Growing A Handcrafted Leather Goods Business To $600K/Year
Hello! Who are you and what business did you start?
Thank you so much for the opportunity to share Ashland Leather with Starter Story. As an entrepreneur, I am personally a big fan of reading everyone’s journey! My name is Phil Kalas and I am the co-owner of Ashland Leather Company.
At Ashland, we handcraft and sell premium men’s leather wallets that are guaranteed for a lifetime. All of the wallets and leathers are made using old-world techniques and are designed to improve with age. Leather is a passion for us. We love the sensory characteristics of leather. The look, feel, texture, luster, and even smell of leather is why we developed a wallet to carry with us all day and every day.
During the day, we make leather for the famous Horween Leather tannery in Chicago. On nights and weekends, we take the best leather in the world and make them into fine leather goods. We emphasize our favorite leathers like Genuine Horween Shell Cordovan™ and Chromexcel™ leathers.
Over the last century, the Shell Cordovan and Chromexcel leathers have developed something of a cult-like following. We have been fortunate to be aligned with this “cordovan cult” and our business has thrived because of people’s passion and appreciation for these high-quality leathers. There are not many things in the world that you can use every day that actually get better each time you use it.
Our flagship wallet is our Fat Herbie double bifold wallet. Fat Herbie also happens to be our first wallet model so I guess we got a bit lucky from the start. Eight years later, we now have several wallet styles but also make Apple Watch bands, watch straps, belts, key cases, and other accessories. In our first year of business, we had $30,000 in revenue. Today, we have grown our passion to $600k in annual sales and provide jobs for five families... And we are still growing!
What's your backstory and how did you come up with the idea?
Dan Cordova and I are the co-founders for Ashland Leather Co.
Both Dan and I are full-time employees at Chicago’s Horween Leather tannery. Simply put, we make sheets of leather at our day jobs.
It all comes down to philosophy. Why are you starting your business? What can you offer? Do people want it? Are you willing to sacrifice sleep to pursue this? You must have passion for your project.
During a lunch break in late 2010, Dan excitedly called me over to show me a beautifully hand-laced leather bag that he had made for his wife on their anniversary.
The bag looked incredible.
At the time, Dan did not know that I had also been pursuing leather crafting as a hobby. I ran out of the lunchroom and quickly returned with a leather wallet (what would later become the Fat Herbie) that I had crafted in my living room at home.
This confluence of two individuals who were passionate about leather and making stuff was the catalyst for Ashland Leather Co.
At our day jobs, we make sheets of leather for huge brands like Wilson, Nike, Allen Edmonds, Alden, New Balance, Viberg, and many others. We ship these sheets of leather to be turned into NFL footballs, NBA basketballs, and many types of footwear like dress shoes, boots, and moccasins.
The Horween leather tannery is essentially a boutique shop that makes small batches of specialty leathers. Many people tell us we have their dream jobs...I tend to agree with them.
Making the finest leather in the world all day spoils me. However, in the past, I did not get to complete the lifecycle of the leather and get to appreciate it as a final product. I describe this dilemma as like being the world’s best wheat farmer but not being allowed to bake anything.
As a crutch, I would often take trimmings or scraps of leather from the tannery and carry them in my pocket to see how each leather would age. Crafting a leather wallet or bag to use as an everyday carry good was a natural progression for both Dan and myself.
When we started the company I had a large amount of student loan debt. And, coming off the Great Recession, I recall going out on the weekends hoping $20 would last me the whole night. Ashland was started with $1000, a sacrifice of sleep, and a lot of blind faith. We simply made wallets that we wanted to wear. Luckily for us, people seem to have similar tastes.
Our first sale
We were extremely lucky to get our first sale.
It happened because we were in the right place at the right time. We, at the Horween leather tannery, frequently receive international buyers on visits to prospect new goods for their retail stores.
Ashland’s first big sale was a result of one of these visits. The tannery had a group from SHIPS Japan (Japanese/Asian retail stores) that was interested to see the “latest and greatest” that Horween had to offer.
The tannery owner, Skip Horween, was the first to promote Ashland to the buyers and offered them Fat Herbie wallets in both black and color #8 shell cordovan colors. That month, SHIPS presented Ashland with its first “real” order for $30,000.
Quickly, Dan and I got to work. We had never produced more than five wallets at a time. Now, not only did we have to produce hundreds of wallets at once we also had to think about new problems like packaging.
Our philosophy was to surprise and thrill the customer so we made a handmade wax-stamped box, custom letterpressed business cards, individual leather bags, and handcrafted hundreds of wallets. Through the month-long lead time that we had I don’t think Dan or myself had more than 4 hours of sleep every night.
This first order quickly led to more orders from our friends at SHIPS Japan but we also started our own website: www.ashlandleather.com -- Today our website is where 90% of our business comes from. Our business doubled the next year and now we took over five different rooms in Dan’s home including his garage.
We started employing more team members (hi Laura, Amanda, Matt, and Lupe!) and eventually leased a workshop next to the tannery. In 2018 we purchased our own workshop up the street from the tannery and finally have a long-term home.
Our website has grown not only in product offerings but also aesthetically. We often receive over 1000 unique visitors each day to our website. Our instagram following just reached over 10k followers.
In 2019, I started a new effort to make videos on our YouTube page and, despite being a self-taught videographer, the initial response has been very positive!
Since launch, what has worked to attract and retain customers?
A strong brand philosophy
The biggest advice I can give to every small business or startup is to have a strong philosophy.
At Ashland, our philosophy is to make men’s leather goods out of the best material (specifically Horween leather). You will notice that the above sentence has three very narrowly defined variables 1) Masculine market 2) Leather Goods only 3) Horween Leather Only.
Having this strong, well-definied philosophy allows you to really focus your attention on what your customers appreciate. It helps to differentiate you and make your product special.
SEO
SEO is our largest traffic source.
On Shopify, I use an app called SEO Manager. It is simple but seems very effective. I recommend it to everyone.
I am not a SEO expert by any means. However, what seems to have worked is focusing on a very specific set of terms. Instead of us focusing on “Leather Wallets” or even “Men’s Wallets” we focus on the name of the tannery and the leather type: Horween Leather Tannery, Shell Cordovan Leather, and Chromexcel leather. These are very specific niche topics that seem to have a reasonable amount of searches without much competition. I write blog post articles about these topics. For example, my blog article “Horween Geniune Shell Cordovan Vs. Chromexcel: What’s the Difference?” ranks either #1 or #2 when people search for “Chromexel” (a famous leather variety). My artcile, “What is Cordovan” ranks #2-3 when searching the word “cordovan”.
By narrowing our focus we rank #1 in google for search terms relating to Horween, Chromexcel, shell cordovan, and several others.
Email marketing is our second largest driver for traffic. We use MailChimp and have about 5000 subscribers. I try to give info or special offerings in my email list as to not try to spam our customers.
Here is a link to one of our best performing emails. This one has a 35% open rate, 12% clicks, and $8k+ in revenue. People bought other stuff from the site apart from the mystery box offered. The mystery boxes sold out quickly.
We offer limited release colors, models, and offers in our newsletter only. As for MailChimp: I think they are worth every penny and I love the service. However, I have not tried any other email marketing platform.
Advertising
For the 2018 holiday season, we hired an advertising agency to help us with some social media ads. We ran ads on google, facebook, and Instagram.
For me, the only thing I really like from these was re-targeting on facebook. Our retargeting conversions were about 10%. All of the other ads we just broke even.
I may try ads again in the future but our organic growth and strong SEO seem to be more valuable.
How are you doing today and what does the future look like?
One of the best new tools I’ve recently started using is called Bonjoro. Bonjoro is an iPhone app that allows me to send a personalized video message to each of my customers.
We started to see real success when we made products that we wanted to own ourselves: Wallets, belts, watch straps, key cases, etc. This strategy may not be what they teach in an MBA course, but for us, it made the business much more interesting to grow.
It does take quite a bit of time and effort to do but the results are completely shocking. My customers are thrilled to see a REAL PERSON on the Internet. I think every small brand should implement a personalized strategy like Bonjoro video messages to set themselves apart from big-box retailers where there is obviously nobody behind the curtain.
Secondly, I think there are stories to be told. A new emphasis for me in 2019 is YouTube videos. The tannery I work for has a 114-year history with a number of incredible stories. For example, one of these leathers was once used in tanks in WWI. It is completely fascinating and incredible to know the leather is made with the same formulations and machines from back in 1905. I think video will be a main driver of traffic for us within the next year or two.
Third and most importantly, you need a great team. Each member of our Ashland family I trust completely. I have to because I am not working with them during the day. I think this constraint actually is quite helpful because it forces me to give the team the broad goal and let them figure it out along the way. A new emphasis for us this year is to set larger goals and have monthly follow up meetings. For example, right now I am working on product development. We assign team members with specific tasks to develop theses products autonomously.
The numbers
Ashland is currently profitable and has been profitable since inception.
We have never taken a loan and, until recently, all of our growth was completely organic. We have experienced a 50% year over year growth since our start in 2011.
Our cost of goods sold is quite high because the materials we use are extremely expensive. The shell cordovan (ultra premium) is roughly 10x the price of other premium leather. About 30% of our costs are on COGS/leather.
Our cost of customer acquisition is effectively $0 because we do not advertise. We get about 22k sessions to our website each month with an average session duration of 3:00 and 81,000 page views.
90% of our traffic is from the USA. 3% is from Germany, and most of the rest is from Japan, Singapore, and Hong Kong.
Our conversion rate is about half of where I’d like it to be at 1%. I think this rate is low because we get a large amount of SEO traffic from the niche tails I’ve targeted and because our goods are expensive.
We have 5,000+ newsletter subscribers and 10,000+ Instagram followers.
We also get about 50 emails or more each day through the Contact Us section on our webpage. Either my brother, Matt, or myself answer every inquiry within 24 hours.
Through starting the business, have you learned anything particularly helpful or advantageous?
One of the largest mistakes that Dan and I made when starting our business was starting with women’s bags.
We noticed that 99.99% of the non-sporting goods leather that came out of the tannery was being used in men’s footwear.
In our minds, we thought that 50% of the market was missing out on what we believed was an amazing product. We made several women’s bags and actually sold them but we very quickly found out that we do not understand women.
Trends for women’s bags change seasonally and we simply could not develop and market product fast enough.
The other big thing was that we were forcing ourselves to fill what we perceived as a need in the marketplace. We started to see real success when we made products that we wanted to own ourselves: Wallets, belts, watch straps, key cases, etc.
This strategy may not be what they teach in an MBA course but for us, it made the business much more interesting to grow.
What platform/tools do you use for your business?
We run our entire website on Shopify. I really cannot recommend Shopify highly enough. It is simple, easy to use and it is very flexible. The best part is the apps. You can have custom programmed features on your website for incredibly cheap. My most used apps on Shopify are SEO Manager, Quickbooks Online, and Yotpo.
Yotpo is worth mentioning because it does an excellent job at automatically collecting user reviews and presenting them neatly on our website and product pages. They have a lot of behind the scene tools too that help to get your brand awareness up. For example, I love that you can automatically push user reviews to social media.
Not only do we create, craft, and market our own products but we also fulfill all of the orders ourselves. We do this using Shopify and stamps.com. These two programs integrate with each other.
We like stamps.com as opposed to FedEx or UPS because our products are small and can ship in the less expensive First Class or Priority Mail USPS options.
What have been the most influential books, podcasts, or other resources?
I am completely inspired by podcasts and audiobooks. The biggest influence on me has been Pat Flynn and the Smart Passive Income podcast.
Pat has a large amount of content and, if you are willing to listen through it, you will find a lot of valuable knowledge and resources in the podcast. Bonjoro, for example, is an app that I found from listening to his podcast.
Next, I have been very motivated and influenced by Gary Vaynerchuk in his books “Crush It” and “Crushing It”. There is so much good stuff in these books but the largest influence that it has had on me is the value of video and YouTube.
During the holidays this year, I was motivated on a re-listen of “Crushing It” to start up the Ashland Leather YouTube channel. I’ve been releasing a video each week and I have already seen sales coming from it (it’s only been 3 weeks!). Video is a large amount of work but I think it is very valuable to our audience.
Advice for other entrepreneurs who want to get started or are just starting out?
It all comes down to philosophy. Why are you starting your business? What can you offer? Do people want it? Are you willing to sacrifice sleep to pursue this? You must have passion for your project and maintain it (without results, even!) for a year or more and probably lose money. If you aren’t completely driven with a clear path ahead of you, the business will fail. Read books, get inspired, put your head down, and get to work.
A very easy, simple piece of advice I can give to anyone just starting up would be to buy and use Business Plan Pro. Their easy to follow program will force you to think about your business in a new way. You will begin to imagine the potential pitfalls ahead of time and avoid them entirely. Anyone looking to start up a new business is welcome to email me to ping ideas off of. You can get me at [email protected]
Where can we go to learn more?
- Ashland Leather Co. website
- Ashland Leather Facebook Page
- Ashland Leather YouTube
- Ashland Leather Instagram Page
If you have any questions or comments, drop a comment below!
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