Two decades is a long time to have survived in any industry, especially in retail: Matt Blatt owners Deb and Adam Drexler return to the My Business Podcast to reveal their insights on achieving sustainable business growth.
From marketing their business to wowing new customers, combatting fraud to the real-world implications of understanding your customer demographics, Adam and Deb are honest and open about their journey in business.
Tune in as they discuss:
• Getting the best value from your advertising and marketing spend
• Countering “the sky is falling” belief about Amazon in Australia
• Useful tips for minimising card fraud and chargebacks
• Strategies for surviving in business as a couple
And loads, loads more!
Announcer: Welcome to the My Business podcast. Insight, inspiration and wisdom for business owners wherever they may be. Here are your hosts, Adam Zuchetti and Andy Scott.
Adam Zuchetti: Thanks for tuning into another episode of the My Business podcast. This is actually our last for 2017 so thank you so much for joining us through all the highs and lows that we've had on this show during the year. We've decided to finish the year off by bringing in a couple of guests that we had in a few weeks ago. We were discussing some very top level things about business a lot of strategy and management kind of concepts, but we wanted to pick their brains more about the everyday level. So they've got some great advice about the recent launch of Amazon, avoiding chargebacks and just coping with life as business owners as a husband and wife team. So our regular listeners might remember Adam and Deb Drexler, who own the eclectic home wares retailer, Matt Blatt. Guys, thanks again for coming back and joining us in the studio. Amazon ... there's a lot of talk about that and as we speak they still haven't announced a launch date but it's obviously getting very close. Is that something that you guys are worried about?
Adam Drexler: I personally have my own theory about Amazon and my own belief, which maybe not everyone agrees with me and that's fine. You said they still haven't announced their launch date. Well, for two years they haven't announced their launch date. They're hyping up the market, they're getting their marketing machine, "Amazon is coming, Amazon is coming. The sky is falling. The sky is falling." I don't think the sky is going to fall when Amazon comes. You can already buy products from Amazon today that come from various parts of the world and they're opening up a warehouse in Melbourne, a distribution centre. It means you'll probably get products quicker.
You can buy products, cheap products today on sites like Ebay. Ebay is not the same site it was when I started, they don't sell on auction. We have a store on Ebay, we have a Matt Blatt store on Ebay. Ebay is just an online site where anyone can list products. Any small business can list their products and sell it to the general public, and I don't see that Amazon is going to be that different in their offering. I personally think it's a lot of hype. That yeah, they'll make a difference, they'll take away market share from various players in the industry because you know it's a new player, but I don't think that it's going to totally revolutionise the retail industry in Australia. And I understand that other markets that they've entered, like Canada and others, they haven't had such a huge effect there.
Adam Zuchetti: What about on your business in particular? Are you going to actually look at, because you were saying that you've got the Ebay store, are you going to look at selling through Amazon as well just to sort of enhance your distribution channels?
Adam Drexler: Look, we may, but if you look at our business we sell a lot of bulky good items. In fact, bulky good items is the main part of our business really. It's what brings us to the turnover that we have you know we don't get the big turnover by selling $10 plates or whatever. So how is Amazon going to deliver a sofa from the Melbourne warehouse to Sydney with two men needed to take it up three flights of stairs? And what happens when they get there if the customer's not home? Where do they put the sofa after that? Back in the truck? And where do they go? What does the truck driver do with it after that? And you know if they have three or four deliveries like that, they've got a full truck and nowhere to deliver it.
So, furniture I think is a bit different to other stuff that Amazon deals with. And although there are a lot of furniture companies or some furniture companies in Australia that are pure online players, like I said before, I don't think it's the best business model. And with furniture it's what's called ugly freight. It doesn't come in a nice box. The more times you handle a box of furniture and move it from one area to another, the more chance it is that that item is going to get damaged. It just doesn't travel that well. We use furniture trucks to deliver around Australia, I don't know that Amazon is going to have furniture trucks. They'll use companies like TNT, Fastway, I don't know what companies there are, that take it off a pallet and chuck it in front of the front door or something. So I'm not terribly concerned in my business about Amazon and how they're going to encroach on our business.
Adam Zuchetti: Okay. Interesting perspective. But looking at more broadly at being in the retail sector and everyone saying oh retail is really struggling in Australia and things like that, and we've had Myer recently saying look we're going to reduce our footprint, close stores things like that. But at the same time you guys are expanding, you're adding new stores, you're opening a new warehouse I understand.
Adam Drexler: Yes. We have opened a warehouse.
Adam Zuchetti: So is that difficult when you're confronted with all this speculation, all this talk and hype about retail in general doing poorly, and you're going well actually that's not our experience we're doing well. Is that something you're having to fight against at all?
Adam Drexler: Look, our business model to open new stores is working for us. Every store we're opening we're making profits out of it, we're doing well. It's not, we wouldn't be opening new stores if we were losing money out of it. It just works for us, our business model, what we represent.
We like to think of ourselves in the entertainment business. People come into our stores and they have fun. We have pinball machines in the business, we have TVs for kids to watch cartoons while their parents shop, we have a chocolate wheel you can spin win a prize, you know a $20 gift voucher. And we feel, I often just for fun sit in a chair near the front door and watch new customers haven't been in to our showroom before, haven't connected with our business, they come in and their jaws drop. You know they look around, they see all these colours and all these funny things happening there and they get excited, they become happy. I feel we're entertaining them.
So, we're connecting with our customers on a different level to maybe other retailers and we're opening up a new showroom in Balgowlah in about two or three weeks. I'll just give you an idea of some of the fun stuff we're having there. So this showroom is on two levels, and there's a lift. There's a goods lift but it's also a disabled lift, so it's quite a big lift and it's people friendly it's not just one of those horrible looking goods lifts that are all battered.
So I went into the lift the other day when I was checking on the progress of the renovations we're doing, and you know it's a pretty big sized lift maybe three metres by three metres, and I said to the manager, "We should be putting furniture in this lift. Put a sofa there and a couple of prints above it, a table lamp next to it."
Deb Drexler: TV.
Adam Drexler: When a customer goes in this lift, it's going to be a lift like they've never been in ever before. You know that's fun, wouldn't you agree that's pretty fun.
Adam Zuchetti: And also different. So it leaves that image in a customer's mind, oh wow do you remember when we went to that store that had that amazing lift, let's go back there and ...
Adam Drexler: Yeah.
Andy Scott: It wasn't a lift Adam, it was a moving room.
Adam Drexler: That's right. Can we use that?
Andy Scott: Take it, it's yours.
Deb Drexler: And we hope people still like shopping. I like to think that people still browse in bookshops and you know rifle through CDs and like to jump on sofas. You know I still think it's in our DNA that we like to hunt and gather, so hopefully it's still something people enjoy doing.
Adam Zuchetti: You guys have really embraced that hunter-gatherer thing and I was looking at your social followings and you've got quite a decent following that you've built up over the years. I think it's 217,000 on Facebook and 44,000 on Instagram.
Deb Drexler: We wouldn't know, we don't even look at it.
Adam Zuchetti: But if you're not looking at it, is there someone who's actually actively posting and keeping that momentum going?
Deb Drexler: Yeah. Younger than us. You've got to have them younger, they know what's going on. They know how it works. You know we buy newspapers, we're old. What do we know?
Adam Zuchetti: So it's a multi-pronged approach because I actually, coincidentally I heard your radio ad this morning.
Deb Drexler: Oh did you?
Adam Zuchetti: Coming in, yeah so I did.
Adam Drexler: Well someone's listening.
Adam Zuchetti: Yes. Well I actually wanted to ask you about that because everyone's talking about digital marketing, social media and doing that sort of push, but you guys at the same time are embracing more traditional means of advertising.
Deb Drexler: Yes, all our friends they're all our age. They don't go on Instagram, they don't know what's going on out there on Instagram. They don't look at Facebook.
Adam Drexler: Okay. I can answer this.
Deb Drexler: But they buy papers and they read it.
Adam Drexler: Let me, let me.
Deb Drexler: You know? That's ... Okay you go, but that's what they do.
Adam Drexler: Yeah, we used to advertise a lot in newspapers and you know in the print and media until about a year ago when we did a promotion and we gave away an item of furniture. We advertised in the paper, no one came to get it. It was free you know? Come into our shop, get this free, sign up on our newsletter. So we repeated the exact same thing with the same shop on social media instead, and there were queues going around the ... neighbourhood. So we came to the conclusion, people aren't reading newspapers they're on social media, they're on Google, they're on Facebook, Instagram, which is pretty reasonable. You know it was kind of like an experiment.
Deb Drexler: I didn't support that view. I was the only one. I didn't agree with that, anyway keep going.
Adam Drexler: So what we did around about last July, is we cut printed media totally and the money we were spending on that we're moving to social media, spending more on Google advertising on Facebook and that sort of stuff. Instantly sales shot through the roof. Foot traffic increased, web sales increased, everything went ... right. And we were all patting each other on the back, aren't we clever.
So over the year since July of last year, a little bit more than a year, sales started decreasing again. And when we had conversations with our store managers, they were telling us that the demographics of the people coming to the store has changed in the past year. There's all young people there and no one of the middle aged and all the people who like to spend money. So, we thought, wondered why that's happening and we thought we would go back to printed media and four weekends ago we did a big push on printed media, we advertised Sydney, Melbourne, Brisbane, Canberra, Adelaide in one weekend. Foot traffic increased into the store and sales were good.
The following week I went around to the stores and talked to the teams there, and I asked them how did the printed media ads go, how did the ad in the paper go? And they all said, this was repeated in every showroom I went to and I wasn't just talking to the manager, I was talking to the manager and the sales staff, and they all said oh we don't think it had a big effect. I had one call, someone asked about this product that was in the ad and a couple of people came in and asked about something in the paper or had a cut out of the paper, but no no we don't think it did that well. I said, how about the demographics of the people who came to the store over the weekend? Yeah so a lot more older people they all said in unison.
So, there were, on that weekend, there were many more older people, middle aged people, all the people, than what they had previously been. And we've since kept advertising and we've found that our old customers are coming back. It took them a year to lose touch, or you know gradually wasn't in front of their eyes, the papers that they're reading our ads weren't there and gradually they lost interest or weren't reminded about us and they stopped coming. Moving forward when I realised that's not just one or the other, it's got to be a mix of the two and you've got to be clever about it.
Adam Zuchetti: That's really interesting that you've actually been quite tangible in breaking that down and coming to that realisation.
Adam Drexler: Yup.
Deb Drexler: Well now we have metrics too so we can, you know months ago we couldn't prove anything we didn't have metrics in place but we do metrics all the time now. We can prove all sorts of things which is very helpful.
Adam Drexler: You know we measure foot traffic, conversion rates, basket sizes. We know who our customers are. We measure, you know Google analytics has all this information but you can even find out where your customers, what websites your customers going to after they've been on yours.
Deb Drexler: You can find out what they eat. No. I wish.
Andy Scott: Food.
Deb Drexler: Yeah.
Adam Zuchetti: Are you finding, and coming back to that point about finding what customers go on to, the website that they look at next, what is that that you're coming across? Is everyone broadly investigating furniture and home wares, or are they quite different and coming to you quite bespokely?
Adam Drexler: No, we don't have a monopoly on the furniture industry. They shop around, they use ... The way we feel they behave is they use the Internet, and in particular Google, to do their research and from there they make a decision on which furniture store they'll visit or which furniture store they'll buy online for. And we just feel that the behaviour of our customers is such that they might be doing some research on a sofa and they'll see our name come up on Google and they will look at our sofas, they'll look at other furniture shop sofas and they'll come into store. They'll look at it, they'll ask questions, they'll look at the different colours that they can choose for that particular sofa for example, and they'll gather all the information and they'll go home and they'll talk about it over dinner. After dinner, they'll go to the computer, they very well may place an order but that doesn't mean that you're selling a $6,000 online without the customer seeing it first.
Adam Zuchetti: Something I really wanted to discuss with you, particularly I suppose from your online sales point of view, is issue of chargebacks. And that's been something that's been quite prominent for a lot of retailers and we've spoken to quite a few businesses that have had that problem. Whether it be fraud, whether it be whatever, they're not, the business owner themselves, they're not happy that these chargebacks are happening and sort of processing it, complaining about it, having it reversed, it just always seems to be lumped on the business owner. Is it something that you guys have been having a problem with?
Adam Drexler: Yes, absolutely. You can't sell on the Internet and not have problems with chargeback. What happens is you might go out for dinner and you give your credit card and your waiter takes it out the back and processes the payment, and while he's out the back he's writing your credit card number down, your expiry date, the four digits code on the back and he processes your sale and gives it back to you. He goes online, Matt Blatt site, and he places an order for a few hundred dollars or a thousand dollars or whatever. He uses your card, right? He's got all the information, he puts the numbers in and that payment goes through because there's no reason, you haven't reported a stolen card, there's no reason for it not to go through. When you get your next statement or the next time you look online at your bank account, you see a charge of thousand dollars from Matt Blatt. I never went to Matt Blatt. This is wrong.
So you call your bank up and you say I didn't authorise this payment. The bank contacts us and says show me a signature. Well we don't have a signature. Chargeback. So we manage it in a few different ways. We might call the customer up, they leave a mobile number, call them up, talk to them, get a sense of feeling of how nervous they are or what sort of person they come across, it's not a fool proof method. Or we might ask them to show identification, take a photo of your driver's licence and send it to us by email.
And we used to do once, I don't know if we still do it, but this something I instigated I thought it was pretty good, was we used to for bigger sales - you know I wouldn't bother with a hundred or twenty dollars, if someone's going to rip you off they're not going to just do it for a small amount - so we would process the payment, take $10 out of their account and contact the customer, ask them look in to your bank statement online and tell us how much we took out. If they can't tell us then they, you know someone, that waiter who took your card doesn't have access online to your bank account so they would not be able to say oh you took out $10.50.
Adam Zuchetti: That's a very clever way of doing it.
Adam Drexler: Yeah.
Adam Zuchetti: Have you actually caught out fraud with this method?
Adam Drexler: Yes. Absolutely yeah. We catch out fraud all the time. But, we also get caught out all the time too. And sometimes we send police around and sometimes we go knocking on their door and sometimes we get our money back and sometimes we don't, but it's a cost of doing business. You can't not sell on the Internet, of course you're going to get ripped off every now and then, but you got to limit your risk.
Adam Zuchetti: When you said it happens all the time though, what kind of frequency are we talking about? 10% of the time, 1%, a fraction of a percent?
Adam Drexler: Not 10%, but I would think in a year you'd probably have 30, 40 cases of it.
Adam Zuchetti: Mm-hmm.
Adam Drexler: Which is not a lot considering the number of transactions we have.
Adam Zuchetti: But it can still add up I suppose.
Adam Drexler: Yeah, it adds up and it's not a loss anyone likes, but you know that's just one way of losing money in a business. There's a lot of other, you know there's a lot of other, shop theft. We were in our Paddington store once, Debra and I. And as we walked we saw this rug on the wall, a big rug 2 metres by 1.8 metres or something, and all of sudden it wasn't on the wall anymore, it was nowhere. Someone, while we were there, they took a rug off the wall. We were dumbfounded.
Deb Drexler: Yeah, yeah.
Andy Scott: Hide in plain sight I guess. I see two people walking out [inaudible 00:19:24] store with a rug, I'm assuming they paid for it.
Deb Drexler: The funniest one was the, the funniest one was at [inaudible 00:19:30] Junction. We supplied the big cow hide replica egg chairs in cow hide, they're beautiful, and one of them was pinched. Two people put overalls on and walked in and walked out with one of them.
Adam Drexler: Put it over their shoulder and walked out, and no one asked any question and they could follow them on the camera and see where they went, out they went. We didn't mind because they placed an order for another one, but we didn't do it.
Adam Zuchetti: Talking about you guys, you guys have such a dynamic here and it's quite visible us to see and our listeners obviously won't be able to see it but even just hearing you talk, being in business together how does it actually work for you guys?
Adam Drexler: You could have balled me over with a feather when we started business, when Debra entered our business and we just got on so well.
Deb Drexler: But we didn't know anything. We didn't even know this business was going to continue to where it is. You know nothing was planned. I walk in the showroom and I think oh this is our business. I have to pinch myself and remember that this is our business. We didn't know it was going to be showrooms even, we didn't know anything.
Adam Drexler: Yeah, but on a personal level ...
Deb Drexler: On a personal level.
Adam Drexler: It just works.
Deb Drexler: Well it's another adventure that we enjoy together.
Adam Drexler: I come home and we talk about it together over dinner.
Deb Drexler: It's like our third child but it's our more challenging third child. Our other two kids are really easy and they're just wonderful.
Adam Drexler: This child doesn't sleep at night.
Deb Drexler: This child, exactly. This child has given us a lot of yes, sleepless nights and sleepless days. Yeah. I don't know how does it work?
Adam Drexler: Don't know, it just does.
Deb Drexler: Maybe it won't tomorrow maybe we will be going to ring up a divorce lawyer tomorrow.
Adam Zuchetti: Do you ever get to the point that you're sick of talking it because ...
Deb Drexler: No, because there's always something different. Every day there's something different. If I go to work for a couple of days, it's whole new and there's a whole new everything. Everything, whole new projects going on, might be new people, it's just all new decisions are being made. It's just every day there's different stuff.
Adam Zuchetti: But you spend all day together talking about all these different things.
Deb Drexler: No. We don't, no we don't spend all day together. We don't spend all day together. No. That's probably partly why it works now because we just different, totally different areas. We don't sit together or anything. It's like in the evening when we get together again and we talk about it all then. Yeah. So it's nice we've got a lot of space.
Adam Drexler: But we're often in meetings together.
Deb Drexler: Yeah that's true. Yeah we are. Yeah, we’re around. Yeah. True. I don't know. It gives us something to talk about. There's always something to talk about, isn't there?
Adam Drexler: We sit in meetings together sometimes, especially board meetings and I look over at Debra and I see this frown on her face, she looks as if she's totally disgusted with what's going on. She hasn't got a poker face and I look at her and I pull a smile, get her attention and smile, and she realises that she's ...
Deb Drexler: Yeah, but sometimes he'll say something funny that makes me laugh. Look we don't take anything too seriously, I think that's the thing in business too, you can't take thing seriously. You can't take your business, you can't take furniture too seriously, it's just ...
Adam Drexler: We like to have fun.
Deb Drexler: It's fun. And we like to do that in our life, you know? Everyone's so serious. One day we won't be here, just might as well enjoy the ride, you know?
Adam Zuchetti: That's actually a really good piece of advice for our listeners, is not to take things too seriously. I suppose what other pieces of key advice would you impart?
Adam Drexler: Other piece of key advice.
Deb Drexler: Listen to each other. Yeah, that's important.
Adam Zuchetti: Make each other tea.
Deb Drexler: Don't go there.
Adam Drexler: Some advice I gave to my son who came into the business, he's been there for 10 years but when he first started even every and now and then I say to him, leave your ego at home, you don't know anything, learn from others, keep your ears open, and treat people nicely. And here's another one, don't ignore karma because it'll come back and bite you on the bum. And if you don't know what karma is, Google it.
Deb Drexler: Can't argue with that.
Adam Zuchetti: Well guys, thank you so much for joining us on the show today. Deb, Adam it's been great ...
Adam Drexler: Well thanks for having us. It's been emotional.
Andy Scott: No, thanks for stopping by guys and good luck with all the new store openings.
Adam Drexler: Okay. Thanks.
Deb Drexler: Thank you very much.
Adam Drexler: Thanks.
Deb Drexler: Thanks.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.