How I Started A Subscription Box Business For Kids

$20,000
revenue/mo
2
Founders
4
Employees
product
Bundleboon
from Amsterdam
started February 2018
$20,000
revenue/mo
2
Founders
4
Employees
8.53M
alexa rank
8.85K
followers
31
followers
platform
email
analytics
shipping
productivity
payments
accounting
customer service
design
referral
freelance
crm

Hello! Who are you and what are you working on?

Hi, my name is Nelli Jeloudar and I am the founder of Bundleboon - a curated shopping service specialized in kidswear. We take away the hassle of shopping for your child and instead, we turn it into a fun and memorable shopping experience for the entire family.

Our concept is easy and convenient to use.

As a parent, you can complete our style quiz on our platform and we will use the data and the answers to hand-pick two personalized outfits and ship them straight to your doorstep. Use your living room as a runway for 5 days and only pay for the items that you love and want to keep.

how-i-started-a-subscription-box-business-for-kids

Bundleboon is essentially a retail formula, where we get inventory from brands and retailers and sell that inventory at full retail price with no additional costs for our customers.

We currently offer more than 50 brands in our boxes and have constructed consignment deals and exclusive wholesale deals with brands, which allows us to lower the inventory risk and still have high enough margins to scale our business.

how-i-started-a-subscription-box-business-for-kids

I initially launched Bundleboon as a side hustle back in 2017 next to my “normal” and paid job. I was a solo founder and managed the operations from my tiny living room in the heart of Amsterdam. Since this was my first attempt to launch a real and scalable company, I wasn’t ready to quit my job without knowing if there was a product market fit.

Within the first 2 months, I had around 300 pre-orders waiting to be picked, packed and shipped. Those 300 boxes generated revenue of close to €45.000 with only €2000 spent in startup costs (minus the inventory costs).

This was a clear indication for me that there was a demand for Bundleboon and that I should pursue it. But I wasn’t willing to it by myself. I needed a co-founder who had complementary skills and could fill out the gap in areas I had zero knowledge about.

I decided to attend the annual Amsterdam startup weekend and met my two future cofounders with expertise in digital marketing, innovation, ecommerce and portfolio management. The party of 3 soon became a party of 2 (stay tuned for the whole story).

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

Bundleboon is my first business, in fact, I never wanted to become an entrepreneur.

When I graduated from college in Copenhagen, I started working for Pandora Jewelry where I quickly found a passion for customer experience and the importance of it.

Don’t quit your day job before you have validated your concept. Run it as a side hustle, until you have enough knowledge, customers and resources to go all-in. You don’t have to have a lot of money in the bank when starting off.

After 3 years of at Pandora, I came across a job ad on Facebook from a Danish/Dutch fashion startup, called The Cloakroom (european version of Trunk Club) located in Amsterdam. They were looking for Danish account managers and personal stylists. I decided to go for it and moved to Amsterdam. It was by far the best decision of my life.

The two founders of The Cloakroom took me under their wing and taught me that you don’t have to have a fancy degree in business or pocket full of cash to become an entrepreneur. It was all about the mindset, dedication and proof of concept.

The idea for Bundleboon came about when my friends with kids kept nagging me about how intrigued they were about The Cloakroom and curated shopping. They didn’t understand why there were no such service available for kids.

I started doing some marketing research about similar concepts in the US and the kidswear market in europe. I found out that kidswear is the fastest growing segment in the fashion industry with a market size of €56BN, but yet lacking any true innovation or customer experience. After a few months, I decided to go for it and see if there was a demand for this type of service for kids. I setup an account with Thunderclap (an announcement tool, which has now been shut down), made a campaign and started to reach out to my network. The goal with the campaign was to get enough social reach and get traffic to my landing page, where parents could sign up to pre-order a box with 2-3 outfits.

Within 1.5 weeks after the campaign went life, I had 125 pre-orders via my landing page with zero money spent on acquisition. This was a clear indication for me that there was a demand for a service like Bundleboon. There was just a small problem. I had no idea how to pull it off. I used the two Cloakroom founders as close mentors and sparring partners. They both advised me to keep validating and to keep the costs as low as possible.

Describe the process of creating the subscription box service.

We bootstrapped the whole process. Everything from boxes quiz on the website. However, finding the right inventory and inventory strategy was a big project. The main focus was to keep the inventory risk low but still have high enough margin to be able to scale, but also to be able to test certain brands before we spend a lot of money on buying inventory.

The only way we could do this was to partner up with a retail partner, who would allow us to use and sell their inventory to our customers. I found a nice dutch retail partner with more than 50 niche and unique brands. They agreed to a deal where I would order what I needed on demand and exchange, the retail partner would get 70% of our revenue. This might seem like a bad deal for us, but bare in mind that the burn-rate at the time was almost down to zero.

I was running the entire operations from my living room, I didn’t have any employees and zero spent on marketing and acquisition. I acquired my customers via my network and referrals.

how-i-started-a-subscription-box-business-for-kids

When my two co-founders came onboard we decided to apply for one of the biggest accelerators in the world, Startupbootcamp.

They offered a 3-month program for startups in the field of commerce, where they would help us dig deeper into our business model and connect us with the most experienced mentors and possible investors.

Lucky for us, we were one of the 10 startups chosen to join the program and the 3 of us decided to put operations on hold during the program to really understand what our customers wanted and how to build a scalable business.

how-i-started-a-subscription-box-business-for-kids

With only a month left to our big demo day in front of 400 potential investors, we had finalized our inventory strategy and decided to start running Facebook ads to target new customers.

In the meantime, we were working on a brand new website and even had a developer and a branding agency working on a customized style quiz.

Looking back now, I know that it was a big mistake to jump so fast on spending half of our revenue on a branding agency or even a developer. We were still in the MVP phase.

how-i-started-a-subscription-box-business-for-kids

On the day of our demo day, we were really proud to announce that we had acquired 350 customers and our goal to expand to the other markets. Within a few days after the Demo Day, our new platform was ready to launch and business was up and running with full speed.

Boxes were going out like crazy and we were super happy that things were picking up and the amount of media attention we got after the Demo Day. Nothing could break us. Until our third cofounder announced that he was leaving the company….

Describe the process of launching the online store and business.

The MVP page was built in Weebly - a simple and easy drag & drop platform.

I built a style quiz in typeform, added some stock photos, and used HTML code to implement it to the website. It was a good setup to get more box orders in.

It wasn’t until April 2018, during our time at Startupbootcamp, where we decided to launch a full-blown, customized website and style quiz by using Shopify. We paid a branding agency plus a developer for something, we decided to change later. Our new website and quiz had everything we wanted.

The quiz looked super professional, the visuals and branding were beyond our dreams! But in reality, we found out that our users and paying customers didn’t find our customized style quiz engaging enough, causing a fall in our online conversion. We decided to keep it running and in the meantime, we went back to bootstrapping, analyzing the customer behaviour and gather as much feedback as possible by calling all of our customers. The quiz we have now is built based on what our customers wanted.

We didn’t hire employees until late 2018, so my co-founder and I did everything from customer service, styling to shipping and sending invoices. By this time, we were also dealing with our third co-founder leaving and cash flow running tight.

All of the investors we spoke to told us that we need to show more traction and show how we can scale. We needed an investment to really show the potential of the concept, so we started a small crowdfunding campaign on a Dutch platform called Leapfunder, which secured us €15.000 in convertible loans. We decided to use the money on hiring an employee and on online customer acquisition.

In August 2018, we moved to a small office in Amsterdam and hired our first employee, Noga. She has a broad background in fashion and she was one of the best performing stylists at The Cloakroom. She was actually one of our first customers and she had shown interest in joining our team. She is now running a team of 3 stylists and has the highest AOV (Average order value) and revenue of everyone in the styling team.

how-i-started-a-subscription-box-business-for-kids

Month over month we secured small loans and investments. On top of that our monthly growth rate grew at 25%.

How have you attracted customers and grown the business?

Our customer acquisition strategy is built up in three groups; online customer acquisition , retention and referrals.

Online customer acquisition

We use multiple channels to acquire new customers, but the one that really works well for us is by using influencers. We reach out to real moms, who are active and engaging on Instagram and have them do a nice unboxing video for us in exchange for a box with clothes. If the influencer uses the right approach, we can get up to 35 new customers in pr. influencer. We have also noticed that the average basket size is almost 30% higher when the customer is acquired via one of our influencers. Next to influencer marketing, we also acquire customers via ads on Facebook and Instagram. The engagement, clicks and conversion are far higher when we use unboxing videos rather than regular photos. Our customer acquisition cost varies between $9-20, depending on the type of ad and target audience.

Retention

Getting our customers back is our main priority and we spend a lot of time on each of the customers, making sure that they receive a great service. We always call or Whatsapp them for a follow up chat after they have sent their box back. This way we can truly understand why they sent some items back and what they are looking for in their next box. 21% of our monthly orders come from existing customers and we aim to get it to 45% by the end of the year.

Referrals

Two months ago, we launched our ambassador program, we will reward our current Bundlebooners when they refer a new customer to us. All they have to do is to share a unique referral code with their friends and family. If the new customer orders a box and keeps for min. €25, the current customer will get €10 to use on her next box.

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

Fast forward to December 2018, we hired three new stylists to join the team. They are now shipping more than 300 boxes on a monthly basis with the AOV being €100, which is equivalent to more than half of the content of the box. Our current monthly revenue is up to €22.000 with a margin of 60% thanks to the exclusive partnerships with our 50+ brands in our inventory.

We are growing super fast and can’t fit in our tiny office anymore, so we are moving into a cool and much bigger office in the red light district in Amsterdam. It is quite crazy to think back to 12 months ago, where we didn’t have any employees and were sitting in an accelerator trying to build a scalable business.

Our goal is to become more than just a fashion company. We are working towards to become a tech company combined with customer experience. As mentioned before, we are currently gathering enough data to build an algorithm to automize the styling process. The automisation will help us understand what the individual Bundlebooner wants and needs for their child.

how-i-started-a-subscription-box-business-for-kids

During the month of February and March, we will start our first big fundraising via an equity crowdfunding platform, called Eureeca. People from around the world (except for the US) can invest in Bundleboon in exchange for equity and a $100 voucher for a Bundleboon box.

Our goal is to raise $280.000, which will be spent on building a data platform, styling algorithm, supply chain and working capital. We are also planning on entering the Nordic market in late 2019. Check out our crowdfunding video here and keep an eye on our social media accounts for updates about the campaign.

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

The most challenging thing was to establish a good cash flow. You can have a great business and thousands of customers, but if you don’t have a good cash flow overview, it might cost you the business in the long run.

Being an entrepreneur is not for sensitive souls. You need to have some tough skin and be prepared for a lot of turbulence. Running a startup is a very lonely journey and requires a lot of time and sacrifices.

So for us, our mentors and shareholders have been the biggest help. Being a first-time founder, you make A LOT of mistakes, but having a great team of serial entrepreneurs as a support system can save you a lot of heart and headache.

The accelerator, we were part of truly helped and taught me some valuable lessons. Remember I told you that I used to have two co-founders? Well during the last month of our time at Startupbootcamp (the accelerator), one of my co-founders decided to leave us. When he came onboard, we obviously had to draft a founders agreement between the three of us.

This particular cofounder tried to convince Monique (my cofounder) and I that the vesting clause should kick in within 12 months. Meaning that if one of us decides to leave before the end of the year (in this case Dec 31st, 2018), we will be able to take 10% shares with us out. Lucky for Monique and I, we got some guidance from the accelerator and advised us to extend the vesting agreement to 3 years.

If all co-founders are 100% committed to Bundleboon, the 3 year vesting agreement shouldn’t matter. Thanks to the clause in the founders agreement, our third cofounder ended up leaving with nothing.

What platform/tools do you use for your business?

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

Books

Podcast

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

Being an entrepreneur is not for sensitive souls. You need to have some tough skin and be prepared for a lot of turbulence. Running a startup is a very lonely journey and requires a lot of time and sacrifices.

Don’t quit your day job before you have validated your concept. Run it as a side hustle, until you have enough knowledge, customers and resources to go all-in. You don’t have to have a lot of money in the bank when starting off.

Depending on your business model, you can do a lot of growth hacking and developments without spending a ton of money on it.

Lastly, I would recommend to find a co-founder with complementary skills and get to know your customers.

Don’t assume that you have a business without any paying customers.

-  
Nelli Jeloudar,   Founder of Bundleboon

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