Doubling Down On Social Media To Combat A 50% ROA Decrease [Be Activewear Update]

Julie New

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Published: April 9th, 2022

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Julie New

Founder, Be Activewear

$125K

revenue/mo

Founders

Employees

Be Activewear

beactivewear.com.au

from Newcastle, Australia

started October 2014

$125,000

revenue/mo

Founders

Employees

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Want more updates on Be Activewear? Check out these stories:

1. Starting A $1.5M/Year Business As A Single Mom (2018) ➜

This is a follow up story for Be Activewear. If you're interested in reading how they got started, published about 6 years ago, check it out here.

Hello again! Remind us who you are and what business you started.

Hello, my name is Natasa Miklic and I am the CEO of Be Activewear. We are an e-commerce business specialising in activewear for women, men and kids. My background is originally in management consulting, and I bought Be Activewear from the original founder around 18 months ago. As a consultant, I worked with lots of different companies, advising them on strategies to grow their business and improve their operations. Buying Be Activewear was a great chance for me to do this for myself.

Be Activewear is a marketplace that offers ~60 brands. Our mission is firstly to provide our customers with a curated collection of stylish and functional activewear products including workout accessories and supplements and secondly to support smaller up-and-coming Australian brands by giving them an opportunity to reach a broader audience, increase visibility and accelerate their growth.

We have collections to suit every occasion, from working out in the gym to hanging out at the beach or lounging at home. Being a marketplace, we offer our customers the opportunity to shop from our most loved collections and mix and match items from different brands. Our customers are women and men of all shapes and sizes, including those who are already active and making giants steps at the top of their game to those who are starting out on their journey and taking their first small steps away from the sofa.

The business is generating around $70-$80k per month and our goal is double this over the next two to three years.

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We’ve been trying to diversify our marketing channels to become less reliant on Facebook as a traffic source.

Tell us about what you’ve been up to! Has the business been growing?

The last 18 months of trading have been very challenging. During the pandemic times, business performance has been very volatile, and it has been a difficult time to be an entrepreneur. We have seen many of our brands struggling to make sales and there have been lots of changes happening in the market.

One main initiative over the last twelve months has been to diversify our marketing channels to become less reliant on Facebook as a traffic source. This was necessary due to the changes made by Apple in their iOS14 release which restricted data collection from iPhones and made ad targeting much more difficult. As a result of these changes, we found our return on advertising spend more than halved overnight. To adapt to this, we have spread our paid advertising budget across Facebook, Google, Tik Tok and Pinterest and invested in SEO to improve our organic traffic performance. We have also spent time actively recruiting new brands to enhance our customer offer.

To help with these initiatives, we hired a marketing coordinator to share some of the heavy lifting. This has allowed us to have a more consistent presence on social media Facebook and Instagram, with more frequent postings and a more creative approach to content (e.g. greater use of reels and stories on Instagram and more creative postings, such as outfit suggestions and other themed content).

When you see your profit margins fall or get wiped out, it's easy to look for ways to cut costs and to obsess on big cost areas, such as marketing or employee costs, and to make cuts there. This is absolutely the wrong thing to do.

What have been your biggest lessons learned in the last year?

I have three key learnings, which are interrelated but critical if you want to survive as an entrepreneur and remain sane through the tough times, so you can be around to enjoy the good times!

Stay positive – The last 12-18 months have been difficult for everyone and especially difficult for small businesses. Initially, the COVID lockdowns were a tailwind for e-commerce as they drove everyone online. In particular, the activewear segment benefitted because many people bought new activewear to feel good whilst they were exercising at home. But over time as the lockdowns dragged on, we saw a significant slowdown in sales.

Through these times, it has been very important to remain calm and clear-headed and not let emotions get the better of you. Bottom line, these conditions have been tough for everyone. But to survive, you must believe that there will be a better tomorrow and keep doing all the things you know are right. There is unlikely to be a single ‘quick fix’ silver bullet but rather there will be ten to fifteen smaller things that you can do that will together make the difference. So, stay positive, keep a clear head and remain persistent so you can continue to make good decisions.

Be contrarian – During the market slowdown, it's easy to panic and stop investing in your business. When you see your profit margins fall or get wiped out, it's easy to look for ways to cut costs and to obsess on big cost areas, such as marketing or employee costs, and to make cuts there. This is absolutely the wrong thing to do. The businesses that will be best positioned coming out of any downturn are the ones that continued to invest in their brand and their points of differentiation no matter what is happening in the market.

This is the contrarian mindset. If you really do have a good business idea, then now is the time to double down and go all in whilst others are retreating and clearing out the path in front of you.

Think long term – We have seen a lot of competitors and smaller brands in our space exit over the last 12 months. Trading has been tough, and some players responded to this by offering deep discounts. This is a fatal trap! Profit margins are oxygen for your business and by cutting this off you are suffocating your business and making it very difficult to recover and grow in the future. Once you get in the habit of discounting regularly, you train your customers over time to just wait till your next discount offer. This resets customer willingness to pay at a lower price point where you will earn less margin.

This destroys your brand value in the long run and places you at a lower price point permanently. In the short-term, you may have gained some sales, but it has been at the expense of the long-term value perception of your brand. We have a few of our competitors fail and exit the market because of this approach over the last year.

To get through these times, we have focused on our five-year strategic plan and not the next 12 months. The market conditions right now are completely out of our control. We have used these quieter times to invest in improving our internal operations, through greater levels of automation and improving the customer experience of our website. These initiatives will pay dividends when market conditions improve.

What’s in the plans for the upcoming year, and the next 5 years?

We have lots planned for the next twelve months focusing on three key areas:

Customer Experience - We are investing in a new shop theme to change the look and feel and to make the store easier for customers to search, find styling suggestions and select products to mix and match. This will be enhanced with new branding and a new corporate logo and colour palette.

New brands – Being a marketplace, we rely on having the most exciting and freshest brands available on our site. We are always looking for new brands which appeal to our core market segment of ‘gym junkies’ but also to find great brands in adjacent categories, such as beachwear, swimwear, cycling, running, yoga and pilates.

Men & Kids – Our current customer base is largely women, with only a fraction ~10% of our sales from our men’s and kid’s range, so we will be looking to recruit new brands which can grow our offering for these segments.

Longer term we are looking to grow internationally and would like to increase our presence across Asia, focusing on markets such as Singapore, Japan and Hong Kong and replicating our business by building a similar marketplace in the UK to tackle the European market.