From the source: Ben Hare, Tinyme

Ben Hare: We struggle to fit into a lot of the normal categories. We generally just say we’re in personalised children’s products, but ultimately we’re a manufacturer and retailer of personalised products for kids – things like name labels, puzzles, bags and stationery, that kind of thing. It’s a mix of organisational products as well as gifts. 

In terms of the business, originally we were a single-person, spare-bedroom startup, and now we’ve grown to about 60-odd employees – in peak times, it’s a bit more than that. Because we’re a made-to-order business, we do have to scale our production capacity to meet those peaks. We’re quite a seasonal business, so we do scale up quite a bit for Christmas and back-to-school, for example.

We’ve been trading pretty well. We launched in the UK and the US about seven or eight years ago. They were our first offshore markets, and they’ve continued to grow, and we’ve seen some really good traction in those markets over the last year or so.

Earlier this year, we launched into the Singapore market. It’s very early days for us in that market, but we’re pretty excited to see what we can do there. 

Sales have been pretty solid; we generally don’t talk specific numbers. We’re heading in the right direction, and we’re seeing stronger growth now in offshore markets. In Australia, we’re more mature, but we’re seeing a lot of potential offshore where we’re in earlier phases of market penetration. That’s pretty exciting. 

IRW: Where does Tinyme fit within the larger retail market? 

BH: I think ultimately we try to be something unique. We only sell Tinyme-designed and manufactured products, so we definitely bring a strong design and innovation element to our product set and that’s always been at the heart of the business. 

We’re in the mass customisation space, and the challenge is delivering a customised product that can be tailored to what the customer really wants at scale – that’s the difficulty. The challenge is the ‘mass’ part in mass customisation, and that’s one thing that we get very excited about. It’s very complex. We’ve built these systems and processes to quickly make to order and ship products, whereas other retailers take product off the shelf and ship it. We have to actually make product and ship it, and yet expectations for customers will be something similar. 

While customers do understand that you’re making the product, they’re just trying to buy a gift for their kid, and we have to try to meet those expectations. So that’s complicated, but it’s also our point of difference, and it’s our opportunity to continue investing in those systems and do innovative stuff that is hard to replicate by more traditional retailers. 

IRW: We’ve seen some other retailers try and struggle with customisation. Why do you think that’s the case?

BH: We’ve been at it for a fair while, since 2006. We’ve only grown from organic cashflow. We’ve been profitable every year of our existence, and that’s been a constraint that we’ve taken on and embraced really, so rather than just trying to scale the business really quickly in a loss-making manner, we’ve tried to take on the fact that we have to be profitable as we go. That’s been a good discipline for us, to continually test new products to make sure they’re washing their face, and that we can actually deliver on that, rather than overspending on marketing or pricing products at an uneconomic level. 

I think that’s helped us stay a bit more stable. It’s probably meant we haven’t grown as fast as we possibly could have in the same period of time if we had taken a different route, but we might not have been as secure.

We have a lot of respect for some of those other businesses and they’ve done some pretty innovative things. I think, ultimately, you need to execute within your niche and have an ability to monetise your business.

IRW: You haven’t had any external funding. Is it something you’d look at it in the future?

BH: We’re pretty comfortable with how we’re tracking. We haven’t necessarily avoided it. Our philosophy has been that if we need it, we’ll take that route and if we don’t, we won’t. We generally built our business model to not be majorly capital-intensive. It’s complex, but it’s not capital-intensive. 

To grow the business, a lot of retailers have to invest in inventory, we don’t. We don’t have any finished-goods inventory since our products are made-to-order, it’s all component inventory. You still have to scale equipment and a lot of other things, but you don’t have to scale inventory, which can be a capital sink. We’re open to taking on investment if we need it, but we’re progressing pretty well without it. If we had ideas or opportunities that required it, we’d certainly look at it.

IRW: How did Tinyme start?

BH: Mike Wilson is the founder and one of the three directors who still own and run it, and our very first product was a wooden name puzzle. He has an industrial designer background. He got the idea simply because there was a piece of equipment – a CNC router at his old workplace – that wasn’t being used all that much. He thought it could be used to make a product and came up with the puzzle. That’s where the business was born.

It went really well from there and scaled pretty quickly. Nick McLennan came on as a second equity partner within six months. They were in Mike’s spare bedroom, then they moved to a mate’s garage. He had a spare bedroom and a garage that they could use to make product and then after that, we moved to our first factory. 

We’re up to our sixth premise now in 13 years. We’ve been here for a few years now – it’s taken off from there. 

Nick’s also an industrial designer and early on, he set about broadening products and getting [the business] into other customised products. We did dabble in non-personalised things, but generally speaking, we found that mass customisation is our point of difference and where we can bring things to the table that others don’t, so now we’re focusing on that.

IRW: What plans does Tinyme have for the business locally?

BH: Product innovation. We keep looking at our products, improving them, how we make them and designing new products. We’ve done a lot of work on our backend manufacturing systems and we’ve built software for all that, which is a big part of the business. We’ve also been replatforming our website, which has been a big focus for our development team. The Singapore site was the first one that we launched on Magento 2, and now we’ve migrated our US and UK and Australian sites. We’ve focused on putting a lot of work into our web development. We do a lot of our development in-house, both backends systems and web development. There’s a lot of customisation on our site to create the customisation experience. We need to create a user experience that’s not off-the-shelf; it needs to be tailored for our products and how we put the pieces together.

IRW: You recently won a couple of awards at the Online Retail Industry Awards. What was that like for you guys?

BH: We were very pleased to win them. It’s fantastic recognition for our team. We’re a small business in the scheme of things in the retail landscape, but it’s great to get recognition from people who are smart and know the industry well. It’s very encouraging. 

IRW: What’s your opinion of the e-commerce market at the moment?

BH: I really love the Australian online retail industry; there are a lot of good people and there’s a lot of innovation going on. The way that things have unfolded in Australia has been different to other markets. In the UK, a lot of traditional retailers have led the charge in the online space, whereas in Australia, particularly in the early days of e-commerce, a lot of innovation came from pureplay startups. Then you saw traditional retailers embrace it a lot more in the last five to seven years. It’s a difference in history, but it’s affected the way things have evolved here.

I think, generally, Australia does pretty well in e-commerce; there are some things we’re behind on and some of the large international retailers have done some impressive stuff with very substantial investment in omnichannel offerings; but I think the Australian industry definitely does a good job of innovation.

IRW: How do you see the landscape changing over the next couple of years?

BH: Consumer behaviour is where the expectations continue to ramp up. But the consumer is changing very fast. What was an OK experience in e-commerce five years ago is a disappointing experience now, which will continue to be the story. You’ll see a lot of innovation continue to take the friction out of e-commerce. Increasingly, you’re getting fantastic online experiences, where it’s so easy to buy something, and I think that will accelerate.

I think part of that will be the relevance in data piece, where people are customising offerings for shoppers, which is ultimately about reducing friction and giving people the ability to access the things that they want much more efficiently. You can do simple things in that space, but it can get quite complicated, so I think it’s one space where you’ll see a lot more innovation.

I think you’ll see a lot of changes on the payments front and the way people shop and what they expect. Omnichannel will be part of that too – how the on- and offline worlds relate is a big part of the future of retail innovation. I’m excited – it’s a rapidly changing landscape and with that comes opportunity. It’s an industry where you have to run pretty fast to stand still, but everyone’s doing it; and it creates the opportunity for you to find niches and opportunities to innovate and resonate with customers that might not otherwise be there.

IRW: What are your thoughts on sales events, like Black Friday? Does Tinyme take part in them?

BH: We do participate to a certain extent, but we don’t tend to do heavy discounting. We try to give a good offering most of the time. We’re frequently doing different promotions, but they’re not about substantial discounts. 

In terms of where it’s going, if you look at the offshore experience, it’s generally become ‘peakier’. Events like Black Friday and Cyber Monday have just become peakier. In some ways, customers have been groomed to shop that way, so they get a good deal one year and are more likely to look forward to it the next year. That will continue to pan out. 

That being said, they have an effect on retail profitability. Ultimately, the costs to deal with those peaks is expensive when you consider the execution and fulfilment of them. Combined with the fact that you’re offering substantial discounts, there is a real impact on margins.

Probably what you’ll see is when the volumes are there, retailers will want to play. You possibly might not see the same level of discounts through time, but it’s hard to forecast these kinds of things. I definitely think sales events will be a fixture in our landscape for years to come, the question is just how big a role they will play.

IRW: I know you guys launched an AR storybook last year. Is that something you’re looking to incorporate more into the brand moving forward?

BH: We’re very interested in augmented reality. We have some other ideas and product opportunities where we can use it, but nothing imminent we’re looking to launch. The book was pretty cool. It’s a full AR alphabet book that comes with a free app download. When you point your device at the book, the story comes to life with 3D animation and sound. Each page is different. 

It’s a pretty cool experience. We’re very much of the view that AR needs to be something that actually fundamentally adds value and it’s not just a gimmick. It’s a unique experience. Those are the opportunities we look to use AR. It’s not relevant to all the products that we have, but there will be opportunities where it could be useful or deliver value and it’s about having the imagination and innovation to work out where those things are and where it will resonate with customers. 

It’s not a cheap thing to develop; it takes a bit of work. We invested quite a lot in that, it was quite a big one to start with. It’s a book with 26 letters of the alphabet, so it was quite a big exercise. 

IRW: Are there any plans for physical experiences?

BH: In the near term no, we don’t. We’ve certainly looked at it. Generally speaking, there are challenges in our business model to being able to do it profitably. To make our stuff, it requires a certain amount of machinery to be able to do things. You have seen certain elements of personalised products entering the physical retail space, but they’re normally fairly superficial personalisation, whereas to do deeper personalisation, it’s harder to do in a physical retail format. Our ambition is to bring more innovation in the customisation side of things, which don’t necessarily lend themselves to the physical environment. So at the moment, our near-term strategy is to stay as a pureplay, but if we see an opportunity to do it, then we’ll consider it.

IRW: Maybe a showroom could work?

BH: That’s one way to do it, where we have a showroom and we don’t fulfil through the store. The ones where people have tried to do it to date have been about bringing theatre to the physical retail experience, where you can get something personalised on the spot. But there are limitations around the kinds of customisation you can do, unless it’s just sticking a monogram on something.  

IRW: What are the major things you’re working on in the next year for Tinyme?BH: We’re always looking at product innovation, both new products and improving existing ones and the way we go about making them. That’s a big part of our future strategy, but we’ve got more emphasis on our offshore strategy. We’ve seen some good results in the US and UK and we’ve just launched in Singapore recently and we might look at other markets as well.