc admin, and social media work. Part-time contractors are leveraged through Fiverr and Upwork as necessary for content creation, ad creative development, and email copywriting.
The business’s day-to-day operations are largely automated, and the core functions will continue to operate without the business owner. Customer service is handled by virtual assistants, both of whom have been with the company since its inception. As a result, they are intimately familiar with the customer service processes and rarely need any guidance. Shipping and order fulfillment is fully automated through a 3PL partner. Outside of this, daily business operations include managing marketing campaigns, social media content planning, inventory planning, and new product development.
No special skills are required to operate this business, and all contractors are available to stay on with the business post-sale. The existing owner is willing to stay on with the company while operations are transitioned to a buyer.
