speaker-1: That’s very true and a lot of CMO and growth marketers come to that realization at some point. It’s like when you’re not growing fast enough, you’re always looking at new markets, new products, new channels, and those things are important. But if you’re spending, let’s say, eighty or seventy percent of your marketing budget on one channel, why not just try to get one, two, three, four, five percent better at that all the time?

speaker-0: Honest ECommerce is a weekly podcast where we interview direct-to-consumer brand founders and leaders to find out what it takes to start, grow, and scale an online business today. Honest ECommerce is proudly produced by Electric Eye, a Shopify Plus partner helping e-commerce brands sell more with strategic design and development. Visit electriqueye.io for more information. Hey everybody, welcome back to another episode of Honest E-Commerce. Today, Finally, welcoming to the show, an amazingly smart gentleman. Alex is joining us from Umhu. How are you doing today, Alex? Absolutely. Technical difficulties aside, we’re gonna do this. Alex is the CMO over at the Copenhagen-based sofa company Omhu. ⁓ they’re very well known for their viral sofa, the Teddy Sofa. ⁓ Alex, ⁓ for those that don’t know about this super cool sofa, can you give us kind of the elevator pitch about this awesome product?

speaker-1: Very good, Chase. Thanks for having me. Sure. So ⁓ I’m the CMO here at Omhu and we are known for the Teddy sofa, which is one of our hero products. ⁓ it’s basically a modular multifunctional sofa that turns into a conversation pit ⁓ that you can use for many different things. ⁓ most people have it in their living room or their office space, it also turns into a bed. ⁓ we have it in many different colors, many different kinds of setups, and ⁓ yeah, we’re selling it online via through a D to C model. With a lot of success.

speaker-0: Absolutely. So take me back in time. Where does your story start with Umhu?

speaker-1: So going a back a little bit further, I started my first e com company when I was a teenager still, selling socks online. Did that for a couple of years, raised a lot of money on Kickstarter and and sold internationally and then failed with that business. Went to the Dragon’s Den and raised money from investors, all of that. ⁓ took all my learning, started an agency, which was the first TikTok agency in Scandinavia, built that for five years and it was acquired by a larger agency where I spent some time. And then about two years ago I was ⁓ contacted by the CEO AMHU and he asked if we if I wanted to join this super cool journey ⁓ where we’re basically trying to redefine how it’s being done in the furniture and sofa business globally. So started two years ago coming in as the sixth employee were really, really early on. ⁓ some good traction but like no processes, no ⁓ structure in the business and since then been building out the team and the strategy and and yeah, just growing a lot these last two years. It’s been fun.

speaker-0: That’s awesome. You got such a fun story. And then for for the listeners that don’t know, Dragon’s Den is is it just Europe’s version of Shark Tank over here in the States? Yeah.

speaker-1: Yeah, so actually in Denmark where I’m from it’s called the Lion’s Den. But yeah, in UK it’s dragon’s den and then in the US it’s shark.

speaker-0: What’s funny is in the US the Lions Den is a sex shop. ⁓

speaker-1: Okay. Yeah, well I haven’t been in that yet, but maybe I’ll I’ll that’ll be f for a later stage in my life I’ll try that out.

speaker-0: Absolutely. All right. So, talk to me about the the lessons learned from your first online business. You said that it failed, ⁓ you had some success via Kickstarter. So what were like the biggest lessons learned, or maybe now looking back on it, you know, what where do you think ⁓ things might have went wrong or or s you know, what could have gone better, or was it just, you know what, it wasn’t a good business model?

speaker-1: So we we started that around like twenty fourteen, fifteen when meta ads was like really still taking off and it was Facebook ads at the time. And I learned a lot about social marketing at the time and I think we actually did quite well marketing wise. But what I really learned was the importance of unit economics. We were selling socks, which is a you know, some some players in the industry have have had success with that, but it’s very hard to scale to size due to the very low AOV. So it’s it can be a high margin business, but it’s ⁓ it’s very difficult to push volume because you need so many customers. It’s good for retention, it’s good for storage, it’s good for shipping, but AOVs are way too low. So I think that was like a really big ⁓ learning for me that unit economics matters so much when you’re doing e commerce business. ⁓ and also just understanding like at the time before AI and and technology was that developed, you needed so many like human resources. So trying to figure out how to build a scalable engine with as few people as possible. That was like a really big learning as well. ⁓ it was difficult at the time. We started on Meg Magento, then we moved to WooCommerce and then we ended up on Shopify, which I’m still very happy with using today.

speaker-0: Yeah. ⁓ tell me you remember kind of what the AOV for that business was when ⁓ you guys decided to kinda hang it up and then what’s the AOV over at Umhu now?

speaker-1: Yeah, well it was around fifty USD and now it I’m over a thousand USD, so it’s definitely a different kind of business.

speaker-0: For a layman, for ⁓ someone that this concept of unique epic economics is like new to them, how how do you how can you explain it to them in a simple way that makes them understand why it’s important, especially when you’re selling direct to consumer online?

speaker-1: So the way we work with it, which is very standard in the industry, is that you basically have a bunch of ⁓ cost centers and lines. So we have revenue coming in and then we’re paying some kind of discount on that. There’s some kind of VAT on text. We know what those numbers are all all always because of our discounting strategy and ⁓ how ⁓ sales are distributed across markets. Then we have the cost of goods sold, the cogs, we know what they are, we know what the return rates are, we know what the sales and marketing costs are and the objects costs and the salaries. And the shipping cost. And then at the end we’ll get to like a bottom line profit. And that’s really what we’re steering our business ⁓ from. I think unit economic wise on on e-com, what really matters the most I’ve learned is ⁓ margins are super important, AOV are really important. Those are the two things that kind of create the foundation, and then your job as a marketer is to deliver the highest possible conversion rate. And then of course retention. Like you really want to have a product that Or business that people keep coming back to in some way or the other. So that you don’t not always just chasing new customers, net new customers. ⁓ so those are the things that I’d look at today. And then from a practical standpoint, like is it easy to ship? Can you ship globally? How much space does it take up in the warehouse? This is one of the reasons why supplements, beauty, skincare are doing so well, because it’s really, really cost efficient from like a logistics and supply chain perspective. It’s a different game in the in the sofa industry, I can tell you, but ⁓ that’s also something that’s that’s really important to consider.

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speaker-1: Yeah, so it’s it’s definitely a challenge and I think we’re still trying to figure out the best way to do it, but we do we do also sell pillows. When people buy a sofa, they need pillows, maybe they need an extra cover. We have interchangeable covers so you can change the color of of your sofa. Maybe you want an extra piece, maybe you want a more modular setup with more pieces. maybe you want to configurate your own setup. I think there are many ways to do it. But it’s definitely not as easy as when you’re selling skincare. Yeah. Where you have like a hundred products and many of them are complementary.

speaker-0: Yeah, but if it’s easy, then anyone can do it. And that’s the challenge of building a successful business. True. Now let’s talk about the virility of the the sofa. And I’m assuming this goes into play a bit with your previous agency and your knowledge of TikTok. So just walk me through your guys’ kind of social strategy and like how it how is it, you know, kind of taken off.

speaker-1: That’s true. Yeah, so we always say that we’re social first and it’s something that we’re very focused on. Social media is by far the biggest line in our marketing budget. ⁓ we work with what we call the influencer flywheel, which is basically just three channels. Influencer marketing is something we use to get reach and awareness and drive conversion, but also to generate content. That content goes into a paid media machine, which then in turn drives more awareness and conversion. And then we take the best of that content and publish it ⁓ through organic social channels. And I think this is like it’s a very popular model today. Many big businesses are doing it as as well. But I think where many f kind of fail is that they don’t really double or triple down on it. So really scaling on social specifically. We’ve gotten really, really far in the umho business just by focusing on influencer marketing and then just using that content to scale, rather than, you know, investing a lot in SEO or ⁓ PPC ⁓ trying to nail generic the brand or search terms and Google ads and shopping and so on. I think that’s never really been a big priority for us because we believe much more in like building community and brand. I think that’s what social can do. It it it can really create demand in ⁓ it’s the only channel that can do it at scale. ⁓ and where you can really like double your budget from one day to the other. So that’s how we’re looking at it. It’s ⁓ the majority of everyone working in marketing at ⁓ who are working on on social media in some way.

speaker-0: Absolutely. And it’s something that I see oftentimes with what separates successful startups from unsuccessful ones is that they pick a channel and just absolutely crush it. ⁓ I I I feel that ⁓ you know, obviously there’s always exceptions to this, but I think that sometimes people ⁓ at the start of the the brand are trying too much at once and it’s such a you know, shotgun spray approach of strategy and you’re not necessarily giving any one channel enough attention to let it shine. and so, you know, it’s always refreshing. And also, I’ve heard it on this show dozens of times before now, and it’s like just find something to be really good at it and just do it. And like you said, people aren’t doubling down on the things that work. They find something that works and then they want and go want to go and find something else that works, but you’re saying no, we’re just We’re making these relationships with these influencers. These influencers are providing us content and we’re putting money behind that content. And that’s the whole strategy. ⁓ and I think that that’s what people need to hear. And it’s like it it doesn’t matter what that one thing is that you’re doing, if it’s working, just keep doing it until it the the you know, the cost aren’t going to if the you increase spend on it, it’s not gonna give you any more, basically. Like just run it until it it it isn’t profitable anymore and then pull it back a little bit.

speaker-1: That’s very true. And a lot of CMO and growth marketers come to that realization at some point. It’s like when you’re not growing fast enough, you’re always looking at new markets, new products, new channels, and those things are important. But if you’re spending, let’s say, 80 or 70% of your marketing budget on one channel, why not just try to get one, two, three, four, five percent better at that all the time? I think influence is a really good example of that because today influence marketing cannot be fully automated. It is still a very manual process, it requires people. And relationships and negotiations. And that’s not something you just turn up ⁓ with a button. So that’s something that you need to hire for and build. I think something that I learned on this journey is that we were too slow on that. I’m so used to like we just spend more on meta or we just ⁓ launch this product, start this new channel. But building up a a big and and efficient influencer team is something that you always need to be working on, like always adding more people as you scale and optimizing that as a channel as well.

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speaker-1: That’s right, we have a a pretty strict zero discount policy. We do run some quarterly funnel clearing events. We’re more playing around with stuff like free shipping or maybe a gift with purchase setup, but we generally don’t discount our products. And the the reasoning behind that is it’s it actually mostly just comes from experience. I think I’ve worked with over a hundred e commerce companies throughout these last twelve, thirteen years. I’ve seen way too many of them fall into the discounting trap. we discussed before ways of growing products, markets, getting better at channels. At some point when you can’t grow anymore, it’s just an easy level to pull. Let’s just discount and let’s get that revenue in. But if you really adhere to the P and L or like the gross profit setup ⁓ where you’re looking at your unit economics, you’ll quite quickly see that it’s a very bad move. ⁓ you’re yeah, sure you’re gonna sell a lot more, but None of that really matters. In e-com, today it all comes down to bottom line and that’s what you want to optimize towards. And I think that’s I mean, there is of course there’s an equilibrium in that chart where it makes sense. I’m not saying nobody should run discounts, but when you have a high OV item, you have a long customer journey, you know, long consideration phase, and you have a brand that you’re trying to build and increase brand equity on, I think zero discount is just the right move. There is not a single case I’ve ever seen where discounting benefits a brand. It can only wear it down.

speaker-0: Yeah, it it really is something that you need to kind of make a choice at the beginning of the business of which which direction you’re gonna go with stuff because I’ve found that and you’ll talk to brands that do have a discounting strategy where it basically trains the customer to wait until there is a discount. ⁓ and I will say I am right now waiting for a brand that I like to have their summer sale to buy something because that’s just I’ve been trained to kind of to do that. ⁓ and so That is like kind of one of the the reasons that, you know, it it’s something else. But then I think it’s people just default to it because it’s easy. And you already mentioned kind of just some of the ways to people, oddly enough, aren’t necessarily buying on price. They’re buying on value and they are completely separate ideas. And you mentioned other ways to provide value without striking the price, which was, you know, free gift with purchase and sh and free shipping is Two of the easiest ways to do it. ⁓ you know, it’s bundling is another way to value stack. Like there’s all sorts of it just takes a little bit more effort and maybe that’s why people don’t do it. Yeah.

speaker-1: I mean ⁓ it’s like I said, it’s it’s not easy to find out how to value stack or offer something in the best way without discounting, but that’s the good thing about e-commerce. Every time you try something new you learn from it and you get the data and then you you just adapt based on that.

speaker-0: You have prepped all year and all that hard work is paying off. Your store is converting, the ads are working, and this is shaping up to be your best holiday season. But your 3PL can’t keep up. Orders are backing up, customers are asking where their stuff is, the reviews are starting to turn. All that hard work, all that momentum, undone by a fulfillment partner that can’t scale with you. This is a nightmare scenario and it happens to brands every holiday season. Enter eFulfillment service. EFulfment Service is the 3PL that scales with you. They are family owned, they’ve been in business for over 25 years, and they’re built specifically for growing direct-to-consumer brands. There are no setup fees, no minimums, and no long-term contracts. You only pay for what you use. If you’re scared your 3PL can’t keep up this holiday season, now is the time to reach out to eFulfillment service. Go to eFulfillmentservice.com/slash honest and get up to eight weeks of account fees completely waived. That’s EF. U L F I L L ⁓ E N T S E R V I C E dot com slash H O N E S T e Fulfillment Service dot com slash honest. You kind of mentioned this earlier that you’ve got ⁓ you know, it is a high ticket item. It’s over a thousand bucks, and it’s got so that lends to a longer decision cycle, a longer customer journey. ⁓ do you have, you know, any idea of How long is that customer journey? How long is that decision cycle? Yeah. How do you market for, you know, something that I don’t know how long it takes, but it’s probably multiple touch points over multiple months. Sure.

speaker-1: So we like any respectable e-commerce business run a post purchase survey where we ask our customers a bunch of questions and one of the early ones that we got a lot of insight into quite quickly, I’m not even sure we ask it anymore because we now we know is like how long did it take from when you first heard of us till you made your purchase. So we have that data and yeah, it’s definitely ⁓ a lot longer than for many other types of businesses. There’s a lot of ⁓ consideration that goes into buying new sofa, timing, saving up money. You spend more time researching, you maybe want to try it in the real world. ⁓ you read more reviews, you’re maybe a bit more skeptical. So I think it’s super interesting working with a long customer journey product in e com. And we often kind of compare it to selling cars. I think that’s maybe the extreme. But ⁓ The car industry have been really, really good at for for decades and maybe hundreds of years almost, I’d say, to find out how to build funnel over decades and then be a top of mind and just build that brand. And then when people are in the market for a car, they buy it. Even though now it’s changed. Over these last ten years, people are switching brands more than they did before, but it’s still kind of the same principle, right? Like at some point you’re gonna need a car and then you have a couple of preferences and then you look have a look at them and then you make a decision. And that’s kind of the game that we’re playing as well.

speaker-0: Absolutely. That makes sense. Now, I know when we spoke, also just ⁓ FYI for everybody, ⁓ Alexander and I met at Shop Talk Europe in in Barcelona. Shout out to Shop Talk, shout out to conferences, they’re a great place to meet smart people. ⁓ when we had had met there, you had mentioned that you guys are looking to break into the States a bit more ⁓ and increase kind of the market over there. So currently th I can buy the product in America, right? You can.

speaker-1: Yeah. We ship to almost all states and ⁓ we launched last year and it’s been a an epic ride.

speaker-0: What are some of the learning curves of being a European brand trying to break into the American market? ‘Cause we’ve heard the other the other way a few times on the show.

speaker-1: Yeah, so it’s it’s for sure it’s difficult and I think a lot of brands have tried and failed, ⁓ coming from Europe going into the US. there are many learnings. If I had to highlight a few, I think just like the sheer size and scale of the US as a market, it’s a bit hard to comprehend when you come from a a city or country of five million people. ⁓

speaker-0: America’s huge. It’s so big.

speaker-1: So, you know, we have really good core business here in some of these European markets and we’re doing well. But l approaching the US, you know, there’s so many ways to do it. Do we start Eco East Coast? Do we just start New York? Do we just start in LA or Austin or w whatever? Or do you just go abroad and then you just let the algorithms do its th their thing? I think it’s been really hard for us to nail that. And then also understanding that building trust as a brand that’s not American in the US is a whole different game. Like when you’re selling to Germany from Denmark, the German people trust Danish companies. They know what Denmark is and not just that it’s a it’s a country, but also what it stands for, what’s our culture like, what kind of businesses do we have. And I think there is a huge culture barrier where even though we produce in in the United States for the American market, it’s still like we’re a Danish company. ⁓ and There are not a lot of Americans that know a lot about what it means to be Danish or, you know, run a business in a Danish way and it’s not necessarily a strong selling point. It might be for some. Scandinavian design, Danish design, but that’s a very, very small specific audience and our audience is quite broad. So ⁓ yeah, just how to buy media and how to target it. Do we divide it into regions? ⁓ do we divide it into states, cities? There are so many approaches. And then I think also like adapting to the culture, it’s would branding and content, I think that’s been such a difficult line to walk because we’re trying to build a global business where we want consistency across continents. And we’re quite bold and we’re doing some pretty wild things. And maybe some of them are a bit more of a risk to the broader American audience. ⁓ but we kind of want to stick true to it. So like kind of walking the line they’re figuring out how do we adapt our marketing and our branding efforts to to the US market. Yeah, I think that’s that’s definitely an ongoing learning curve.

speaker-0: Hey everybody, just a quick reminder. Please like this video and subscribe if you haven’t. We’re releasing interviews like this every week. So don’t miss out. Now back to the interview. Are you ⁓ working with like ⁓ a local partner in the States to help with some of the copy or or kind of just some of the weights to market? That’s something I heard actually at Shop Talk a few times when I was speaking with other brands was they were like, we’re looking for a a a a you know, a media buying partner over there to just n confirm our assumptions or point us in the right direction. Yeah. Because it is just such a different place.

speaker-1: we have had of course some help with it, but I think all in all the model and strategy is the exact same. It’s copy paste. We’re doing the same media split, we’re doing the same of course the content will vary and and the assets and key visuals and so on. But the overall strategy and our fundamentals are as they are. And I think we want to learn this ourselves and also get the data from that. So we do run almost everything here from our office in Copenhagen. Then we’ll have some partners for some things that that maybe it requires some more cultural insight, ⁓ or market specific insight. But no, I think we’re we’re we’re generally quite independent when it comes to that.

speaker-0: Well, if your partners can understand why Americans think the way they think, they’d be a great partner. We have a lot of interesting opinions over here.

speaker-1: Yeah, and very varied opinions and you know there’s also ⁓ yeah polarization and then there’s the whole thing about like politics. We we we’re not a political company, but we are I would say in some ways in our in our marketing it’s quite out there, bold, and some would maybe say progressive, but ⁓ it’s that’s also been hard to navigate in because it’s it’s really important in the US and you see a lot of brands that are kind of piggybacking on some kind of maybe political angle or ⁓ tapping into some kind of community where politics play a role. And I I think that’s that’s also just something that you have to think about. Yeah. Maybe our culture here is something that it can be of you know, either super positive or offensive. Like you you need to understand the culture when you go into a big market like this.

speaker-0: Absolutely. Yep. Is there anything I didn’t ask you about that you think would resonate with our audience today?

speaker-1: No, but I I often get asked for input and tips and I I I work in some advisory boards and I think generally what what I always try to push is like really doubling down on the social first strategy. I still think influencers and creators are super under leveraged. And I think they are a great, great tool and channel to test out if you have product market fit. ⁓ something that I usually tell people is that if you don’t have influencers contacting you inbound and you can’t scale that, then you don’t have a strong product. Or maybe your price is too high. There could be other things. But inference is a really good way of validating if you have product market fit. And of course, if you’re a fashion brand or apparel, it’s different because you need to build a brand. But still, it’s you can really often sell on product. And I think even though brand is important and ⁓ I’m a very you know brand first marketer, I also always try to ⁓ say that there are also ways to scale on product and not brand. And I think that’s something that a lot of e com businesses still struggling with, like not really being good at product led ads, you know, pain points, USPs, ⁓ unboxing, all of that, it can really take you far without having a brand. I think that’s a big shift that we’re seeing in the industry now that you have big players coming out without a brand that are doing really

speaker-0: Yeah, I kinda have a interesting opinion on that. Especially I over at the agency we work with a lot of younger companies and some people still have this like odd idea of being like, ⁓ that’s not on brand. And I always kinda like want to push back. I was like, you don’t have a brand. No one knows who you are. So what we’re doing here is just experimenting and trying. It’s like Coca Cola, Apple, they have brands. You know, a a sub million dollar brand that’s just getting their feet wet out there selling their new product, they have a logo, but that’s not necessarily a brand.

speaker-1: No. I think those kinds of considerations or concerns maybe are quite relevant when you have a big established and profitable business because a big part of your revenue comes from existing customers and they buy into some kind of brand. But when you’re just starting out, you should not be saying those things. You should only focus on doing anything you can to scale and becoming profitable.

speaker-0: Yeah, that’s also that’s like kind of my whole North Star with young companies in it’s usually it’s like just go and sell. Stop doing the busy work of, you know, a a big fancy logo book or super custom web design. It’s like go sell your product. Go figure out w what it is that resonates with your audience. Find out how to market that more to the correct audience. And then in time all these other things will fall into place.

speaker-1: Completely agree.

speaker-0: Awesome, Alexander. If I’m listening to this podcast and I want to check out the Teddy Sofa, where should I go, which I do?

speaker-1: Well, we’re a social first brand, so I’d recommend checking us out on Instagram first. I think that’s where you can get a pretty good sense of the product and the brand. At least that’s how we use it. We see it as being almost as important as our e commerce ⁓ platform and inside. But just O ⁓ H U on the on on Instagram and you’ll find us. And ⁓ yeah, I think there’s a lot to learn, hopefully for other e commerce people out there in terms of what we’re doing and how we’re doing content and building community and so on. Yeah, so go and give us a follow and and I’d love some feedback. So if anyone out there listening thinking we should be doing something differently, I’d love to hear from them.

speaker-0: Awesome, Alex, we’ll make sure to link to that stuff in the show notes. Thank you so much for coming on today.

speaker-1: Yeah, thanks for having me, Chase.