Shoppe

Ryan Frahm explains how he and his wife leveraged the power of word-of-mouth referrals to grow their platform for sellers to $120,000/mo.

Hello! What's your background, and what are you working on?

Hi, my name is Ryan. I grew up loving logistics and making things as efficient as possible. I'm attracted to true/false type problems, and I love building complex workflows. Software development was a love at second-sight, you could say. However, I found myself disgusted with the way software was taught in college, so if you look at my college diploma you'll find that it says I graduated from an Industrial Engineering program instead.

Shoppe is a social selling platform for small boutiques. We offer an affordable way to sell your products online through our web platform and mobile app. Our customers who have the most success are usually consultants of direct sales companies. They love it because we save them a ton of time (like multiple hours many times a month) and provide an awesome shoping experience for their customers.

Since our launch, Shoppe has seen explosive growth from 100 users in the first week, to now over 22,000 users.

What motivated you to get started with Shoppe?

My wife started selling LuLaRoe clothing in November 2015. By April 2016 we both were tearing our hair out trying to sell clothes through Facebook group albums. "Why in the heck didn't we just build a Shopify website," you ask? Well, direct sales companies all impose unique constraints on their consultants to protect their brand and to control supply and demand. One of the restrictions for us was that she wasn't able to sell through Etsy, Amazon, Ebay, or her own e-commerce website.

One day, while rummaging through my parent's attic and mulling over how much I despised selling clothing through Facebook, an idea hit me. Why are we selling through Facebook? The answer was clear — because there was no alternative that was compliant with LuLaRoe's rules. As a concrete thinker, this realization was all I needed to be able to roadmap out a clear-cut feature set for our first MVP (minimum viable product), given that I was myself a customer and knew what was needed for us.

The first MVP took around six weeks to develop, and the rest has been history.

Shoppe website

What went into building the initial product?

I was a one-man operation for the first four months as I had both the technical skills to build Shoppe and also the limited business knowledge to make sound decisions (due to my Industrial Engineering degree). This proved to be invaluable, as I only had to invest sweat equity and did not have to overcome the communication barrier that many startups face when there are multiple humans trying to move as fast as possible together.

My first goal was to release an MVP (minimum viable product, i.e. a prototype) to my wife and a handful of her direct peers. That MVP needed to accommodate a basic inventory and order management system, as well as a simple e-commerce system. I was able to accomplish this by working in my free time from work and family, which was usually from 5am-7am and 8pm-10pm. I lucked out tremendously because our third child was born ten days before launch, and I was able to take an extended leave of six weeks off, which gave me a ton of time to power through some massive piles of code.

We think of every new feature in MVP terms. We release early and often, then support the feature and mature it.

Tweet
Share

Our initial tech stack was a monolithic web/API app built on Django (Python), Angular 1, Bootstrap v4, and PostgreSQL. This was all hosted within a single Ubuntu 14.04 LTS VM on a $5/month Digital Ocean droplet. Stripe should be honorably mentioned because I was able to offload (and not worry about) any of the payment processing!

We've since split out the web and API and bolted on a host of services like Elasticsearch, Redis & Memcached, a CDN, and some other various microservices.

How have you attracted users and grown Shoppe?

Acquiring users for Shoppe has been extremely easy for us, because they all came through word-of-mouth referrals. Our customers (the retail consultants) are all very close-knit, so if you build a loyal customer out of one, you gain immediate access to them all.

We initially reached out to around 10-15 of my wife's peers and gave them free access to the full feature set for life (all customers after have been expected to pay). A couple of these peers were higher up in the company and carried a lot of influence, which helped a ton. I worked hard at asking them what the pain points in their lives were, and then discerning whether or not that pain could be fixed by our software.

Some growth rates in terms of customers added each week early on:

  • Week 1: 178, 29 payments
  • Week 2: 61, 20 payments
  • Week 3: 103, 27 payments
  • week 6: 211, 96 payments
  • Week 8: 346, 149 payments

Customers began to trickle in at a faster rate every week as I kept on listening to them and iterating on that feedback. This proved vital to our business, as our customers continued to tell us that we had gained their referral because of how responsive we were to them.

LISTEN to your customers! This turns them into loyal customers. And loyal customers bring you new customers!

Tweet
Share

To make this communication barrier smaller, we created a closed Facebook group to house all of our customers. It allowed us to have a crowd-sourced knowledge base and show our customers how much we cared about them. This was a huge communication asset to the business.

Note: I want to strongly caution you that this can open your business to a lot of (very immediate) flak when things go wrong. When a service goes down in the middle of peak hours, you will have a lot of grumpy people using the soap-box that you have given them to sound off.

What's your business model, and how have you grown your revenue?

We currently have one income stream: our monthly subscriptions. We offer free, $9.99, and $29.99 Shoppe plans that build on one another the more you pay. We started charging customers immediately, and have around a 55% profit margin.

Here's a breakdown of expenses per month:

  • Payroll including founder distributions: $32,500
  • Hosting and other services: $20,000

The rest of the money is deposited into various bank accounts, which include an emergency fund, checking, and savings. We are a fully remote team and have no other major costs. This has been very important to me as a big advocate for the LEAN principles.

Here's a look at our revenue at various points over the last year:

Month Revenue
May 2016 2600
July 2016 58600
October 2016 83600
January 2017 110700
April 2017 109600

Around Febuary we started to notice a dip in signups and revenue, which we've attributed to changes in the customer landscape. LuLaRoe as a company has seen explosive growth over their four-year life, and it was traditionally pretty easy to make big money selling retail.

This meant that there were a lot of new retailers entering the market in hopes of capturing that money, and a lot of them have started to leave because it has gotten more difficult in recent months. In fact, the biggest reason that customers have said they leave our system is due to them going out of business.

We have been prepared for these changes and have been working on abstracting our platform in a way that allows its use for consultants of other direct selling companies (because I was dumb and didn't do this right away). This is now where our primary source of customer acquisition is right now, as there are several competitors of LuLaRoe entering the market.

The really awesome part about all of this is that we can apply the same technique we used to grow at launch to those new markets. We simply have to build a few loyal customers and let them spread us throughout their networks. And it has been working so far!

What are your goals for the future, and how do you plan to accomplish them?

From a business standpoint, our biggest goal for Shoppe is to become long-term viable as a business. In order to do this we need to not be dependent on one single direct sales company, because they can easily tell their consultants not to use our platform, or develop their own.

From a relationship standpoint, it has been a privilege to hear all the stories of how much time we have given people back. I've had several personal conversations where a customer was in tears because of how grateful they were for our system.

In the beginning this platform was built to do the same for our family, and it's so cool to see how much impact software can have on people's lives. We even have a story where a customer's husband passed and away, and the only reason she didn't quit her retail business (because she was so busy managing a household, small business, and full-time job) was because of our system and how much easier it made her life.

What are the biggest mistakes you've made? If you had to start over, what would you do differently?

Here are a few of our mistakes:

  • Not interviewing our customers all day every day. So incredibly important.
  • Not implementing load balancing and autoscaling sooner for our servers. This caused many a sleepless night.
  • Boxing ourselves in with branding: our name used to be Roe With Me, which was a conflict for consultants outside of LuLaRoe. We also boxed ourselves in with a couple of features that were built to only accommodate LuLaRoe consultants.

If I had to start over, I think all of the changes would be purely technological. I would use a more flexible microservice-based stack. However, we have an extremely solid stack currently, so it's not all bad! 😆

What were your biggest advantages? Was anything particularly helpful?

My wife and I are Shoppe customers, which has proven to be a huge advantage. It allows me to look at things not only from the developer's perspective, but also the end customer's perspective.

My wife is also awesome and an incredibly wise entrepreneur who has constantly pushed me to be better and recognize trends. She even came up with our name! 😍😘

What's your advice for indie hackers who are just starting out?

MVP all the things! Seriously though, come up with the bare minimum, build it, and give it to a small group of customers that are dedicated to your success. They will be your initial source of awesome ideas and marketing. I've seen many startups fail because there is too much asked of the product too early. It's ok to have bugs and to not have a full feature set!

We think of every new feature in MVP terms. We release early and often, then support the feature and mature it. This allows us to bail on a feature at a lower cost if it isn't needed.

Ask and listen to your customers! This turns them into loyal customers. And loyal customers bring you new customers!

Additionally, here's a book recommendation: The Go-Giver, by Bob Burg.

Where can we go to learn more?

We're hiring! We're looking for web designers (graphics, fonts, sleek designs) and also an infrastructure engineer (DB optimization, server monitoring and management, etc). Email your creds (what you do, why you're interested, your resume, etc.) to ryan@shoppewith.me.

If you have any questions for us, feel free to ask below!

Loading comments...

Subscribe for new interviews every week! 🤗

Courtland here! I regularly interview the indie hackers behind profitable apps and side projects like Shoppe. Enter your email below, and I'll send you new interviews once a week! Feel free to unsubscribe whenever you want.

Share this interview: