Growth at scale with 3PL leads to global opportunities
Lori Phegan (top left) is the founder and director of The Inappropriate Gift Company, an online store ideal for those with a snarky sense of humour. The company started as Lori’s hobby. After receiving enthusiastic responses when gifting selected quirky products to family and friends alike, Lori realise she had created something special.
It turns out lots of other people were looking for similar gifts. And now, just 18 months later, the company has grown significantly with global demand from the UK and US. Lori recently appeared on the season opening of Shark Tank where she was looking for investment to take her company into its next stage of growth. So we thought we’d ask her to share her story with us.
Coghlan: Lori, tell me a bit about what inspired the rise inappropriate gift company?
Lori: I’ve got a very inappropriate sense of humour. At the time I started, I was an HR manager with a large firm, and I’ve been told I’m the most inappropriate HR manager they’ve ever met. Everything started when I was trying to solve a problem for others. I was looking for a present for my brother who has an inappropriate sense of humour. I was looking online and couldn’t find anything. I ended up creating something for him – a mug, notepad and pen and he loved it. And when I showed friend, she loved it too. So it started as a hobby with a website that just kind of grew.
The first few months there were a few orders but it didn’t really kick off until I saw a social page post a photo of one of my products and it went viral! It reached nearly 8 million views over three days and then my website crashed. I got all these orders in and started to panic because I couldn’t fulfil them all. That’s when I decided the business had legs.
What was your business’ pivotal moment?
Up until then I was creating all the products and sending them individually; going down to the post office, writing the labels on the packages, etc. When I got the huge flood of orders, that’s when I knew I had to change what we did. It was a real make or break moment.
“I needed real structure in the business, so I could grow at scale.
So I started looking for a 3PL provider.”
My website got so many hits that I needed to close it down and re-do it. We ended up being offline for about a month and that’s when I got in touch with Coghlan.
How did Coghlan help you manage your influx of orders?
Oh my gosh, I was very naïve, I didn’t know how to set things up. I remember calling Kevin, asking him if he was easily offended, because some of my products use profanity and he said he was fine. Then I talked to him about where I was at, the fact that I hadn’t used anyone before and didn’t know how to go about it. He stepped me through the whole process honestly as well.
Coghlan’s Kevin and Rolf have been amazing throughout our journey. I think it was September last year (2017) when we first contacted them and they had us set up in a couple of weeks. I think we went from a very small number of sales, but the enquiries have grown steadily ever since. Coghlan have been very accommodating and grown with us every step of the way. They’re definitely part of our future growth plan.
Coghlan now look after all our product, picking and packing, shipping and returns if we need them. They integrate with our Shopify store and it’s all really easy.
What the real benefit of using Coghlan?
Now I can focus on growing my business, not doing the back-office shipping admin that they do so well.
Plus I think it provides the ability to actually scale up and grow. It’s all very well when you’re a nice little niche, one man band and you’re selling 15 items a week – that’s fine you can do it yourself. But when you want to scale up and you need to deal with new markets and business developments or advertising and promotions their value is really taking the day-to-day operations and not making you worry about it.
You started with three products, how many do you have now?
Around 350. We started taking the business seriously in September 2017. Since then we’vehave shipped products to 37 countries and have more than 15,000 customers.
We’ve got offices in Sydney, London and we’re, now we are looking at expanding into the USA.
Wow! The US will be a huge growth market for you.
Absolutely. We found that people were buying our products and paying the shipping costs from Sydney to the States where in some cases it is double the price of the actual product. So I was getting bombarded with people saying “Can you ship here” or “I would love to buy a product but I can’t justify paying shipping which is 3x the amount of the product.” But some people are actually doing it. So if we can set up over there than that would be a huge road for us.
When you first started using a 3PL provider, did you have any concerns?
Yes and no. Obviously this was a completely new field for me and when I was doing it all, I could control the quality of my packing and time to deliver. So if an order came in I wanted a quick turnaround. But when it became quite apparent I couldn’t do that anymore because I literally didn’t have the capacity I wanted somebody that had the expertise.
As soon as I spoke to Coghlan I actually felt quite relieved – there was a weight of relief off me when they said “this is what we do, this is what we specialise in.” They gave me some examples, they let me talk to other customers because I did look at other 3PL’s. I did check on references and the references just backed up on what I felt. Being able to talk quite honestly with the team about the challenges we might have, the costs involved, I didn’t have any fears after that. They knew what they were doing, that they had experienced this before. Since setting up in November we are only 6 months into this relationship and I have no hesitation of recommending them to anyone else. They’re brilliant actually.
It’s not just Rolf at the top, it’s everyone we deal with when I drop off product. If I say I need this urgently they will get it done for me. They’re so easy to deal with.
What do you think would’ve happened if you hadn’t outsourced to a 3PL scale provider?
A couple of things would’ve happened. I probably would have let a lot of my customers down and the minute you start doing that, it doesn’t matter how good your product is, if you can’t get good recommendations it’s really hard to recover from that.
I would only have done the orders I could physically do myself. In which case I wouldn’t make much money because I was limited to what I could do myself. Or I would’ve taken on too much and let my customers down and the reputation of my new business would’ve gone down the plughole quite quickly.
So tell us about Shark Tank?
It was such a great experience. I looked at all the previous auditions and the one thing that came up for me was ‘be prepared’. As a television show, it’s for entertainment. But at the end of the day it’s your best chance to sit in front of five very successful business people and pitch your business. The whole experience was very nerve racking, but exciting. I was very lucky to have been involved with it because it’s the kind of advertising/publicity you couldn’t pay for as a small business.
Do you think your 3PL scale set-up made a difference to the Sharks?
Yes. Absolutely. I think it made a difference because I looked like someone who took their business seriously. I’d already taken the business from concept to reality, gotten market traction and done the first round of scaled growth. So many people go to the Shark Tank with a concept and say “I want to sell loads of this”. Rather I was in a position where I could proudly declare “I will sell loads of product with or without your help and I’ve structured myself to do it.” I think that made a difference.
Your 3 lessons from being on Shark Tank?
- Know why you and your business are different from everyone else.
- Be prepared – know your business – especially your numbers.
- Make sure you enjoy your experiences like this. And be open to what you get told. These are five of Australia’s most successful business people. It pays to acknowledge who they are and listen closely.
Lori asked the Sharks to contribute $100K for a 10% stake in her company (which meant she was aiming for a $1M valuation). They loved what she did. And Lori inspired a shark feeding frenzy with each of them offering various deals for $100K to fund the business.
In the end it was Naomi Simpson’s offer of a staggering $250K for a 25% stake that won the deal with Lori.
Congratulations Lori and Naomi – we’re so thrilled to be part of your journey.