Steve Elkins from Yarn.com – Podcast Transcript

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Shaun Ryan: [00:01] Hi. I’m Shaun Ryan from SLI Systems, and this is the Ecommerce Podcast. Today, I’m talking to Steve Elkins from Yarn.com, WEBS. Welcome, Steve.

Steve Elkins: [00:08] Hi. Thanks for having me.

Shaun: [00:11] Now, I’ve got a traditional first question that I’ve been asking on this. What’s the first thing you ever bought online? Can you remember?

Steve: [00:17] I can. It’s kind of funny. Even though I sell a lot online, I don’t do a lot of shopping online. But the first thing I bought was from Tiffany’s, for my wife.

Shaun: [00:27] From Tiffany’s, some jewelry.

Steve: [00:29] Yes, jewelry, because, obviously, one of the important things about shopping online is the trust factor. And we don’t have a Tiffany’s anywhere near where we are. I needed something, I needed it quick, and they were right there and got it done for me.

Shaun: [00:46] Fantastic. So it was a good experience?

Steve: [00:48] Yeah. It was a great experience.

Shaun: [00:50] And your wife was happy.

Steve: [00:52] With a little blue box, she is always happy.

[laughter]

Shaun: [00:56] How can you go wrong?

Steve: [00:57] She is always happy.

Shaun: [[00:59] So, Steve, can you give me a little bit of background about yourself?

Steve: [01:02] Sure. It’s a family-owned business. WEBS is a family-owned business. My wife and I have been running the company for about six years now. I was in Fortune 500 companies. I worked for a Budweiser distributor. As well as my previous job, I worked for PepsiCo. I was actually on the bottling side, on the distributor side, and I ran the part of the business in Connecticut.

[01:38] My parents had approached us several times about taking over the business. And at the time, we were younger and didn’t have any kids. We always said, “No. No, no, no, no.” And they finally said, “OK, we have a buyer. So you need to either step up or forget it.” At that time, it just became right for us to take the business over.

So I have an MBA. My wife has an MBA. But we are fairly technically illiterate. [laughter]

Shaun: [02:12] [laughter]

Steve: [02:13] We rely on other people. And we’ve learned the whole Internet piece.

Shaun: [02:17] Fantastic. So it must have been quite a transition, going from the corporate jobs to a family-owned business.

Steve: [02:26] It was. And the biggest issue was: Could my wife and I work together without killing each other?

Shaun: [02:32] Yeah.

Steve: [02:33] Which we have done very well, once we kind of got the ability to understand who was going to run which sections of the business. For the most part, it’s become really great. My wife handles most of the marketing and the retail-store side, and I handle the operations and the finance. It has worked out really well.

Shaun: [03:01] That’s fantastic, because it must be really difficult to sort out those boundaries.

Steve: [03:07] They just kind of evolved. The only one that was really difficult was HR, because we had both worked in large companies where you had somebody to do that. And, all of a sudden, it became us.

In a small company, sometimes you make it up as you go, and she drew the short straw. But we work really hard together on the HR piece, and the people piece is probably the hardest part of the business.

Shaun: [03:40] Yeah. And it’s normally a very important part of the business.

Steve: [03:45] It is.

Shaun: [03:46] And you have to work on that, because the culture of the business drives the business, doesn’t it?

Steve: [03:52] Exactly. And as we’ve grown… We’ve grown from 12 to 48 people, so you get a lot of folks kind of coming on board. And really trying to make them understand how we want the customer to get treated has been a challenge. But we think we’ve done it fairly well.

Shaun: [04:11] Great. So, can you tell me about the business? What does WEBS do?

Steve: [04:14] Sure. We sell knitting and weaving yarn, both online and through a brick-and-mortar store. Our online business is Yarn.com. My father got Yarn.com forever ago, when he was reading the “Journal” one day and it says, “You need to have a URL.” And “webs” was taken. So, he typed in “yarn,” and the rest is kind of history there.

Shaun: [04:43] That’s a great domain.

Steve: [04:44] Yeah. It’s been terrific. And you’re at a trade show or something, and the customer asks you, “Do you have a website?” And I said, “Yeah, Yarn.com.” They said, “OK. Well, we can remember that. That’s pretty easy.”

Shaun: [04:54] [laughter]

Steve: [04:55] So, obviously, we sell knitting and weaving yarn. We sell all over the US as well as overseas. As the dollar has weakened, our overseas business has picked up very dramatically. We have been online since about 2001, but really have kind of picked up the pace over the past three to four years.

[05:22] We do everything out of one building in Northampton, Massachusetts, which is in the western part of the state. We have a brick-and-mortar store, which is a little bit unique in that the consumer can go shop in our warehouse.

Shaun: [05:38] Cool.

Steve: [05:40] There is about 16, 000 square feet of physical shopping space, which is about 10 times bigger than the average yarn store. So it is a really different experience for the customer to come in. Their jaws usually drop when they open the door, because it’s just very different than what they’re used to.

We have a tremendous amount of variety, and that is one of the things that really sets us apart from the competition.

Shaun: [06:06] Yeah. I can imagine that if knitting and wool was your thing, then people would just salivate at that.

Steve: [06:13] Yeah, they do. And it’s really kind of neat to watch people come in for the first time. But again, in total, we have about 30, 000 feet. That allows us to offer the variety, both online and in the store. They kind of complement each other. We couldn’t do the amount of variety that we have in the store without the online piece, and the online piece makes people want to come to the store.

[06:38]The variety that we are able to offer is so much greater than the average, small, local yarn store that it’s really a tremendous advantage for us in getting people. People know that they can get what they want from us.

Shaun: [06:59] Yeah. Yes. I understand that. That would be great. Now, can you tell me a little bit about the history of the company? It was owned by your parents.

Steve: [07:07] Sure. My mother started it in our basement, in 1974. She started it as a way for her to buy her yarn. In other words, she is a weaver…

Shaun: [07:21] Yeah.

Steve [07:23] So she started it by teaching hand-weaving in our basement.

This became, “OK. I’m going to teach hand-weaving as a way to generate income so I can buy yarn.” This is the way a lot of local stores operate, or got started. It was started for the love of the yarn, we’ll call it.

My father was a professor at the University of Massachusetts. He retired and decided he needed something to do. So my mom hired him. They specialized in what’s called mill ends, which are the equivalent of a closeout or a discontinued product.

[08:09] Back when there were mills in the United States, textile mills, they would get odd lots, at a really inexpensive price, and sell them to the consumer–mostly weavers at that time. And the business kind of evolved.

As the mills started closing, they started focusing on their own lines of products. And as we have become more specialized into knitting, we’ve done the exact same thing. We still sell closeouts from the manufacturers, and we’re probably the only store that’s big enough to take an entire lot from a manufacturer.

Shaun: [08:50] Right.

Steve: [08:51] This gives us pricing power. We are now big enough that we can go to the mills that aren’t in the US now; they are in Peru or Brazil or Italy. We have our own yarns made under the Valley Yarns label, which are sourced from the same mills as our suppliers come from. So, we can design with them, and we get a little bit of a cut out of the middleman opportunity. We price our products competitively, and it works really well for us.

Shaun: [09:29] Oh, that sounds great. Now, obviously, we want to talk about your online store as well.

Steve: [09:37] Sure.

Shaun: [09:38] How much do you sell online, or what percentage of your business is that?

Steve: [09:42] Our business is about 75 percent online. That percentage has obviously grown, just like almost every other online business. We used to be 50-50. And we also do a catalog as well. This is a 56-page, full-color catalog that we do four times a year that really feeds the online piece. The consumer is really almost encouraged to take what’s in the catalog and go to the online.

We do about 300 orders a day. And obviously, it depends on the season. Winter is the most popular season for us, and it depends on whether we have sales going on or whatever it may be.

Shaun: [10:30] Great. So you’ve grown. The catalog does a lot of the driving of customers to your site. How else do you get customers to your site?

Steve: [10:40] We use a lot of pay-per-click. In our industry, there is a site called Ravelry, which is Ravelry.com. This is the equivalent of a combination of knitting and Facebook.

Shaun: [11:00] OK.

Steve: [11:01] So it’s an online chat group with many different groups that people can belong to. And we get a lot of traffic off of there. That has 170, 000 members. And it drives a tremendous amount of traffic to our site – not necessarily through advertising, but from people doing the work for us. So it’s very much a social-marketing tool.

Shaun: [11:28] So, to drill into that, how do you encourage this? Or does it just happen without you doing anything?

Steve: [11:33] Well, we’re very involved. I mean, my wife, Kathy, and I both have a presence on Ravelry. Our employees do. We encourage our employees to answer customers’ questions or issues. They also have their own pages and talk. I won’t say it happens naturally, but it happens through basic monitoring of the site.

[12:03] We don’t do a whole lot of advertising, because the advertising’s a little bit hit or miss. But you get a lot of traffic generated by consumers who will say, “I’ve had a really good experience at WEBS. You should go over there. They have great pricing and great products, and they ship fast.” So that’s a place we advertise.

We advertise in all of the national trade journals and trade magazines. But again, it’s very difficult, in national print, to find out what your payback is.

Shaun: [12:31] Yeah.

Steve: [12:33] Whereas we can trace, as best we can, with our current site, traffic coming from the web to our website.

Shaun: [12:44] Yeah.

Steve: [12:45] So we’ve gone from majority national print to a focus on our catalog, and also our e-commerce, be it pay-per-click or places like Ravelry, where we spend money on advertising to folks who we know are knitters.

Shaun: [13:08] So the pay-per-click stuff that you do, co you do that in-house, or do you get someone else to help you out?

Steve: [13:13] We have an outside company called Timberline Interactive that does our pay-per-click for us. We have been with them for about a year plus. They do a really nice job for us.

It’s just one of those things. We just don’t have enough in-house time or talent to manage that. We’ll write all the descriptions for them, we’ll provide them all the links, and then they do all of the management of getting everything up on the Google pay-per-click for us.

Shaun: [13:47] Yeah. That’s great. Because it’s relatively easy to create a PPC campaign, but to manage it and to manage it effectively takes a lot of expertise. I mean, I think that’s a very sensible approach. Would you recommend Timberline to other people looking for PPC?

Steve: [14:00] Yeah, they’re great folks. They are terrific folks, and they do a really nice job. They are really nice folks, and they’ve been a great benefit for us.

Shaun: [14:10] Fantastic. And how about search-engine optimization? Is that a big part of driving traffic to your site?

Steve: [14:17] I wish it was. [laughter] We relaunched the site, our current site, about a year and a half ago. The best way I can describe it is that it has an “issue” with the spiders not being really friendly to it.

We went from our previous site, which was our first site and much more designed to be informational – it was all HTML-driven and incredibly search-engine friendly, and we had never, ever done any pay-per-click advertising previously – to our new site being launched. We had previously been ranked very high organically, and then we fell off the face of the Earth and never came back. [laughter]

Shaun: [15:01] That sounds like an opportunity to me.

Steve: [15:04] It’s an opportunity to do a new site is what it is. [laughter] The current site has JavaScript menus, so it’s basically like putting in a new foundation once you’ve built the house.

Shaun: [15:17] Yeah.

Steve: [15:18] We learned the hard way. SLI has been really helpful for us. In this case, because the search.yarn.com site that SLI puts together now has 14, 000, I think, items on Google. In comparison, our Yarn.com site has 400.

Shaun: [15:45] Wow.

Steve: [15:46] So, [laughter] we have appeared, again, thanks to SLI, but…

Shaun: [15:53] Are you working to optimize the site again?

Steve: [16:01] We actually are not, because we are very close to relaunching a new site. And we are more focused on that.

We have had our new site in the hopper now for close to a year, and we are working on that. It’s in the final stages, and we are very excited about getting that out. The new site will be much more search-engine optimized and much friendlier. We are looking forward to great results out of that.

Shaun: [16:28] Great. And can you tell us a little bit about the new site and the technologies that you’re using?

Steve: [16:34] Sure. Yeah. The new site is designed by a company called WebLink, which was actually recommended to us. We were at a trade show, and we asked your folks at SLI who they might recommend, because we refer to ourselves as an “awkward tween.” Our needs for doing a website are pretty healthy, so small designers are too small for us. But big companies look at us and say, “Oh, you sell yarn? Isn’t that really nice?”[laughter] “You certainly couldn’t afford to pay us.”

[17:15] The WebLink folks are a nice middle ground, even though we are probably one of their smallest clients, I would say. But they’ve been really good for us. And so we have that technology coming online. It will have SLI powering the search. And so the two of them, I think, are going to produce just a far, far better site.

Our current site, again, being very old, has its original shopping cart, which is a separate site. So we lose all of the cart-abandonment information and all of that. We’ll have a built-in cart with this one, all the things that you would expect a normal company to have. It will be a big step up for us.

Shaun: [17:59] Yeah. That sounds exciting.

Steve: [18:02] Yeah. It is going to be great.

Shaun: [18:04] And I am pleased the recommendations worked out well. [laughter]

Steve: [18:07] They did. They worked out very well. It has been a nice fit all around.

Shaun: [18:12] Great. So, to sort of go back to the marketing side of things, do you have a marketing campaign that you’re particularly proud of?

Steve: [18:20] I would say… It’s funny. My wife and I have our own podcast, called “Ready, Set, Knit!”

Shaun: [18:27] Oh, great.

Steve: [18:28] It was brought to us by our local radio station, who was saying, “We want to revamp our Saturday AM lineup and we’d like you guys to have a knitting show.” And my wife looked and said, “We’re doing it.” And I said, “You’re absolutely nuts.”

[18:43] We are close to our 100th show, and we do it every week. We talk about new products that we might have available. We’ll chitter-chatter for a little bit, talk about our kids or whatever. And we’ll do projects. We’ll do knitting projects, what’s called a “Knitalong.” We get people that will actually work with us. We pick one project out, and we do it over a series of weeks, and that has worked incredibly well. We get 8, 000 listeners a week now.

Shaun: [19:21] Fantastic.

Steve: [19:22] And we go to a trade show and people will ask us to talk, or they’ll say, “I know that voice.” It is so amazing to see the popularity and to see people really get engaged with our business. We feel like it’s really added a lot, because people know WEBS, and they feel like they know who they’re buying from. They know that they’re buying from Kathy and Steve, who own WEBS, and they know that Kathy and Steve will take care of them.

[19:53] So the podcast has been a really terrific tool for us. And it is incredibly inexpensive. The entire thing, including the production and everything, because the radio station does it, is about $15, 000 a year.

Shaun: [20:10] Wow.

Steve: [20:11] And so it is just a huge benefit for us.

Shaun: [20:13] That’s great. So, obviously, it gets broadcast on the air, and then you distribute it as a podcast as well.

Steve: [20:21] Yeah. We put it on our site and on iTunes as well. It has been incredibly effective for us.

Shaun: [20:28] This is obviously an area I’m also really interested in. How long did it take you to build up your subscriber base, up to the 8, 000 listeners which you now have?

Steve: [20:41] It has taken a while. We’ve been at it for two years. But we promote it heavily on our site. We promote it on our email blasts. I would say that we have been growing steadily for–a year ago, we were probably at about 5, 000. So we continue to add almost every week.

Shaun: [21:01] Yeah. That’s fantastic.

Steve: [21:03] Yeah. It is.

Shaun: [21:07] Do you have, for example, on your site when you publish a podcast, do you have an area where people can discuss it, and do you get much interaction happening on your site around that?

Steve: [21:15] That we don’t. That is probably one of the things that we need to do better, to take the information that’s on the podcast and use it as a sales tool: OK, here are the yarns that we talked about on the podcast.

We do show notes, but we don’t do them as well as we probably should do, so that the people can take that information and say, “Oh, I remember the yarn, ” or “I want to see what yarn was talked about that was on sale this week, and I need to look on the show notes.”

[21:47] We probably don’t do that as well as we probably could, but we have demonstrable results. For example, we’ll have the owner of a yarn company on the podcast, and the next week the sales of that particular product go up by 200 percent.

Shaun: [22:04] Great!

Steve: [22:05] So you know that people listen. [laughter]

Shaun: [22:07] Yeah. That’s fantastic. Now, what do you think the biggest opportunities are that you have online?

Steve: [22:14] Obviously, to get our new site launched, and then product presentation. There’s two ways that people buy our products. They will either go to find a particular yarn. They say, “I want this particular yarn.” And then, “I’ve got to go find something to do with it, so then I’ve got to go find a project to make with it.” And we’re fine, right now, at doing that, because the yarns are laid out very easily now, and you can find them.

[22:45] What we’re not so good at is when the customer says, “I want to make a sweater.”

Shaun: [22:51] Yeah.

Steve: [22:53] And then, “I’m going to go find the yarn to make it.”

The new site will allow us to do that part of the business much better, which we think will give us an instant boost. Let’s say, OK, the customer says they want to make a cardigan sweater for themselves. “These are all the patterns I have to choose from, and I like this one.” And, then, “Let me go find…” I’m going to give them an easy way to find the yarn and get it out and capture that sale.

[23:31] So that’s the long and the short of it. Really, the product presentation is a huge opportunity for us.

Shaun: [23:26] Yeah. That sounds great.

Steve: [23:28] Along with a new shopping cart. [laughter]

Shaun: [23:31] Now, do you have an e-commerce site that you particularly admire?

Steve: [23:36] Like I said, I don’t do a ton of online shopping. I like LL Bean, because it’s very clean and easy to maneuver, for me. I want something that I can get in and get out fairly quickly. That is the best way I can describe it, because, like most guys, I don’t like to shop. [laughter]

Shaun: [23:57] Yeah. Yeah. I understand. [laughter]

Steve: [23:59] But that is a site that I find pretty clean and easy to shop, for me.

Shaun: [24:05] OK. Thank you. Now, how many people do you have working on your website within WEBS?

Steve: [24:14] Exactly one.

Shaun: [24:15] Exactly one. [laughter]

Steve: [24:16] [laughter]

Shaun: [24:17] That’s not a big team.

Steve: [24:18] It’s not a big team. My IT guy has a picture of him that he’s tripled so that he thinks he’s got an IT team of three.

Shaun: [24:25] [laughter]

Steve: [24:26] As our new site launches, we are going to add a second person, who will be responsible for content on the site. We know we’re making this kind of sea change where we’re going to have all of the projects available as well, and that requires someone who not only is technically competent but also knows knitting. They have got to know how the knitting consumer shops. So it’s a little bit difficult to find that person.

Shaun: [24:55] I agree. [laughter]

Steve: [24:58] That’s why we rely on SLI to do our search, and we rely on Timberline to do…

Shaun: [25:11] Your PPC.

Steve: [25:14] … the paid search. Just because we’re not big enough to support a full technical team.

We, luckily, have a very reliable network, because that person also has to support all of the back-office operations that help us process our orders. Our being able to have a lot of outside partners has been really important to us.

Shaun: [25:41] Yeah. And are there any other outside providers that you use that you would recommend?

Steve: [25:46] We use VerticalResponse for our email blasts.

Shaun: [25:50] Yes.

Steve: [25:51] That has worked very well.

As I’ve said, we use SLI for our search. That has probably been the best investment for us because our site search was awful before. Just putting that into place had an instant bounce for the company because we know that – and I’m sure you’ve heard it before – when your employees don’t use the site search, [laughter] you know it’s bad.

Shaun: [26:19] Yeah.

Steve: [26:20] And our people love it now. So SLI, VerticalResponse. We use Timberline. And those are pretty much the three sources that we use.

Shaun: [26:30] And now.

Steve: [26:32] And WebLink.

Shaun: [26:33] And WebLink, coming up. Yeah.

Steve: [26:35] Yeah.

Shaun: [26:37] OK. That’s great. I was going to ask you what is your current biggest headache, but maybe we’ve already talked about that. Is it the search-engine optimization?

Steve: [26:43] It is. It’s the JavaScript menus. [laughter]

Shaun: [26:47] Apart from your new site, what other changes are you planning on in the coming year?

Steve: [26:54] It’s really about having integrated marketing. For example, working not only with our partners with the new site…

The new site gives us so much more flexibility. We have a partner, one of our suppliers, that is extremely good with the web, and every Friday they produce a new pattern out to their 130, 000 subscribers. And so, for example, we’ll have the ability to say, “OK. Every Friday, you know that this company’s patterns come out for free. And you’re going to want to go buy it. You’re going to know that WEBS is going to have that free pattern up on the web, on our site, on Friday at 11 o’clock, and you can come buy it.” So it’s really about being much more integrated.

[27:50] We also have to do some work on our back end. We use Mail Order Manager as our fulfillment software. We need to change our back-end software, upgrade our back-end software with them, to allow us to do real-time inventory online. When we get that done, our customers are going to be very happy, too. [laughter]

Shaun: [28:18] [laughter]

Steve: [28:19] So those are the two major innovations that we have coming.

Shaun: [28:23] Great.

Steve: [28:25] …And getting online inventory. In yarn, you don’t buy–for example, you go online and you buy a shirt or a bracelet…

Shaun: [28:36] Yeah, a piece of jewelry.

Steve: [28:37] In knitting, you may need to buy 22 skeins. So you’ve got to know that we have those 22 skeins in stock, ready for your order. Now, we update our inventory a couple or three times a day, but our consumers are looking for more. So that will be our next upcoming change as well.

Shaun: [28:56] Yeah. I imagine that must be a problem, when you’re selling end-of-line runs.

Steve: [29:01] Exactly. Particularly when we might do an email blast, we are going out to in the tens of thousands of emails that we deliver. The site can take a lot of traffic, but to have to email the customer back and say, “Oh, we sold out of that,” is not a whole lot of fun. So that’s a big thing for us to be able to correct.

Shaun: [29:27] Right. Well, this has been extremely useful. So I just want to thank you very much and congratulate you on what you are achieving with such a small team. You are doing a fantastic job there. I want to thank you for taking the time to talk about your story today. It’s been fascinating, and I’m sure our listeners will have learned a lot. So thank you very much, Steve.

Steve: [29:50] Great. Thank you very much for having me.