CatastrophiCreations’ Business Model Evolution: New Products, Approaches and Distribution Channels
Since co-founding CatastrophiCreations just a few short years ago, Mike Wilson and Megan Hanneman have continually worked to grow their market share through strategic channel expansion. Although this cat furniture company had near-immediate success on Etsy, its owners knew that to succeed they couldn’t just sit back and watch the sales flow in — or rely on one source for all of their business.
“We knew that if we wanted to grow, we had to get as many eyeballs on our products as possible,” Wilson explained. “As great as Etsy is, it appeals to one kind of customer. To really build a sustainable business, we needed to get our product listed on multiple online marketplaces, in addition to Etsy and our own e-commerce site. Then, keep expanding from there.”
Moving from One to Multiple Online Marketplaces
To identify which sites would be the best fits for the company, Hanneman used her logic and her browser.
“I did Google searches for tags like ‘cat furniture’ and ‘cat shelves’ - terms that potential customers would use if they were looking for those products,” she said. “Wayfair, Overstock.com, Amazon and Fancy.com were consistently at the top of those searches. So, those sites became our targets.”
Hanneman quickly learned that everything from the initial application process to overall vendor requirements vary from site to site.
“Before you apply as a vendor, make sure you understand each marketplace’s model and requirements, which may impact how you operate or what you can offer,” Hanneman said. “For example, Etsy’s focus is handmade products, so our three-week wait time for hand-assembled furniture wasn’t an issue. Amazon Prime requires much faster delivery. Their customers expect to receive their products in just a few days.”
To meet those expedited requirements, Hanneman and Wilson limited the Amazon product line to two color combinations they could back-stock, instead of the broader color palette they offered on their own site and on Etsy.
“If you want to expand and work with different online partners, you have to be flexible enough to work within their various models,” Hanneman said.
Fulfillment processes vary, as well.
“A few websites, like Amazon and Etsy, auto-import orders to ShipStation. With Wayfair and Overstock.com, we have to manually enter orders,” Hanneman said. “You have to manage all of the accounts differently, and it’s important to set up a process to do so — right down to what additional materials you’re allowed to enclose in your packages.”
As they broadened their market presence, Hanneman and Wilson also took the time to re-examine their own business strategies. They determined that to effectively and profitably scale they needed to offer a more agile delivery option than their flagship, made-to-order products allowed.
From Hand Assembled to DIY
“Our furniture has been popular from the beginning. But, because it’s hand assembled here, it doesn’t have great margins,” Wilson explained. “We’ve also had customers want to remove, wash or change out the fabric, which they couldn’t do because everything is stapled down before the furniture is shipped. So, we were missing an opportunity to sell additional hammocks or other add-ons to current customers.”
Wilson’s solution? A new, modular, “assemble it yourself” line that gives customers the flexibility to change out fabrics or add items down the road. To be successful, Wilson knew that it had to be fast and easy for customers of all skill levels to put together.
“I created and patented a process that uses grommets to fasten together the wooden parts of the furniture,” Wilson said. “It works a lot like a connector set, so almost anyone can put it together without a problem.”
This new line benefits CatastrophiCreations beyond meeting the fast shipping requirements of some online marketplaces.
“Although we’ll keep our hand-assembled line, our assemble it yourself version gives us a way to expand into retail,” Wilson said. “It also gives us the option of starting a subscription service, where a customer can get hammocks in seasonal colors or different add-ons, like planters or other items. All of that gives us additional opportunities for sales and keeps us connected with our customers.”
To Wilson, it’s critical for a company to evolve as it grows, no matter how popular the initial product is.
“You have to look at margins and logistics and the market. If you want to go from a small company to a bigger, more successful company, you have to take care of what’s holding you back from where you want to go,” he said.
For Hanneman and Wilson, that means spending a lot of time researching, learning and exploring the possibilities.
“We are always looking ahead, thinking about where we want to go and what we need to do to get there,” Hanneman said. “Then, we figure things out as we go along. It’s a lot of work, but it is so worth it. That’s the only way to keep going and growing.”
CatastrophiCreations’ Tips for Market Expansion
- Feature your products on a variety of online marketplaces that cater to different kinds of consumers.
- Understand that each site has different requirements, different means of order entry and fulfillment models — and you have to adjust to them.
- Make sure you set up documented processes for each online site, including what instructions or marketing materials you’re allowed to include in the packages. Then, make sure your staff is trained on all of the differences.
- Adjust pricing for free shipping and other site requirements that may erode margins.
- Sell a limited assortment early on, so you can meet fulfillment deadlines without excess inventory.
- Continually evolve your product line and operation as your business grows.
- Since many marketplaces don’t allow you to drive traffic to your site, ramp up your social media efforts to stay connected with your expanded customer base.