How Stowaway Cosmetics Achieved a 30% Repeat Purchase Rate, Landed BIG VC Cash, Scaled Without Hiring, & Other Ecommerce Growth Hacks
Blue Stout Podcast Episode 2
It’s not everyday that you meet someone who has landed major VC cash from investors like Jason Calacanacis, Mark Ecko and Vayner RSE and built a company that has a 30% repeat purchase rate in just over a year – all while being a part of just a team of four people!
I got the chance to interview Julie Fredrickson, co-founder of Stowaway Cosmetics, about her company. Julie is an ecommerce veteran, dynamic CEO and one of the most forward-thinking professionals in ecommerce that I’ve met. In our interview, she and I discussed many things including:
- Why Julie thinks the next level of literacy will be a phenomenon she calls “thinking algorithmically”
- Team building and how Stowaway can successfully scale with 4 team members
- Why she thinks hiring is failure
- The key component for a successful relationship between ecommerce and traditional retail
- Stowaway’s migration from Spree to Shopify Plus
- Her “beef” with Ben Horowitz
- How Alex Turnbull of Groove won her over
- How she personally manages the stress of being an entrepreneur (it’s not what you think)
…and much, much more.
This was really one of my favorite interviews I’ve done for our podcast so far and I’m excited to share it with you.
What follows below is a summary of the highlights of my interview with Julie, but to do it justice, I HIGHLY encourage you to check out the full audio above.
Let’s get into the interview!
First, let’s look at the how Stowaway has proved you actually don’t need a physical location to sell a product that “requires” an in-person experience:
You Don’t Need Actual In-Person Experiences to Sell Your Product
The cosmetics industry is one that just hasn’t changed in decades.
Let this settle in for a minute: the sizes of product and the way cosmetics have been sold truly has not changed since the 1950’s!
Similar to Uber’s disruption of the transportation industry or Casper’s disruption of the mattress industry, Stowaway completely bucks the “norm” when it comes to the cosmetics industry and is setting out to disrupt it.
Stowaway was born online, making it a V-commerce brand. We’ve written before about digitally native vertical brands (DNVBs) and how they often launch into physical retail in order to maintain growth (more on that later).
Surely this would be true with cosmetics, right?
With a product that women actually want to see, feel and experience before they buy?
Julie doesn’t think so. She believes (and has already proven with Stowaway) that customers have an increasing desire to shop conveniently around their own life.
She also says that ecommerce has evolved to the point where she believes that it’s “almost laughable” that the cosmetics industry can completely avoid ecommerce.
In fact, a lot of the innovation coming from online shopping is from new companies successfully replicating the in-store experience… but replicating it strictly online – on their ecommerce website.
This has its benefits for the consumer:
- It’s more convenient to shop from where you want, when you want
- It’s less overwhelming from a decision-making sense and you can focus on funneling your customer closer to conversion, without them getting distracted
The key, Julie says, is to take down the basics of the brand experience and edit it.
The challenge is: how do you do that without a physical, in-store experience?
There needs to be some type of sophisticated functionality that the ecommerce website brings to the table.
Stowaway builds their brand experience with a kit-builder that guides customers through a bundle purchase step-by step:
“There’s the adage where the more clicks you have, the less likely you are to move someone through the conversion funnel. We have a kit builder with 7 choices, and if you start that, you will finish it. Women get through it in 90 seconds” (6:34).
It’s the fastest shopping time Julie (who is an ecommerce veteran) has seen in over a decade of ecommerce.
The reality is that if it’s a great experience, and it’s something the customer wants and enjoys, they’ll spend the entire day doing it.
But getting them through that funnel is a lot easier than people think. Using a customization tool – like the kit builder – is a way to replace the “in-store experience” for digitally native ecommerce brands who want to give their customers a pleasant brand and shopping experience.
Maintaining that customer experience, however, all hinges on ONE part of your ecommerce website: your platform. Next, Julie and I dig into their recent platform migration.
Your Ecommerce Platform Can Bottleneck Growth
Stowaway’s product line is limited by design. Their products are created to be a set of “go-to” products that a customer can purchase, feel confident that they will look good in, and re-order.
Julie says that giving the customer a limited set of choices (but choices, nonetheless) is a critical aspect to how the ecommerce shopping experience will evolve.
That’s one of the reasons they originally chose Spree Commerce.
Honestly, that’s the exact same reason we’ve pushed clients towards Spree here at Blue Stout – flexibility.
Julie says of the platform: “Spree really is excellent, and it has the ability to do a lot, especially if you’re more sophisticated” (9:16).
Over the last 18 months, however, Stowaway needed more ability to integrate with other third-party apps and services, which led them to switch to Shopify Plus.
Julie says that decision was due to Spree’s inability to “play well with others” (10:20). While they had also considered platforms like Magento, they said the deciding factor was integrations.
According to Julie: “Shopify has really done a great job recognizing the limitations of their platform, and has introduced many of the features that made Spree so unique.” (10:42).
We, too, have been observing the evolution of Shopify Plus as they keep rolling out features and functionality (like Shopify Scripts) to help enterprise-level ecommerce companies reach levels of deep customization that, before, were only available with other platforms that require more development.
It made sense for Stowaway to switch platforms because they needed their brand experience to hold true to offering their customers options, and Shopify Plus was the platform that enabled them to do so.
So now Julie’s told us how you can create a good brand experience strictly online to sell product and how your platform choice is crucial to maintaining that experience.
Where we go next is very interesting…
Julie opens up to me about her long history in ecommerce and in retail and how that’s influenced her thinking about data transparency between ecommerce brands and retailers.
Data Transparency Is Essential for a Successful Ecommerce/Retail Relationship
A primary reason for needing those integrations (and the ultimate move from Spree to Shopify) was the focus on exploring more retail options.
“What we’re seeing now, because we’re still in the early stages of this industry, is that a lot of [DNVB’s] are going back to retail,” she says. “They’re doing retail differently, trying to change the game in retail, but they are going back.” (15:16)
Companies that have believed that ecommerce is “the way” are now seeing opportunities to go back to physical stores and retail popups, where customers CAN physically interact with their product.
Julie emphasizes that it will be CRUCIAL for Digitally Native Vertical Brands (brands that were born online) and retailers to find a way to share customer data in order to have a mutually-beneficial relationship:
“I love direct-to-consumer retail, because you do get a much broader understanding of your consumer,” she explains. “I’ve been a J. Crew customer since I was a teenager, but J. Crew still struggles to remember that I buy the same cashmere sweater every single year” (16:01)
Retailers may struggle with the sharing of consumer data because DNVBs are used to knowing their consumers in a way that bigger retailers just haven’t been able to do. If they don’t know who the customer is, that will impact business very materially.
“It’s about looking at retail and exploring it, but the key challenge is preserving the brand experience, and knowing your customer so you can say, “Hey, it’s been three months. Time to toss your mascara and get a new one!” (17:23).
The team at Stowaway does a great job monitoring that data:
“Of our customer base, if you have been with us for long enough to become what we call a ‘mature cohort’ – which is over three months – 30% of them have come back and repurchased” (17:47).
That’s relatively unheard of for a typical ecommerce repeat purchase rate.
The key takeaway here is that if you’re thinking of getting into retail, perhaps it’s worth deciding how you can create a transparent relationship with your retailer in terms of sharing your customer data.
Establishing a system beforehand can ensure that your brand experience transcends channels. Meaning: your customer can have the same experience shopping on your site or shopping in a retail location.
If you haven’t gathered it by now, Julie knows what she’s talking about. Her experience in ecommerce and in retail clearly shows she has an understanding of how the two should work together.
But did she always feel this confident? Did she always know?
I wanted to tease out a bit of the sentiment behind a tweet she sent in the past, just when her company was hitting their growth stride.
When You Hire, You Fail: Leverage Technology to Scale
Julie once tweeted: “You know what is a lot more intensive than you expect it? Scaling. Going up in order and magnitude is a hell of a ride and a lot of work.”
A lot of people place a lot of emphasis on the idea when you’re starting a business, and the product, and the product market fit. And you have to have all of these before you get going. But the greater challenge is actually then executing and growing that business – scaling.
Julie says: “People, I think, underappreciate that going from 0 to 1 is a huge moment […] But then you have to go from 1 to 10, and 10 to 100, and 10 to 1,000, and 1,000 to 10,000 and every time you add a zero, your problems are different” (21:27)
One of those scaling problems Stowaway experienced – the need for more creativity – put scaling a company in perspective for Julie.
She realized that anyone who has played with Google Adwords knows it’s easier to optimize smaller campaigns, but the second you scale out, you need creativity to successfully manage and scale those campaigns.
You need more time and resources to dedicate to that initiative. And being realistic, you’ll deal with many, many scaling problems that all happen at the same time.
“It’s so much harder than the actual act of making something,” she says (22:28).
So what happens when you’ve started to scale?
In Julie’s words, the answer should be technology and what tech to deploy to solve those next-level problems:
“Anytime you have to hire someone, you fail. Yes, you want to create jobs, but it’s the idea of, ‘How efficient can you be with the tools and resources at your disposal?’ (24:33)
For Stowaway, it was about figuring out how all of their processes could be faster and how to leverage a different toolset. It was also about enabling their four-person team to solve their own problems. (25:15)
For a lot of entrepreneurs, it can be easy to solve a problem with a hire, or to think that putting the right person in place will lead to success, and that’s the mantra that gets preached from past executives: build a team.
But Julie thinks differently. Her mantras are:
“Don’t turn it into a thing” and “Get it done.”
So it’s obvious that Julie has a certain level of focus and dedication to taking care of business.
But what speaks volumes is Stowaway’s philosophy to look to technology before hiring.
Imagine how this can “free up” your own company to scale faster. It also allows you a certain level of insight and knowledge about your business that you otherwise may not have.
Listen above to hear exactly what tools and software Julie and her team use instead of hiring.
Lastly, I wanted to get a bit personal. Being an entrepreneur myself, I’m always curious how others manage the lifestyle: the stress, the long hours, the constant fires popping up.
Julie was very frank with me about her strategy in managing her own psychology when times get tough.
How to Manage Your Own Psychology as an Entrepreneur
According to Julie, every time you’re responsible for someone’s well-being or paycheck, you have dedicated yourself to providing a return.
Many entrepreneurs don’t see that, they just think, “Money!” (39:00).
But for Julie, it’s about saying that no matter how hard it is, no matter how long the hours are, you can’t “punk out.” You have to be there for the tough times, and you have to watch out for your team. (39:18).
“Understanding how you operate and making sure that you equip yourself to get through it is so critical.”
Julie strongly believes in the power of failure and the fact that she can’t be embarrassed has actually helped her grow: “You will find some of your biggest winning strategies just by messing around and playing around. For me, that’s how I manage my own psychology.” (40:06)
She acknowledges that Stowaway has made many mistakes, but she remains an advocate for taking risks, saying:
“Fear is a mind killer.”
Regardless of how you deal with stress, it’s important to make sure that you are doing OK and are in the optimal mindset to continue focus on growing your company.
Experiment with different stress-coping practices, whether it be yoga, exercise, reading – or like Julie: MORE WORK!
Successfully Scaling Is All About A Steady Focus on The Process
What I’ve summarized from my chat with Julie is that the key to successfully scaling an ecommerce business is all about maintaining a constant focus on refining “the process”:
- improving the brand experience
- leveraging technology to grow
- getting things done
- and managing yourself so you can better-manage others
To get the full scope of how Julie and her team refine Stowaway’s process to keep growing, give the full interview a listen above. It’s so full of other great tidbits and anecdotes that aren’t in this post!
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