The business path from bedroom to garage, to global. Where there’s a wig, there’s a way
What are the steps to taking a business from running out of a bedroom to global – while still staying ‘small’ and having a life? Andrew and Mandy Coates have done just that with www.theWigOutlet.com.au. This is their story…
Pretend hair has been around for a while. Credit for creating the wig goes to the ancient Egyptians, who came up with it as a way of protecting their shaven heads from the relentless desert sun. Depending on a person’s social standing the wig would be made of human hair, wool or vegetable matter and held in place with beeswax glue. Things have moved on a bit since then and wigs are now made out of a variety of natural and synthetic substances and have a wide range of uses.
Gold Coast husband-and-wife team, Andrew and Mandy Coates, first established The Wig Outlet, Australia’s largest online wig store, in the early 2000s. The idea for the business was pure chance. At the time, Andrew was working from home designing e-commerce websites – going fishing as often as he could – and Mandy was working as a speech pathologist for the Queensland education department. One of Andrew’s clients sold adult lingerie and gave him a box of out-of-season stock to sell on the website. That box sat in his office until the day Mandy popped her head in saying she’d heard about people selling on eBay and thought she might give it a go.
“I looked at the box on the floor and said maybe we could sell that,” Andrew recalls. “As quick as she could list it, it sold. That got us thinking we should purchase stuff to sell on eBay. Some Chinese factories had contacted us offering to supply products, and when we started looking through their websites we noticed a lot of them also sold wigs. We were more comfortable selling wigs than adult lingerie, even though Mandy was getting quite good numbers, up to around $15,000 a month, selling lingerie. She cut her speech therapy job down to four days a week, then three days, substituting that income with what she was making online.”
That success of that fledgling eBay business led Andrew and Mandy to develop their own e-commerce platform and website.
“We decided to take it to the next level,” Andrew says. “The wigs were an easier product to sell than lingerie – they were cheap to post, they never went out of season and the stock didn’t go off. That was the niche market we decided on. We thought about expanding it into costumes, but were held back by the inventory side that came with that.”
Then they put it all on the back burner, selling wigs part-time while they started a family. Andrew set up Hot Goanna, an internet marketing business with a contract from Google, which had just launched AdWords into Australia. After five years, they decided to rev the wig business back into life.
“It was such a good niche and we were the experts in that niche – it was a bit like a tap, we just turned it back on and the orders came streaming in,” Andrew recalls. “We started to take the business more seriously and to import, manufacture and stock for ourselves. We sourced a factory in China, which is a whole experience in itself.”
Andrew and Mandy found that doing business in China had its share of pitfalls – one of them dealing with trading companies that are basically on-sellers. “You think you’re dealing with a factory and order a stock of yellow wigs,” Andrew remembers. “Then the next shipment is a different colour because the agent has found a cheaper factory. It gave us a few problems, but we were fortunate in that we’ve got a low-cost product."
The couple found that acquiring a reliable representative in China smoothed out many of the problems they were facing. “We developed a good relationship with a lady called Cassie who ran a trading company,” says Andrew. “We now employ her as our quality control officer. We order from four factories in China, pay a 30 per cent deposit then send Cathy to check the quality of the product before we make the final payment and it gets shipped.” Andrew says they pinpointed early on the importance of creating a label and branding their products. “This allowed us to sell our own brand on the website, which opened up the opportunity to wholesale into
bricks-and-mortar costume shops around the country. The novelty and special-occasion wig business has certainly proved a winner at many levels. “The State of Origin wigs are always popular,” Andrew laughs, “the ‘Richies’ at the cricket, a lot of rugby, we sell a lot to AFL and NRL clubs directly as giveaways and for member events. School Book Week is a real big seller for us in August – every primary school kid in Australia has to dress up as a character from a book. And of course the king is Halloween, it’s really started to take hold in Australia. We also sell a lot of wigs at discount prices to charities – Ronald McDonald houses, Beyond Blue, the Cancer Council, the Heart Foundation.”
The more serious side of the business, Luxury Wigs and Hair, evolved around 2011. One of Australia’s leading manufacturers of wigs, hairpieces, ponytails and hair extensions, Luxury Wigs caters to people who have had cancer treatment, accidents or suffer medical hair-loss issues such as thinning hair or alopecia. “We’d been getting a number of enquiries to the website from people who had had
chemo and were losing their hair, so obviously there was a market there,” Andrew remembers. “We’d sourced a high-end product from the US, a leading US brand, but the problem was that they set the RRP too high. People were saying they couldn’t afford to outlay $600-$800.”
When Andrew’s mother had similar concerns after a course of chemotherapy, the couple decided they wanted to be able to offer a quality product below the price point currently in the marketplace. The only way to bring that price point down was to manufacture the product themselves. “Cathy identified a factory for us and we did quite a bit of research and development before setting everything in motion,” Andrew recalls. “We use a new Japanese synthetic fibre called Futura, which is designed to mimic human hair.
So it has the feel of human hair without the price tag – and it’s 100 per cent heat-friendly. We also have a range of human hair wigs.”
With only a few traditional wig salons in Australia, Andrew and Mandy were hearing that the majority of customers would understandably like to look, feel and try before they buy, but were unable to. Regional Australia in particular was under-served. So the next logical step was to get a good distributor for the brand, one with trust in the marketplace and an existing distributorship of clients. “We went with a hair extension company called Showpony, also based on the Gold Coast. They’re a great fit because they’ve got around 5000 salons around Australia, New Zealand and Indonesia that they sell their products into. We’re also having conversations with a large distributor over in NZ. The experience there is very similar to Australia.”
Andrew and Mandy are finally stepping back from running the business to growing the business. The stock has been moved out of the big shed on their Nerang property and orders are being packed and dispatched via a third party fulfillment centre. Andrew says his main focus for the next 12 months is to take the novelty wigs to the international market. Previously, postage was the sticking point with the cost of freight often exceeding the cost of the wig. However, after a fact-finding mission to the US last year, Andrew found the solution – and its name is Amazon.
“It quickly became evident that the best way was to sell directly to the public on Amazon,” he says. “It’s a mind blowingly huge market – there are 330 million US customers on Amazon and 80 million of them pay Amazon $100 a year to become a member and get free shipping. Our stock will be manufactured in China, sent straight to an Amazon fulfillment centre in Dallas, listed on Amazon and they’ll ship the product to the customer. Of course, Amazon coming to Australia will be another platform for us to sell
our products here, as well.”
For the future, Andrew indicates that “the timing is actually right about now to sell the business and move onto some new projects. With the #1 Google ranking, fully automated, and Amazon on its way in to further lift the business again, we’re ready for our next challenge!”. Judging by the path taken in this one, that will be something to see.
Check out the Wig Outlet website HERE!
