Bad habits small business owners stick to

The co-founder of beauty and hair care retailer RY shares his experience of disrupting an industry, the changing consumer experience and how he is shaking off bad business habits.


Combining skillsets
Having operated his own salon on the Gold Coast for a number of years, James Patten recognised a potential market for retailing shampoos and hair care products outside of the salon walls.

“I’d had a couple of people in the store that said, ‘I’ve bought some stuff online [from] overseas because it’s so much cheaper’,” says James (pictured below, on the left).

To achieve this, he decided to partner with Bradley Carr, who at the time was running his own IT business.

“I was introduced to Brad, who is now my business partner, through a mutual friend. I said, ‘I want to sell shampoo on the internet. I’ve got access to all these professional brands that no one else has access to in Australia, and nobody’s doing a good job of it in Australia at the moment’.”

The combination of product knowledge and experience in online delivery proved to be a perfect fit, and today the pair continue to jointly operate RY as a dominant force in the beauty and healthcare retail landscape.


Online retailing before it was popular
James admits it was a shaky start, given that he and Bradley were pushing against the norm of in-store retailing.

“Pretty much everyone that we spoke to, every brand that we called, every person that we told ‘We’re going to sell some shampoo on the internet,’ people were like, ‘The internet will never catch on. Why would anybody buy shampoo on the internet when you can buy it in a shop?’. So we’d heard all the clichéd arguments,” he recalls.

Yet the pair persevered, believing that their idea had legs.

“We launched the first website, and the day that we launched, we did one transaction, and Brad rang me said, ‘Did your mother buy something?’, and I’m like ‘No, I thought it was your mum!’, and we both had a laugh and said, ‘That’s good’,” James says.

“And [there was] nothing the day after, then maybe two transactions.

“Then after a few years, it sort of came to a point where we said, ‘I think this is going to have real legs. Should we give it a real good go and see where it can take us?’. At that point, every waking hour we went about growing the site, making the site busier, and now the brands [were] ringing us, [saying] ‘Do you think you could sell our shampoo on the internet?’.”


“The bad habit is coming in every day, sitting down at your desk, and not seeing the bigger picture … You’re putting your handbrake on your own growth, really.”


Transitioning from a small to a medium business
RY has continued to grow strongly ever since. In the 2015-16 financial year, the business saw revenue growth soar by 60 per cent to in excess of $13 million.

Yet the result could have been very different had the business not been restructured to allow it to transition from a small start-up to a medium-sized enterprise.

“I think a lot of start-up businesses continue to run as a start-up for too long, and that was probably a mistake that Brad and I made,” explains James.

“We were still working in the business on the tools ourselves. About 12 months ago, our accountant advised us: ‘If you really want to take the business to the next level, you need to maybe step away from tools a bit, strategise a bit more [and] put some more long-term plans and goals into what you could do: some real KPIs and marketing budgets’.

“We were just basically just a little bit more focused, and obviously the trend of online shopping continues to grow. I can’t claim that I’m responsible for that, but as a business, we did get a lot more focused on our growth. I think we were just running day-to-day, week-to-week, for a very long time.”

That restructure led them, among other things, to significantly expand their number of employees – taking on an additional 10 staff to a total of 35 – to give them the capacity to work on the business, rather than within it.

“The bad habit is coming in every day, sitting down at your desk, and not seeing the bigger picture sometimes. It just all revolves around letting people take responsibility for their own role, and understanding what you’re responsible for as an owner of a business,” James says.

“I’m actually not responsible any more for packing the orders, but as a small business owner, you just feel like you’re responsible for everything. You feel like every negative review you get on the internet, you think it’s your responsibility to fix it; the parcel that goes missing, you feel like you have to call Australia Post to find out where it is, because your customer service person is not going to get the answer that you need. You’re putting your handbrake on your own growth really.”


Keeping pace with changing consumer demands
It’s not just on the business side that technology is having dramatic impacts. As James points out, consumers’ expectations have also shifted as they adapt to new technological possibilities.

“[Online retailing] is all around speed and convenience, where online used to be purely price,” he says of the shift, which has taken place over less than a decade.

“When we started – we were laughing about it the other day – our shipping terms were we guaranteed to ship your product within 21 days, and I think we had a clause that said it may take up to 21 days after we shipped it. So essentially a month and a half to get your bottle of shampoo, and that was the industry norm, and shipping was, I think, about $15. This was 10 years ago.

“Whereas the consumer now, pretty much, 24 hours is considered slow delivery; [the expectation is] same-day delivery. So you’re looking at some challenges there of keeping up with what the consumer defines as the normal online shopping experience now. People want their stuff fast; they want it at a competitive price.”


“We thought we’d be opening our stores to expand our channel and our reach, and it turned out a lot of our online customers were quite excited to visit us in-store as well.”


Expanding into muli-channel delivery
“We have plans to open 20 stores [in the] three years from middle of this year. We’ve got two open currently, and we’re looking at the third,” says James.

He admits that starting in the online world and then seeking to expand into a bricks and mortar presence goes against the grain compared with most Australian retailers. Ultimately, though, James says your entire business model should be about meeting the expectations of your customers.

“It lends itself to that multi-retail strategy, to say, ‘Shop online, shop on your iPhone, shop on your iPad, shop in your lunch break’. It really, again, comes back to the consumer.

And as James points out, business owners are often surprised to find that customer behaviour is quite different in reality from what was initially forecast.

“We were surprised when we opened our store, the concept store, recently. [A lot of] in-store customers were also already our online customers. I thought, ‘If they’re buying online, why would they want to visit us in-store?’,” he explains.

“We thought we’d be opening our stores to expand our channel and our reach, and it turned out a lot of our online customers were quite excited to visit us in-store as well.”


“Retail is just one [business]; it will be the customer that chooses in the end where they shop."


Meeting the challenges ahead
Of course, as other retailers such as My Pet Warehouse’s Philip Bartholomew have previously pointed out, the main challenge in this multi-channel environment is not about operating each as a standalone entity, but delivering a holistic shopping experience for customers.

“The challenge is to bring the two together,” says James.

“Retail is just one [business]; it will be the customer that chooses in the end where they shop, and I don’t think you will define yourself as an online shop[per] or a bricks and mortar shopper, you will just be a shopper. You’ll choose the shop that you want to shop at, and if that shop is sensible, it will have a bricks-and-mortar store, a mobile site, an online store, a click-and-collect option.”

According to James, the fundamental goal of any business is to make the experience “as convenient as it can be for the customer”.

“In all honesty, when we launched the business … we were both working; I was in a salon and Brad had a small IT business. I don’t think we thought that the business would become what it is today!”


Quick facts about RY [pronounced R Y, not rye]:
Industry: Beauty retailing
Established: 2007
Customer base: Australia-wide
Annual turnover (FY2015-16): $13 million
Number of employees: 35


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