Apr 20, 2015 7:30 EST

Mokee: an online nursery brand and retailer: We sell and deliver our design-led baby furniture and equipment directly to consumers all over Europe at a fraction of the price it would cost through traditional retail channels

iCrowdNewswire - Apr 20, 2015

Mokee

Mokee

moKee is an online nursery brand and retailer. We sell and deliver our design-led baby furniture and equipment directly to consumers all over Europe at a fraction of the price it would cost through traditional retail channels.Since its launch in April 2013, moKee has sold over 4000 of its flagship product, the moKee mini cot, and is well on track to deliver another 6000 units over the next 12 months.

Samuel Serra 1

Samuel Serra 2

The Idea

moKee is an online nursery brand and retailer. We sell and deliver our design-led baby furniture and equipment directly to consumers all over Europe at a fraction of the price it would cost through traditional retail channels.

Since its launch in April 2013, moKee has sold over 4000 of its flagship product, the moKee mini cot, and is well on track to deliver another 6000 units over the next 12 months.

CONSUMER SHIFT

With the rise of design-inspiration websites, such as Pinterest, consumers are now increasingly searching for unique nursery designs that are consistent with their home interior design.

However, our research shows that mainstream nursery chains have been recycling the same traditional designs for the past decade.

On the other end of the spectrum, design-led brands are expensive and usually out of reach for most customers.

This is partly due to the intermediaries involved in the supply chain, the daunting cost of bricks-and-mortar high-street stores but also the old-fashioned concept that to be an aspirational luxury brand, your products should be expensive and reserved for an “elite” who can afford to pocket out £500+ for a baby cot, for instance. This means that the costs of production are often multiplied by six to eight times before they reach the end consumer.

And this is what we are trying to change. We are on a mission to offer affordable nursery designs to the largest number of people. Our research shows that people nowadays are looking for brands that are approachable, transparent and fair. The rapid growth and success of vertically integrated brands in other industries, such as Bonobos, Everlane, Made.com and Warby Parker, are proof of this shift in consumer demand.

We believe we can make it happen, unlike the other “more established” nursery brands on the market. Here are three reasons why:

1. ONLINE ONLY DIRECT TO CONSUMERS

We position ourselves as a pure online multichannel player, meaning we sell exclusively to consumers through our website and online marketplaces. This means we have reduced the number of intermediaries in the supply chain and we can pass the savings onto our consumers. We give them a fair deal whilst still maintaining healthy margins.

The other advantage of the online-only model is that we are able to create a unique experience that is not possible in a physical retail environment, through mass customisation of our product, but also by giving customers an opportunity to influence the design and functionality of our products. This is something we will be experimenting with and developing further.

2. EUROPEAN SCALE AND CENTRALISED LOGISTICS 

Our main operation is located in Poland, near our factories. From there we are able to ship all over Europe competitively by avoiding unnecessary transport costs.

3. LOCAL SOURCING & PRODUCT DEVELOPMENT

We aim to source most of our products from European manufacturers, which usually have lower MOQs and also much faster transportation turnaround times than goods imported from Asia. By doing so, we are also able to reduce drastically our product development cycles, which helps us to launch, test demand and iterate faster. Having compared both locations (Europe vs Asia), we have often noticed that the delivered prices were not far apart. Also with the dollar getting stronger and rising labour costs, Asian manufacturers are slowly losing their edge for exports.

There will be instances and specific categories of products where we will have to source beyond Europe but we will always check in Europe first.

 MARKETING OUR PRODUCTS

Currently a large proportion of sales from the site have been the result of blogs and word of mouth. We have also started to test Facebook ads and CRM activities; these are still at a very early stage but they look promising.

Moving forward and with the help of our fundraising, we will be able to test new channels and improve existing ones. We are aiming and budgeting for 10–15% CPA across all channels and we intend to focus initially on the following marketing mix:

PR: Our product style combined with our attractive prices, make us a favourite with bloggers and the press in general. As we will have an aggressive product development agenda, we are expecting PR to bring us a sizable amount of targeted traffic in the long term. We will also be launching an affiliate programme later this year to give further incentives for online publishers to talk about us.

WOM / REFERALS: Interestingly, increasing numbers of customers are recommended by friends and we are now looking at solutions to incentivise happy customers to spread the love around them and become brand advocates for moKee.

SEO: Having few products on sale might have disadvantages compared to multi-brand retailers but we can also spend more time improving and increasing information about our products and other content on our site. So we will be focussing on creating relevant content that search engines love. Also we are planning to launch our site in more languages (currently it is in English, Polish and French): Spanish, German and Italian are in the pipeline. 

Facebook ads: We believe that Facebook offers very powerful targeting features and our very visual products are well suited for this non-intrusive format. This is currently being tested.

Partnerships and collaborations: Partnership and design collaborations with non-competing brands with similar target customers and with well-known designers are a great way to put our brand in front of potential customers, build credibility and also grow our database.

CRM: Email is still the most intimate way to communicate with people. And used well, it is a powerful channel to engage with potential customers, upsell and launch new products.

 

DESIGN & PRODUCT DEVELOPMENT APPROACH

We currently focus on pre-birth essential products. But eventually we will be growing with our customers’ children and developing products for up to 5–6-year-old kids.

Our aim is not to flood each category with a large number of references but to create a few optimal products in each category and to gain breadth of inventory rapidly. Our designs must match four criteria:

1. Price

We analyse each category and define an ideal pricing range and keep that in mind throughout the whole development process.

2. Style and uniqueness

We focus on minimalistic style often inspired by Scandinavian designs, as their simplicity makes them cheaper to produce whilst still being visually appealing.

3. Functionality

Products for babies should be functional but should also make parents’ lives easier. This is where consumer feedback really turns into action. We do not want to be an arrogant brand telling people what they need. By working with and listening to our consumers, we believe we can eliminate unnecessary features to focus on what they really need from our products.

4. Safety

Before anything else, a product for babies must be safe, so we work with safety-testing houses (Bureau Veritas, Fira, etc.) as well as our manufacturers to ensure our products comply with UK and European safety requirements. This is done throughout the process to ensure our product development cycles are not slowed down by compliance issues.

 

MOKEE TIMELINE AND SOME NUMBERS

 

  • Officially launched in April 2013.
  • Over 4000 of our moKee mini cots have been sold to date and we expect another 6000 more in the next 12 months.
  • Our moKee mini cot is one of the best selling cots on Amazon France.
  • We have caught the eye of a number of blogs and publications across Europe.
  • Three new product ranges launched since October.
  • Our main team is based in Krakow, including marketing, product development and operations.
  • New CTO recruited in January 2015.
  • Site is currently in English, French and Polish.

 

USE OF FUNDS

We are looking for a £250K investment from Crowdcube, which will be used mainly for two things:

MARKETING: To experiment with marketing channels, and to optimise and scale them. Also to enter new markets progressively.

PRODUCT DEVELOPMENT & PRODUCTION:  To achieve our product launch targets, we need to grow our product development team. We need funds for prototyping and testing and we need a cash flow for initial orders.

The Market

THE BATTLE IS HAPPENING ONLINE

The nursery market might seem at first sight like one of those established markets with dominant players where little innovation and growth can occur. However, the real battle and growth opportunities are online. Our research shows a growing percentage of the population are embracing ecommerce for major purchases. However, penetration rates are still relatively low and established bricks-and-mortar brands are struggling to transform their businesses and adapt to online demand. We believe we are in a prime position to grab market share and establish ourselves as a dominant online player. 

  • Over 9M babies are born in Europe every year (5.5M in western Europe + 3.8 M in eastern Europe).
  • In the UK alone, over 750,000 babies are born per year to give an estimated market size of £450M for nursery and travel products.
  • Traditional retailers such as Mothercare and Toys R Us have been struggling in the past few years due to the rise of online competition and the high cost of maintaining bricks-and-mortar outlets.
  • Pure online player Kiddicare, which was sold for £70M to Morrisons, ventured offline, incurring a loss of £127.8M. It was subsequently sold for £2M to Endless, who closed all its physical branches to refocus Kiddicare as a pure online player.
  • Based on the companies own research of the market, we estimate that circa 25% of sales of nursery furniture and wheeled products are from online and in other verticals, pure players such as sofa.com. for instance, has seen its revenues soaring in recent years. This is likely due to a number of factors, such as the convenience of purchase, delivery and returns; customisation and attractive pricing, but most importantly consumers are becoming more open to making major furniture purchases online.
  • Customers are becoming more style conscious. Research suggests that parents are moving away from traditional nursery designs and are now looking for designer nursery furniture and equipment to match their home interior style.

The People

moKee’s operational office is located in Krakow near our logistics centre and factories.

We are currently renting desks in a creative and product development focus co-working space, which is great as we have access to a number of tools we need during prototyping.

THE TEAM: 

Samuel Serra – Founder & CEO

Samuel Serra is an online entrepreneur with a strong background in ecommerce. Most notably he co-founded Boudoir Privé, which was subsequently sold to Jolie Box and shortly afterwards to worldwide leader Birchbox. He then consulted for edgy knitting brand Wool and the Gang after their series A and he was part of the team that relocated its operations and logistics to the UK. Samuel now spends his time between London, where he lives with his wife and two children, and with his team in Krakow. 

NINJA SKILLS: START-UPS, OPERATIONS, LOGISTICS, ECOMMERCE

 

Kinga Chmielarz – Head of Design

Kinga is an award-winning product designer with over five years of experience designing for various large furniture brands in Poland.

NINJA SKILLS: PRODUCT & INDUSTRIAL DESIGN, GRAPHIC DESIGN, BRANDING

 

Maciek Serafin – Marketing Manager

Maciek is our marketing manager. He helped one of the first and largest voucher code sites in Poland, Kody Rabatowe, to grow to become the major player it is today.

NINJA SKILLS: ONLINE MARKETING, CUSTOMER ACQUISITION, PR, SOCIAL

 

Slawomir Dlugosz – CTO

Slawomir is our new CTO. He has been working on Magento projects since the beginning and has strong PHP and mobile development skills. He currently works for us part time but will be joining the team as a full-time CTO when we raise the funding. 

NINJA SKILLS: MAGENTO, SYMFONIA, MOBILE, ERP

 

We also have three great junior employees, Milena, Barbara, Lukasz, supporting our design and marketing team.

The Financials

These notes should be read alongside the Financial Snapshot

SALES:

  • Launch of new products those will help us acquire new customers but also increase AOV & LTV of exhisting ones. Target of £200 AOV (currently £115).
  • Entering new markets ( through marketplaces and language specific subdomains).
  • Marketing activities to be tested and optimised initially incude Social, PR ( on/offline), CRM, WOM, Paid , Partnerships, Inserts.

USE OF FUNDS:

  • Marketing & PR to grow awareness and sales of moKee as a brand on a European scale.
  • Product Development & cashflow to develop new products across the baby category and cashflow for initial stock.
  • Small proportion to be used to help scaling operations and technology.

EXPENSES AND PROFITABILITY:

  • We are budgeting for staffing around 20% ( to decrease to 5% by Y5) + General & administrative that will be made up mainly from product development cost.
  • Currently 40% fross margins but this will be increased realistically to 45% through ecoonomy of scales, potentially further vertical integrations ( manufacturing and transportation), bundling and launch of products with higher margins.

EXISTING DEBT OR EQUITY INVESTMENTS:

  • Around £40K at the end of of 2014, predominantly made of accumualted VAT on sales in last quarter.

CASH:

  • In 2014 burn rate was £9000 per month, in 2015 it will grow to £28000 (Excluding Income).
  • Currently we are not anticipating an additional round of funding.

The Exit Strategy

Over the next five years, we intend to develop moKee to reach a turnover circa £12M per annum and £3.2M in EBITDA. Trade sales could make sense and, based on ecommerce average sales valuation multiples of two to three times revenue, we could expect a valuation in the range of £24-36M, giving back £3.6 – 4.5M to CrowdCube investors or a 12-20x return on their investment.

 

Rewards

Rewards with monetary value over £1000 can affect the amount of EIS you may be able to claim. Please obtain independent tax advice if there is any concern as Crowdcube does not provide legal or tax advice.

  • Invest £10 and get

    Thank you so much for investing, we will keep you posted regularly about our progress

  • Invest £250 and get

    5% off all our products for the next 3 years.

  • Invest £1,000 and get

    Get 10% off our products for the next 3 years + £50 voucher per year

  • Invest £20,000 and get

    As well as getting A Shares, we will fly you to our team in Krakow for 2 days, where you will meet our team and spend some time discussing product development & strategy as well as enjoying some of the local specialities.

Share Types

This company is offering both A and B shares. If you invest £20,000 or more you will receive A-shares which have full voting rights. If you invest less than £20,000 you will receive B-shares which have no voting rights or pre-emption.

 

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