How We Started A $65K/Month World-Wide Luggage Storage Service

$65,000
revenue/mo
2
Founders
2
Employees
product
BagsAway Luggage ...
from Toronto
started October 2017
$65,000
revenue/mo
2
Founders
2
Employees
2.07M
alexa rank
23
followers

Hello! Who are you and what business did you start?

BagsAway Luggage Storage is a marketplace that connects travelers and city locals with convenient, secure, on-demand bag storage locations across key cities. Utilizing the principles of the sharing economy we partner with local shops and businesses that monetize existing free-space by offering hourly/daily storage on location. We keep about 60% of all revenues while the storage partners keep the rest. With BagsAway locations in place, travelers and locals can now win precious hours back by conveniently dropping their bags at a location of their choice around the city, freeing their hands and their time to explore, experience, and sightsee without their bags in the way. Our overarching vision is to change people's relationship with things that weigh them down during travel and on the go.

We have stored over 150,000 bags for travelers thus far and have expanded to over 50+ cities and going strong! Our plan this year is to expand worldwide, with new funding and new members joining our company.

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What's your backstory and how did you come up with the idea?

I am a software engineer, graduated from McMaster University then began a career in Oil & Gas, where I was fortunate enough to have been granted a leave of absence. I used this opportunity to explore the world and travel to South America, Asia, and Africa!

BagsAway was born as an answer to a recurring problem my co-founder Irina and I experienced on travels, and I observed back home when renting my place on Airbnb. We are first and foremost world enthusiasts at heart - travel is a passion and a life goal for us and luggage, of course, is an inseparable part of the travel experience.

We often found our bags to be time wasters, having to make special trips to drop off or retrieve them on arrival and departure days. Or just having to drag them along, which of course limited what we could do, and we were not the only ones. We noticed others dragging their bags on Hollywood Blvd or sitting on a beach with backpacks in Asia before boarding their boats.

Validation of our business came when my Airbnb guests were repeatedly asking for a place to leave their bags before their late afternoon checkin’ and after their checkout before their evening flights, we realized there was a bigger problem and with it an opportunity. Time is the most precious currency we have so we figured there had to be a better way, and when we couldn’t find a solution we decided to create it ourselves. We were also accepted into the DMZ (Ryerson Digital Media Zone), which is the top business incubator in Canada!

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Take us through the process of designing, prototyping, and manufacturing your first product.

Originally the business started with a dedicated luggage pick-up and delivery model, which yielded traction and actually brought us to capacity during the high travel season. We quickly realized that this model was not scalable as an on-demand service. Try scaling this one: purchase a few used trucks, hire a number of drivers, hire dispatch staff, somehow keep track of everyone and everything, while managing drop-off and pick-up delays due to traffic and road conditions. Whew, that was a scary thought.

We started with brainstorming sessions on how to tackle the scaling issue. We squeezed our brains “tight, tight.” Suddenly a bright light switched on above our heads. We looked at each other and yelled, “customer feedback!” Armed with survey data, customer reviews, and customer support calls, we decided to pivot our model to what customers had been requesting all along.

Instead of a pick-up and delivery service, we updated our booking page to serve as an MVP where people could find and book on-demand luggage storage on an interactive map. We Initially started with limited partners in Toronto and Montreal. In all honesty, the first iteration of the website was crap! It was buggy, and slow but despite the potential blow-up of user experience, the first day the site went live in February 2018. The magic happened and we received our first booking - an exhilarating moment! I now ring the motto of “do now, fix later!”

During the initial phase, our startup costs were kept to a minimum, at about $4,500/month, and grew into the second iteration. Here is a sample of our first logo and Page.

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Describe the process of launching the business.

We launched BagsAway to help travelers find luggage storage in Toronto with a simple booking interface for pick-up and delivery. The website was completed in 2 months and we received 5-star reviews on google. We hired a great driver and he was very friendly with the customers and always on time.

After a while, the van capacity was not enough to store the bags, so we rented a locker to store excess luggage that is meant for longer-term storage. However, we constantly had customers inquire about dropping their bags at a physical location. They did not have set plans and wanted freedom without having to stick to a specific time and place for pick-up & delivery. We had a virtual office address on Google and we had customers show up trying to store their bags there more times than we care to admit. The customers had spoken but we were faced with a problem - do we proceed to open a physical storage location with the overhead of staff and rent? That’s not something we wanted to be bound to nor did we want to enter the traditional brick & mortar model.

Striking a balance between expansion while maintaining a positive experience for customers and partners proved to be a challenge operationally. It’s better to figure out and dominate a few markers but do it well, instead of partially penetrating many markets.

After a brainstorming session (with a board and color sketches and all) we decided to ask a nearby convenience store if they would consider storing bags in return for shared revenue and increased traffic from potential customers who may purchase their products or services. At this stage of the business, we relied on personal cash flow to fund the growth, an opportunity we were lucky to have but was ultimately limited and did not offer the same growth opportunity as external funding would.

To accelerate our growth we applied to join the DMZ (Ryerson Digital Media Zone) and in August 2018 we were accepted to their prestigious program for high-potential startups. I was already in talks with a number of potential investors and partners who could help us scale the business quickly. However, investors take their time to get to know us, as founders, and I learned that most invest in founders, not necessarily the business idea itself. They trust the founders, and trust takes time to build.

Learning to budget properly and perform iterations of a product is most important. Design iterations allow customers to provide feedback in between designs. We learned to avoid creating a product that we like and create a product that our customers can use intuitively, with an overall positive experience that improved their trip

Having an idea and running a business are two very different things. Be prepared to deal with lots of low levels and high-level tasks you didn’t set out to do or simply intimidate you.

Since launch, what has worked to attract and retain customers?

With the COVID-19 going on, my advice is: do not over-leverage, retain some capital for the unknown. Focus on growth but the pace of growth needs to be controlled and gradual. Too much growth and customers have a bad experience, too little growth, and investors have a bad experience. Founder… learn to balance!

On the marketing side of things, we are in a constant state of learning and experimenting. For instance, we did not put enough focus on developing content and lagged behind on the SEO side of things in 2019. This directly contributed to increased spending on paid traffic to counterbalance where we were lacking on the organic side. We have since made a major push and are making strides with our content and SEO & SEM strategies in a big way. Despite the current situation with the travel industry globally, we are hard at work and expect to accomplish solid progress in 2020.

A great deal of our traffic comes from Google search, however, it’s a limited channel that’s correlated with overall awareness and hence the total volume of searches. More awareness results in more searches, and hence more traffic. Although many people experience the luggage problem and seek a solution, it has not yet established solid ground as a known travel service. As a whole, this pain point is still treated as part of the travel experience and the status quo is often to just drag your bags.

As such our marketing efforts beyond the content and traffic side of things are focused on awareness through channels like social media, partnerships, PR, ambassadors, startup communities, and conferences. Banner ads are also a great supplemental tool to reach potential customers that expressed interest in certain topics or visited our website but didn’t book. Investing in awareness doesn't only contribute to our direct growth alone, but the entire vertical as a whole, so we don’t always see results in a direct cause and effect like other marketing efforts.

Nonetheless, awareness is a critical aspect of our business as a driver and catalyst for organic and paid traffic. Social media is a great tool to promote awareness and reach our ideal customer persona. It even allows us to reach people in real-time as they’re traveling but with general awareness, the conversion window depends on the time between the moment a customer is served an ad and the time they plan to travel.

Beyond digital marketing, we recognize the importance of offline traditional advertising for our business. Brand ambassadors, flyers, signage, are all a necessary part of awareness building. We go to where our customers are - busy travel hubs, ports of arrival and departure, and high-traffic tourist attractions. Those are ideal places to reach our audience when they are experiencing the issue yet aren’t finding a solution or not thinking that one exists and hence aren’t seeking it.

Other marketing channels include direct partnerships with Airbnb property managers, short-term rental software providers like Guesty, short-term rental management companies like LuckyHomes, local tourism boards, and multi-location businesses with physical storefronts like Penguin Pick-Up across Canada.

Some links and examples below:

Social media partnership announcements:

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How are you doing today and what does the future look like?

We are a profitable company, our monthly traffic is at 81,500 users per month. We are currently investing a lot of resources in growing our traffic and we expect to grow this number significantly. We share a greater percentage of gross revenue to our partners. Our customer acquisition cost is around $4 per order with an LTV of 25%.

We are a virtual-marketplace and all our bookings and payments are done online-only. We keep our pulse on emerging trends and are looking to expand this process in the future to allow other methods of payment (think PayPal and even digital currencies). We are always looking for ways to offer added convenience and reduce steps to booking and are evaluating opportunities to offer “tap to book” on location with some of our premium partners.

We run a lean operation, but we did expand our core team to 8 members (including us) in the last year (woohoo). We are even managing to maintain growth during the pandemic. I feel like the best way to spend lockdown is working on something you love to do! Our short-term goal is to expand our marketing and traffic base.

Our long-term goal is to eliminate luggage storage as a pain point altogether and incorporate it as a standard part of the travel booking process - book your flight, your accommodations, and your storage. The vision is to offer our service in every city in the world with added value beyond the storage alone. We believe without a doubt in the service we offer to travelers and we want them to spend time traveling and experiencing luggage free!

Through starting the business, have you learned anything particularly helpful or advantageous?

Everyone makes mistakes and we’re no different, I personally like to call them misguided opportunities. The delivery idea was great in the beginning but trying to scale that idea is filled with blockers. We can definitely solve the problem, but we have to do what our customers tell us and we didn’t do this at the start. We thought that delivery was the way to go, it’s convenient and savvy, but ultimately the scalability of the business is a determining factor of success and that’s where the model fell short in the long- run.

Another mistake we are guilty of was over-expanding too quickly, which is a common startup mistake, especially in marketplaces where land-grab is a race. Striking a balance between expansion while maintaining a positive experience for customers and partners proved to be a challenge operationally. We had limited resources at the time and we ended up in a race against ourselves. The conclusion? It’s better (at the start) to figure out and dominate a few markers but do it well, instead of partially penetrating many markets without really having a proper foothold. Once you accomplish that you can better replicate the model as you expand and grow into other markets successfully.

Our best decisions were made as a team - no man is an island and that is especially important to remember when growing a business. Speak to your team, consult your employees, they are on the front lines and can offer great insight into opportunities we might not be seeing as we focus on other aspects of the business. Another important thing is to trust your team. Offer support and be approachable but learn to let go and delegate. It will build their confidence, skills and nurture their abilities, and help you, as the founder to focus on your tasks and give them the opportunity to be more creative and experimental, which can ultimately grow the business. Don’t get me wrong, don’t leave them to their own devices, but don’t micromanage and expect to control everything they do. It will drive you and them crazy.

What platform/tools do you use for your business?

Our favorite tool for design is Figma. It is very flexible and allows collaboration with our team and user testing. We are able to quickly prototype our UX design and get feedback. We love iterations and Figma fits perfectly with an iterative approach as opposed to a requirements-oriented approach. We like customer feedback!

We use HubSpot for sales, to be honest, their start-up program was the main incentive to use it, they offer the software free of charge for the first year and then half-price for the following year. It is a great software to keep track of your sales funnel, but rather pricey overall for the functionality it provides, at least as a startup.

UberSuggest has been great for content writing and I feel that Niel Patel is a marketing genius.

Of course, we use Slack for collaboration and keeping everyone informed, especially during software development. It's great to work through blockers and issues that come up throughout the product dev cycles.

For development, we use Github for source control and releases and JIRA for project tracking. JIRA is great for dev progress because it's built for agile, rapid iterative development which is our culture!

What have been the most influential books, podcasts, or other resources?

My (Eugene) personal hero is Elon Musk, he just has the balls to say and do things that most leaders do not. He focuses on product and development instead of politics and ass-kissing. Customer experience, product quality, production scaling, and rapid prototyping are most important to build a successful business.

The E-myth Revisited was very inspiring and I do recommend others to learn how business works and what to do and not to do. It outlines why most small businesses fail but then some succeed. It outlines the amount of required patience to grow from a start-up to a real business that can stand on its own.

Irina is constantly inspired and impressed by Michelle Romanow, the youngest Dragon on CBC’s Dragons Den. Her determination, razor focus, and belief in the product and opportunity she was developing despite the 100+ no's she got along the way from so-called industry experts is admirable. I’m not saying “go forth blindly” but she knew she was onto something and didn’t abandon her vision, and it paid off times-fold. I think this resonates with me because we all have moments of self-doubt when faced with one hurdle after another, but as they say “ go the extra mile, it’s never crowded”. She did and continues to. Not to mention she is unapologetically herself along the way. Cheesy but true - “you go, girl!”

Advice for other entrepreneurs who want to get started or are just starting out?

  • Having an idea and running a business are two very different things. Be prepared to deal with lots of low levels and high-level tasks you didn’t set out to do or simply intimidate you. DON’T let that discourage you. There will be moments where you will feel like you’re not actually doing what you want to do or are losing focus of the big idea or your passion in all the nitty-gritty things. To reconcile the gap, relate each of these tasks to the bigger picture, reframe your outlook and focus on how each administrative task or big presentation ultimately drives the company to the overarching goal and aligns with your values.

  • Don't hesitate! Test ideas and hypotheses as quickly as possible for real market opportunities - there are so many tools out there these days that make it possible to create a simple landing page that says “coming soon!” or direct people to the simplest signup process to gauge interest. Get practical and if you don’t know-how, seek help or consult good ol’ youtube or google. If you take too long to think and don’t act, you stand to miss the opportunity.

  • As an entrepreneur perfectionism is an enemy - it's better done, than perfect. My co-founder Irina is a recovering perfectionist in progress, and it’s been a bit of struggle for her to let go. However, execution is key! Being timely and speedy is the “secret sauce”.

  • One common mistake is feature overload in the first product iteration. Including too many bells and whistles and making too many iterations before getting it out to market is a waste of time. If it’s not buggy and works optimally, you waited too long. Focus on the bare minimum features and get it out in front of your target audience. THEY will tell you what they like, what else they want, and point out what is missing. Don’t spend time and resources working on assumptions when the real data is out there.

We've gone through some hard-times: no personal income, no funding, stress regarding bad customer feedback & complaints, delays & development hell. Years of patience and perseverance is what it takes to spring through the stormy weather and be rewarded with service customers love and enjoy!

Are you looking to hire for certain positions right now?

We are looking for marketers and writers, paid full-time & part-time

Marketing role:

  • Must have a passion for social media and online trends
  • Attention to detail is a must
  • Write blogs, newsletters, and other engaging content. Must have the ability to research topics
  • Market research and recommend best practices for building brand awareness, social media, and consumer engagement
  • Learn the basic principles of SEO strategies to maximize content visibility
  • Produce relevant and origins content type, including blog posts and website copy
  • Monitor and engage with potential and existing customers through email. Blog forums. Social media and other mediums to increase user awareness.
  • Establish positioning of the business, identify target audiences and develop marketing plans with specific objectives across the different channel's and segments of our industry
  • Measure and report on the performance of marketing campaigns, gain insight and assess against goals
  • Post-secondary education diploma/degree in sales, marketing, public relations or related field

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
Eugene Veeden,   Founder of BagsAway Luggage Storage

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