How I Started A $150K/Month Business Selling Rock Bands Official Merchandise
Hello! Who are you and what business did you start?
Hey! My name is Matti Lehtonen and I am the MD and founder of Backstage Rock Shop, a company that takes care of more than 30 official band merchandise webshops for rock and metal bands such as Nightwish. Our main products are t-shirts, hoodies, and caps and we sell basically everything you can think of from shoes to coffees and from vinyl to jewelries - Whatever suits the artist the best. A factor that sets us apart from our competitors is our wide range of exclusive items.
We sell our products worldwide, in 2019 to well over 80 countries. Our main territories are Finland, The United States, Germany, and the UK. We ship annually around 50,000 webshop orders and we also take care of live sales to most of our artists, well over 400 live shows annually from small venues to arenas. We have been nominated three times as “the consumer service of the year” in Finnish Music & Media Industry Awards Gala. We are the largest band merchandise vendor in Finland with a growing number of artists coming to our roster each year.
When we started back in 2011 our annual revenue was around $150,000 and since those days we’ve come a long way as we’ve got many new artists to our roster. The past few years we’ve grown 20%+ in a year and nowadays we make the same revenue in a month what we did the whole first year. In 2020 we are looking $2M+ revenue, we just moved into a bigger office and we’ve recruited more staff to our warehouse.
What's your backstory and how did you come up with the idea?
When I was 16 or 17 I played in a rock band where I was taking more or less care of the business side, and also the merchandise. I quit playing when I was around 20 and I started to tour with several bands and taking care of their merchandise. At the same time I was working in a small 360 degrees music company (record company, booking agency, music publishing, and merchandising) while studying.
I used to think that it is a weakness if you have to ask for help in some issue but nowadays I couldn’t do what I do if I wouldn’t ask for help in many matters.
Merchandise always seemed a natural thing for me. For others it seemed to be “the last thing to think about” and “mandatory evil” but I always liked everything involved with it. In my mind “real” merchandising companies in Finland seemed to do several things wrong so after five years working in the music company and handling the merchandise section more or less on my own, me and three friends of mine bought the merchandise section from the company along with all the stocks and contracts and we started Backstage Rock Shop Ltd with the clear idea to have the best-merchandising company in the country which at the same time has the best customer service but which is also artist-friendly (that’s definitely not the case in many companies).
Since then, we’ve been developing our business a lot. At the moment we have our webshop 3.0 running, we have more people working in our company and our roster also seems to get bigger each year. We definitely want to be the place where people want to work and where the artists want in, not out.
We started in a small basement and since then we have moved three times to bigger premises. At the moment we have 480m2 (circa 5200ft2) premises with brand new offices.
Looking back 2011 there’s a lot of things we could have done differently but we’ve always had a clear idea of what we want to become and I think that is the most important thing why our business has grown steadily. When we started, we couldn’t pay a decent salary but after a few years we got the business rollin’ and since then we’ve paid normal wages to all founders and staff and everyone in the company is working full time.
Take us through the process of designing, prototyping, and manufacturing your first product.
Everything starts with the idea that some artist needs a new t-shirt or an entire collection. Usually, we will match the new collections with album releases in order to back the album sales.
We have an in-house designer and we also use many freelancers, depending on the case. With the product itself, everything starts with the idea. There has to be a story, a good idea behind it. We discuss it with the artist and make a plan who, when, and how makes the design or the entire collection. When we have all cleared and scheduled, we usually start with pre-sale along with marketing campaigns (social media, newsletters, print media in some cases) and also make the orders to our print at the same time.
Based on the pre-sale volumes and the upcoming tours, we order items to our warehouse and ship the pre-orders so that the customers will receive the order on the release date.
We usually do not make any prototypes of textiles as we have really clear ways of working with those and we already have all the samples of similar textiles. With new and a bit more odd items or packages we usually order samples and make prototypes (i.e. pendants, beanies, or soft toys). With some items the sampling and prototyping phase takes a few weeks, sometimes it can take months so you need to have a clear idea about the schedules or the launch could go very wrong.
We can predict pretty good what kind of amounts we should order. Sometimes the live shows are a question mark with new bands as you cannot say if the sales will be $1,000 or $5,000 per show so you need to have flexible printing partners and you also need to have the know-how not to order huge overstocks but at the same time way too low amounts of stock.
Start-up costs with new products can be in some cases just some hundreds of dollars, in some cases, you need to order large quantities and invest tens of thousands of dollars. For example, with stadium shows live sales where you are facing 30,000 hardcore fans you need to have large stocks and you need to invest a lot of money into it. We use a lot of data to predict all of our campaigns, launches, and live sales and usually, we do not have much of overstocks.
Video of Nightwish pre-sale shipping process, March 2020:
Describe the process of launching the business.
Before we had a lot of customers, you could not call those launches as we just put something online, the band may be posted something online but the sales weren’t anything big. After a year or two, we started to work more systematically and we also got bigger names to our roster and since then we’ve had quite a few large launches where the biggest pre-sale shippings have been 10 000 shipped packages.
Our first webshop was launched in some free service and it looked just like that. Since then we’ve developed our systems a lot and we are currently using Shopify as our platform which has worked pretty well. All the background systems are developing all the time and now we are focusing and developing a lot of our warehouse systems.
The biggest lesson learned over the years is that there is no such thing as organic sales. Well, actually there is (and quite a lot of it) but it’s more like a mindset: you cannot assume that people will just find your shop, love everything in it from products to services and just buy a lot of stuff. You have to do a lot of work, develop 24/7, always make everything a bit better than before, and always think of new ways of launching, marketing, and selling items.
Since launch, what has worked to attract and retain customers?
Premium quality is the key to our business. If we sell shitty quality, the fans won’t buy stuff from you again and they also let the artist know how shitty their merchandise is. Lose-lose situation. Our key rule is that if you cannot wear the merchandise yourself, why bother selling it?
On the marketing side, the bands play a big part with their social media channels along with our own marketing so we need to keep the artists and their staff aware of all new additions to their shops as well as all the upcoming campaigns that we will run.
We use a lot of data to track what kind of people buy different kinds of items and we focus mainly on them. We do cold marketing to assumed new customers as well but the band fans and our existing customers are most likely to buy from us again so there’s the main focus. Our main marketing channels are social media, newsletters and our upsell/cross-sell marketing in our shop. We use a lot of automated marketing along with the manual stuff.
Based on my experience, always listen to the customers. Develop your ideas, products, and services. The first idea isn’t always the best one.
How are you doing today and what does the future look like?
Like I mentioned earlier, we are looking at $2M+ revenue this year and we have also recruited new staff earlier this year. Now, at the beginning of Q2, we are well ahead of our targets so it is definitely looking good so far.
A few years ago we did a lot of investments and some bad inventory calls which led us to make losses but the past few years we’ve made profits and due to some really good system changes and new deals we are looking at a good future. We’ve done a lot of plans for the next five years and there are many great things coming ahead.
Through starting the business, have you learned anything particularly helpful or advantageous?
To put it simply, treat people as you want them to treat you. Be nice. You will meet the same people no matter if you’re going up or down and people will remember you.
Advice for other entrepreneurs who want to get started or are just starting out?
Trust yourself and at the same time, ask people who know the stuff. I used to think that it is a weakness if you have to ask for help in some issue but nowadays I couldn’t do what I do if I wouldn’t ask for help in many matters.
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