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The Drapers Interview: Carol Kane and Mahmud Kamani, co-founders, Boohoo

Boohoo.com’s Carol Kane and Mahmud Kamani are determined to keep up the etailer’s rapid acceleration into online fashion’s fast lane

“From the day that Mahmud said ‘Let’s do this’, I felt I had a new lease of life. It was the start of something new.”

So begins the story of Boohoo.com. When Drapers visits co-founders Carol Kane and Mahmud Kamani at its Manchester headquarters, the vibrant, youthful atmosphere conveys the sense of ambition and excitement Kane felt from day one, back in 2006.

Nine years later, the business has grown from three staff (Kane, Kamani and a photographer) to about 350 in the head office and a total headcount of just over 900 (including warehouse and customer service teams in Burnley and London, as well as a team in New York).

And there is a lot going on. Men’s and women’s activewear line Boohoo Fit, launched earlier this year, will be increased from 51 to 130 pieces by the end of June, ranging from £6 for a crop top to £25 for a jacket. Boohoo Petite, for women 5ft 3in or shorter, will comprise 430 pieces (up from 180) by the end of this season, priced from £4 for a crop top to £25 for a playsuit.

For autumn 15, Boohoo will build on its competitive denim offer with the launch of a 506-piece denim-based range called Boohoo Blue, at £5 for a vest to £35 for dungarees. It will trial men’s tailoring in the form of six three-piece suits, with each item sold separately at £45 for a jacket, £25 for a waistcoat and £28 for trousers. Alongside this, the company will increase the size of its warehouse in Heasandford, Burnley, from about 140,000 sq ft to 820,000 sq ft and implement a new warehouse management system.

Carol Kane

While the rapid growth is impressive, it has not been a completely smooth ride. The business had to issue a profit warning in January advising that its full-year performance to February 28 would be below market expectations. This week it announced that sales increased 27% to £139.9m for the full year to February 28, while gross profit rose 31% to £85m.

Boohoo has established itself as a recognised name and competitor in online fast fashion. Last November it picked up the Pure-play Etailer of the Year Award at the Drapers Awards 2014.

Since its successful IPO in March 2014, the company has brought in retail heavyweights in the form of chairman Peter Williams (ex-chief executive of Selfridges) and Mothercare chief executive Mark Newton-Jones (former boss of Shop Direct) as a non-executive director.

Kristine Kirby, now executive strategy and innovation director at software firm Thoughtworks - she has held senior ecommerce positions at Lipsy, Monsoon Accessorize, Hackett and Fat Face - says of the business: “It reminds me of Lipsy when I was there. They have caught the right customer base, in the right space at the right time.”

Looking back to January, Kane says the profit warning came about due to a combination of factors: “We were going strong and having the most fantastic year and the summer just didn’t feel like it was ending. But then everyone started discounting around us. We got into a cycle where we had to start discounting to compete in an aggressive environment.”

Despite Boohoo enjoying a huge lift on Black Friday on November 28 - its best day ever, with sales two-and-a-half times higher than its previous best - Kane says problems with delivery firms across the ecommerce sector (many were unable to honour delivery times) meant the Christmas selling period ended early, even though Boohoo had no delivery issues itself. “Christmas ended in terms of ecommerce a week earlier than we were expecting because of the carrier failure. We didn’t actually fall subject to it and were honouring deliveries all the way through, but customer sentiment shifted from ecommerce and flipped to an in-store approach to shopping.”

When asked if she would change anything if she could tackle the festive season again, Kane says: “Probably not. We take full ownership of not delivering those figures to the City, but there are factors that are out of your control and everybody will face that at some point. The only thing I would probably do is market harder.”

“The only thing I would probably do is market harder”

Marketing is something Boohoo has become renowned for since its early days, using offline activity to promote its online offering. When Kane and Kamani first started working together in 1993 at Pinstripe, a fashion supplier set up by Kamani’s father, Abdullah Bhanji Kamani, selling clothing to retailers including H&M, Topshop and Asos.com, Kane joined the business as design and buying director. She found that her flair for marketing product and branding formed a winning combination with Kamani’s strengths, which lie in IT, finance and the operational side of the business.

With billboard advertising in London Underground stations, sponsoring the Inside Soap awards in 2012 and collaborations with celebrities such as singer Little Nikki in 2013, the business has not relied solely on traditional digital marketing such as PPC (pay-per-click) to create its brand awareness. However, Kane emphasises that the two channels do work together.  

“As a pure-play you have no stores, so therefore have no store-front billboards to get your message out there. Trust is important and, even as a small business, if you have that imagery out there you are perceived as a much larger business than you actually are. Digital channels sit over the top.”

The most recent campaign for spring 15 is called ‘We are us’ and includes ‘real-life’ individuals, such as stylist Sarah Tankel Ellis in the ‘We are stylists’ advert and singer/songwriter Rae Morris in the ‘We are free’ festival-themed version.

“It’s about giving the customer a little of what we are about as a brand”

Kane emphasises how content produced works across multiple platforms; a shoot may be predominantly for a TV campaign but behind-the-scenes content is used online and across social networks.

“What we’ve found is that the customer is obviously interested in great clothes, great price points and style information, but what they are really interested in is what happens behind the scenes. It’s about giving the customer a little of what we are about as a brand.”

Social networks have been an integral part of Boohoo’s marketing strategy since the early days. Kane says she was introduced to social media by Kamani’s sons and then by employees who matched Boohoo’s customer demographic. By watching them, Kane saw the impact the channels can have on the younger generation and, although the brand didn’t hire its first social media manager Roxanne Nejad until three years ago, social media has always been an element of its marketing.

Everyone in the business is encouraged to send messages and images to the social team to contribute to Boohoo as a social brand - it has more than 392,000 followers on Twitter, 2.1 million Facebook fans and 782,000 followers on Instagram as well as an active Snapchat account.

Mahmud Kamani

Although the company has grown significantly over the past few years, Kane and Kamani are passionate about maintaining a fun, energetic and innovative team spirit. Central to their ethos is bringing a sense of what they offer the customer to the head office. Kamani says: “The culture of the business is so important. The Boohoo staff are our customers and we need to bring that young, dynamic, fun element into everything we do.”

When Boohoo Fit was launched in January, the company started yoga and Zumba classes for its employees at its HQ, as well as introducing healthier menu options at the in-house cafe. In the head office, each department has created boards depicting their version of the latest Boohoo campaign, such as ‘We are design’, creating a feeling that everyone in the business is living - and loving - the brand.

Boohoo menswear launched for autumn 13 and is contributing about 8% of total sales at present. Denim was in the top two growing ranges of the past year, the other being tops. For 2015, knitwear and coats are showing early signs of strong growth. Kane says more lines could be added, including a tall range and a maternity offer, but will give no time frame: “It’s about taking our consumer and giving them enough within the collection to stay with us for a little bit longer.”

The scope of product is particularly important when it comes to Boohoo’s international strategy, with its plus-size range popular in the US and a broader range of sizes is necessary to target Australia, says Kane. Boohoo has local language sites for Germany, France, Spain and Italy and sells in the local currencies in Scandinavia.

Although branding remains consistent and everything is shipped from the UK warehouse, each country home page is tailored to show relevant offers and messages to that market. The business has no plans to launch further sites this year but instead intends to concentrate on its key markets - the UK, Australia and Europe - and “make them work harder for us”, says Kane. Last month it launched its first US campaign, using singer Angel Haze, actress and singer Bella Thorne, model Chloe Norgaard and DJ Hannah Bronfman, all of which are seen as influential among its target audience.

While reaction from the US has been positive so far, Kirby warns that it is a very different market. She says: “In the US shopping patterns are different. In the UK there are clear times when customers shop; in the US it’s a constant flow. If Boohoo just replicates the same marketing strategy [from the UK] to the US, it will hit some pitfalls. To work in the US, marketing needs to be more ground-based and experiential. Boohoo needs to go where the customer is and be seen at the right events with the right influences, rather than expecting the customer to come to them.”

“It’s about getting that further customer reach and it’s a great association”

Back in the UK, this month Boohoo will launch on Asos.com - a surprising move, considering the two are usually seen as competitors. However, customer crossover is much smaller than people might expect, with Boohoo citing figures from Hitwise, which measures website traffic, at under 4% of people using both sites. Kane says of the collaboration: “It’s complementary for both of us. It’s about getting that further customer reach and it’s a great association - Asos is a fantastic brand.” It will also, of course, allow Boohoo to test markets such as Russia and China, where Asos is already more established.

Mobile is a channel that Boohoo has increased significantly over the past 12 months, launching a responsive site in September 2014. Mobile traffic is now at 64%, up from 47% in 2014, and conversion rates have increased by 24% to date since the responsive launch. Looking at the cross-channel experience, Kane highlights how the improved mobile offering makes the shopping experience so much more engaging; even if customers are not checking out on their phones, the strength of the experience will contribute towards a rise in conversions across all channels.

When asked if Boohoo will ever launch an app, Kane simply replies: “Yes - but don’t ask me when.” She says the number one reason for doing it is to be on the first page of somebody’s smartphone. “Will it help drive sales? Who knows? Will it be part of the engagement piece? Absolutely. It’s all part of the customer journey.”

The one channel Boohoo seems to have no interest in right now is stores - although Kamani and Kane do caveat this with “never say never”. Although it opened a pop-up shop in New York for three weeks in October 2014 to increase brand awareness, Kane says it does not need to do this in the UK, as the brand name is already well established.

Boohoo will need to maintain its pace to remain at the forefront of the online fast fashion sector, a challenge both Kane and Kamani are ready to take on. Initially seeming quite different in skills and personality, it is clear that the strength of their mutual respect keeps the business focused. That and the obvious genuine friendship between the two, which is apparent as they laugh through the photoshoot before heading back to their respective offices - Kane’s with wooden floors, open space and a large fish tank, Kamani’s with a plush cream carpet, enormous desk, huge boardroom table and an arcade game.

To enter this year’s Drapers Awards, go to Awards.drapersonline.com

 

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