Launching a Furnace Filter Store and Growing to $60k/month
Hello! Who are you and what are you working on?
My name is Jay Vasantharajah and I am the co-founder of PureFilters.
PureFilters is an online supplier of furnace filters in Canada, we carry a wide selection of the best brands and ship directly to homeowners. We cut out big-box retailers and HVAC contractors in order to provide homeowners with the best prices possible and unmatched convenience.
Through rigorous process building, investments in automation and utilization of outsourcing, my co-founder and I are able to manage this $60k/mo business with less than 10-12 hours spent per week collectively.
We are most proud about our obsession in building systems to maximize customer experience and as a result we have built quite the fan base among homeowners in Canada.
What's your backstory and how did you come up with the idea?
Honestly… I accidentally got into the business.
I run a digital marketing agency and at the time we had a lot of HVAC Contractors as clients. One of my clients was explaining to me how he sells furnace filters to customers that he visits, and wondered if he could sell them online instead. I researched this for him and concluded that there were a ton of Google searches for furnace filters. I pitched him on creating a new campaign to sell these filters online. He decided not to do it.
Once an idea comes into my head, I don’t rest until its given a fair shot, that’s just how I am. Even though my client said "no", I still wanted to do it because I was curious. I saw it as an opportunity to get a better understanding of the e-commerce landscape and the marketing challenges involved.
So when I had some downtime on the weekend, I built a WooCommerce website. I didn’t do it with any sort of serious business/financial intent, I was busy working on ClientFlo, my digital marketing agency. I became super busy at my agency, and the fun project took a little bit of a back seat for a while.
I think one of the smartest decisions we made was to truly become a customer-focused company, it is stitched into our DNA.
That is until I got an email notification that I made a sale. I thought I was seeing things. I thought to myself - did someone just give me money for a furnace filter? This isn’t even a real business. I thought it had to be fake or a scam, so I just left it. The next day I got notification that I made another sale. I googled the order addresses and they were real, I couldn’t believe it.
At this point, I was scrambling, my fun side project now had liabilities. I had no idea how to fulfill these orders, and my ego wasn’t about to declare defeat and give these customers a refund. I ended up buying the filters at retail at a speciality store near my place and shipping out to my new accidental customers at a loss. I was just so excited I didn’t care, I wanted to keep my new customers happy.
This was the first filter I shipped at a loss to my “accidental customer”.
Describe the process of manufacturing your product and getting inventory for your store.
In order to buy furnace filters, most manufacturers require that someone in your company has a gas fitters license, something I did not have. I remember I had a friend from high school who was an HVAC contractor. I reached out to him and made a deal with him. I hired him as a consultant, which meant we were able to use his license to try to open up accounts with manufacturers.
Even with the license I got denied from just about every single manufacturer (due to lack of business history in HVAC) except one account. This manufacturer happened to be one of the most recognized HVAC brands (something I didn’t even know at the time). This stroke of luck seriously helped PureFilters grow and scale.
Describe the process of launching the online store/business.
It’s funny because my website was created and I had already made my first few sales before I really even considering PureFilters an actual business.
This is where my co-founder Nadir Chaudhry comes in, who I always knew had an entrepreneurial desire, and had recently quit his full-time job. Since I was busy running ClientFlo and didn’t have much time to invest, I made a deal with Nadir. I asked him to become the managing partner, in charge of day-to-day operations/growth, and I would become the financial partner and put up all of the cash required.
Too often, I hear business owners claim their business is "customer-focused", but there is no real follow-through. After defining what the three most important things that matter to your customers, re-assess all of your business processes and policies and optimize accordingly.
Once Nadir agreed, this is when the business really took off. He went through product catalogues, added more filter models and brands. He built out our customer support systems and fulfillment processes. Nadir reached out to different suppliers and manufacturers, negotiated costs down so we can deliver the best prices to our customers. He managed the massive amount of inventory that was delivered first to his condo (which we quickly outgrew), then to his mom’s suburban house (again, we outgrew) and then eventually to our warehouse. Within 6 months we started seeing a ton of new customers coming in regularly.
Since launch, what has worked to attract new customers?
I run a digital marketing agency, so I’m fairly well versed with things like Adwords, SEO, copywriting and conversion tracking/optimization. I have to admit this helped a lot in scaling our business and acquiring new customers.
My original market research which led to my conviction to sell furnace filters online was based on Google search volume data (if you recall my conversation with the HVAC contractor). Because of this, I decided to swing for the fences on Google Adwords and this proved to be a successful move. We currently have a cost-per-acquisition of around $10 per customer on Adwords, and till this day it is the only money we have ever spent on marketing. It’s really hard to justify spending money (and more importantly, time) on other marketing channels right now with this level of cost per acquisition.
I think the key to success on Adwords is testing, you really cannot skip this crucial step. A/B testing fills in the gaps about human psychology we cannot comprehend ourselves, so follow the data. Through testing we figured out that the majority of our conversions come through desktop, free shipping in the ad copy improved conversions and many other elements of our campaign.
It takes time to get to what I consider the "optimal point", where your Adwords campaign requires a few minutes each week to maintain. We know exact which keywords to use, ad copies, negative keywords (very important), ad schedule and all the other settings involved in order to maximize ROI on ad spend.
PureFilters first company retreat in St. Maartens
PureFilters will always focus on data-driven marketing. I have always been a numbers guy, so any marketing channel with trackable metrics and direct ROI really appeals to me. Gone are the days of "guessing", with the tools and data out there that is available to marketers, you can really hone in on your exact audience and adjust rapidly in accordance with feedback. A key tool to have in your pocket book is the Google Keyword Planner, I mean the data that this tool provided is essentially why I started PureFilters. Keyword data allows you to get into people’s head if you use it correctly, it show’s people’s intent and you can make some pretty powerful decision based on it.
My general marketing advice for e-commerce entrepreneurs is, use feedback from your initial customers (or some other form of research) to figure out your customers buying behaviour/psychology. After you find that you, tailor your entire marketing approach to match it. In order to truly scale, you need to learn exactly how your customers buy.
How is everything going nowadays, and what are your plans for the future?
My co-founder and I don’t spend any more than 10-12 hours per week on PureFilters.
Operations are quite automated and now running like a well-oiled machine. I work on my main business ClientFlo for most of my day. Even though I was originally just a financial partner, the business is truly addicting, I can’t stay away from it. Our customers love us, our suppliers love us, it’s hard not to want to work on it, so I spend time strategizing how to improve and grow.
In terms of short term goals, we have a few ideas in the pipeline to really scale our business further, right now we sell mostly niche sizes of furnace filters. We want to eventually tap into the general market (which are the one inch filters), but are still strategizing on a cost effective way of doing this since the margins are much thinner.
In terms of long term goals, we had acquisition offers from competitors, and also an offer from one of our suppliers to buy him out because he wants to retire. We thought about raising capital to grow/scale further. I think a capital transaction is probably eminent, but who knows? Just rolling with the punches and having fun.
Through starting the business, have you learned anything particularly helpful or advantageous?
One of the biggest mistakes we have made was purchasing too much inventory.
We got very excited at the discounts offered by our manufacturers for bulk purchases, and overextended ourselves a couple times. This can really screw up your finances (I am an ex-accountant, I should have known this). This resulted in me having to pour more cash into the business. Proper reporting and forecasting prevented us from making this mistake again, we want to run a lean/automated operation.
I think one of the smartest decisions we made was to truly become a customer-focused company, it is stitched into our DNA.
Every single decision we make, we ask ourselves "is this going to help the customers?" and we constantly ask ourselves “what more can we do to make our customers experience better?”. For that reason we have a pretty loyal following of homeowners in Canada. Our company motto is “We are a customer service company that happens to sell air quality”
Like Henry Ford once said; "It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages."
What platform/tools do you use for your business?
We use WooCommerce for our e-commerce platform and there is a host of analytics and reporting plugins that we bought as well as a ton of custom modifications we made to improve efficiencies.
We use Aweber to communicate to customers via email, Quickbooks Online for our accounting and Dropbox for file sharing. Both my partner and I travel quite frequently, so digital communication via Whatsapp and Skype with each other and our outsourced employee is pretty key too.
What have been the most influential books, podcasts, or other resources?
I think anyone in e-commerce should read Made in America by Sam Walton, perhaps one of the greatest retailers and customer-focused businessmen of all time.
The Everything Store details the story of Jeff Bezos, pretty good read as well. Both men are quite similar in their retail/ecommerce philosophy in fact I think Jeff Bezos learned a lot from Sam Walton’s career.
Like Isaac Newton once said "If I Have Seen Further Than Others, It Is By Standing Upon The Shoulders of Giants".
Advice for other entrepreneurs who want to get started or are just starting out?
Get feedback from your customers as early as possible, and design your entire business around what your customers care about. It is no mistake that we have almost 300 5-star reviews, for something as boring as furnace filters. We figured out the 3 most important things our customers cared about and catered PureFilters around them.
Jeff Bezos figured this out with Amazon a long time ago. His entire business philosophy revolves around optimizing the most important things Amazon customers care about, price, speed of delivery and selection.
Too often, I hear business owners claim their business is "customer-focused", but there is no real follow-through. After defining what the three most important things that matter to your customers, re-assess all of your business processes and policies and optimize accordingly.
Where can we go to learn more?
I am doing my best to write as much as possible, whenever I can find time. You can see my blog here: www.vasantharajah.com or follow me on Instagram at @jvasantharajah.
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