Anna Ross: I'm not like the typical business person. I just go, well, why wouldn't you do that? Doesn't really make any sense to me. Within three months, I tripled business revenue. And I thought we were hot shit. I thought we were walking the talk when it came to sustainability. It's hard to run a brand if you don't really align with it. That's what I found, you know, like, every time we try to do something that's not me, I'm just like, nah, boring, don't want to. So we always come back to whatever it is that I stand for.
[Voiceover]: Welcome to Add to Cart, the podcast that Express delivers all you need to
Anna Ross: know in the fast moving world of E commerce.
[Voiceover]: Every month, Nathan Bush from 12 High
Anna Ross: and an E commerce industry expert will share the news, research and insights that you need to know to keep you
[Voiceover]: at the top of your game and of course, keep your customers adding to Cart. Hello and welcome to Add to Cart. My name is Nathan Bush, host of Add to Cart and E commerce strategist at 12 high. Man, what a fun chat this was. Joining me today, all the way from hotel quarantine in New Zealand, is Anna Ross, founder and CEO of Kester Black, Australia's leading ethical beauty brand. Kester Black creates premium cosmetics, especially nail polish and lipsticks, which are cruelty free, and was actually the first beauty brand in the world to be awarded B Corp status way back before B Corp was even cool. Anna, as you'll find out, is not your typical CEO or entrepreneur. She has done things totally her way, totally bootstrapped, and has ended up with a business that perfectly aligns with her values. And as a result, Anna has been rewarded, awarded, sorry, Telstra's Australian Young Businesswoman of the Year, and is a member of the World Economic Forum's Global Shapers community. Makes me wonder why the hell she is even on this show. But here we go. Join me as Anna talks about Kester Black's journey, covering everything from creating a brand that reflects your own values, how to scale your Facebook spend successfully, and how running for business awards is actually a really valuable growth strategy in itself. Also, stick around right at the end. First time in Add to Cart history that we have a very special Kester Black giveaway for our listeners. So thanks to our partner, Shopify plus and Klarna, here's our conversation with Anna Ross, CEO and founder of Kester Black. Anna Ross, welcome to Add to Cart.
Anna Ross: Thanks for having me, Nathan. Really good to be here.
[Voiceover]: Pleasure. All right, so you're in Melbourne at the moment, Are You?
Anna Ross: No, I'm actually in a managed isolation facility in Christchurch because we just moved back to New Zealand. Very smart.
[Voiceover]: When did you get back?
Anna Ross: On Saturday. So, you know, 24 hours before the new announcements in Melbourne. I knew it was happening. We've got the tip off, so we were out of there.
[Voiceover]: Beautiful. And your team, are they in Melbourne or are they all over the shop?
Anna Ross: Yeah, most of them are in Melbourne, but we have lots of sort of freelancers, so they kind of go everywhere. I even had an employee once, this gorgeous girl from the Blue Mountains, and I never met her, and she worked for me for three years. So we're really, like trying this whole remote working thing.
[Voiceover]: Well, that's what I'm finding too. I'm finding there's a lot of e commerce businesses who this thing hit. Covid hit. And everyone was like, we've got to go remote. And it's like, we've already been remote for a fair while anyway. So it's kind of just an acceleration or kind of an amplification of what we're already doing. And they seem to adapt it a lot better than the traditionals.
Anna Ross: Yeah, we've been trying to do it all. We've been trying to flip our business from wholesale to E commerce, and we've been trying to work remote. And Covid's just been like this awesome excuse for us to just get it done. That's probably the only positive.
[Voiceover]: Yeah, fair. Cool. All right, let's start at the start, right? So we could jump straight into some of the good stuff that we've already been talking about. But we're going to start at the start and tell us about Kester Black. Tell us about how Kester Black came to be. And if you can recall, tell us about your first sale.
Anna Ross: So Kester Black, I studied. So I grew up in New Zealand and I grew up in the city, but we had a holiday house in the country, so that sort of plays an important role later down the track. And when I went to uni, I wasn't very good at retaining information, so I needed to do something with my hands. And so that meant I had to go to tafe pretty much. I studied fashion design. I love sewing. Like I love. If I walk into a shop, I just drag my hands along all the shelves and just feel all of the fabrics. So it just seemed like kind of a natural step for me to go and do something that was design based but also worked with materials. So I ended up studying fashion design. And Kester Black was actually born in the third Year of my fashion degree as a fashion label. So it's changed a lot over the years. So I did a run of menswear and put it into menswear. Yeah, menswear was the big, the hot seller. And it was really interesting because it was really, really good quality. It had an interesting design element to it, but it wasn't graphic. So it was like really nice, tailored, say, sweatshirts and T shirts and pants for men. And I put my first order into a store called Slick Willys and it sold out within a week or something. And they did, like this other massive reorder. It was all very exciting, but it was more of just a hobby project so that I could keep my skills ticking over, because when we all graduated, there would be, I don't know, 300 of us across New Zealand all going for the same two jobs there. So I needed to get a foot up on the rest of my class. And then after I finished uni, I asked my mum for $30,000 to start a fashion label and she said no. And I have no idea to this day why she still said no to me, but she said, you need to go overseas, Anna, and get some experience. And so I actually wanted to move to Wellington, but the flights to Wellington from Dunedin were more experienced expensive than they were to Melbourne. So I just moved to Melbourne because it was cheaper, but I thought it would be the same and it was completely different. New Zealand and Australia, until you live in the other country, you're like, whoa, it feels the same, it sounds the same, but it's completely different. So when I got to Australia, I couldn't afford to bring my sewing machine over and I got a job in retail and hated it. And I needed a creative outlet. So I ended up learning how to make jewelry. Like, I was told about a jewelry store in town on Swanson street and you could get stuff cast in the building. And I said, oh, I don't know what casting is. So I walked into the casting shop and said, I want to start a jewelry label. What do we need to do? And they pretty much told me how to cast something. So the next day I, like, went back in with the dirty chicken. Wishbone was literally my first piece. Got this wishbone cast. And then I must have sold thousands and thousands of that necklace for, like 200 bucks a pop.
[Voiceover]: So it was actually a chicken wishbone.
Anna Ross: A chicken wishbone that I cast in silver.
[Voiceover]: Wow.
Anna Ross: It was really quite successful quite quickly. Nothing compared to the success we see now. But for me, back then, at the end of Fashion school, when I was like making 30 grand of extra on the side money, it was pretty, pretty successful, I would have thought.
[Voiceover]: And how did you sell those? How did you sell that first jewelry? Was it online or was it elsewhere?
Anna Ross: No, we didn't have an online store for about two or three years. We just started with, I made a lookbook and I went to a couple of stores and we sold it into wholesale stores essentially. And so I, I had $50 and then I made some jewelry and then I went and sold that jewelry and I got like $250. So I went and spent that on casting and then I just grew like that really naturally. Yeah, totally bootstrapped. And, and just a hobby. In August 2012, I was bored of working with sterling silver because I started in 2009, I came to Australia and I had heard that you could color silver with enamel paint and that nail polish was enamel paint. So I went to David Jones, bought a nail polish and like painted it all over this ring. Totally destroyed it. It was just a shit show. It didn't work. And I thought, oh, but we could make nail polish. And at that point we had just had an online. We'd had our online store for about six months and was going all right. We were doing like 20 sales a month, which was really good. And I thought it would be good to have an add on piece because you know, you know, if you're going to buy a $200 necklace or a $200 ring, if we could just increase the cart value a little bit more by 20 bucks, that would be worthwhile. So I made nail polishes and I made six nail polish colors, launched them in August 2012 and within three months I tripled the business revenue from 30 grand a year to 90 grand in three months.
[Voiceover]: How do you even, how do you even know where to start with making a nail polish though?
Anna Ross: No. Well, you don't. You just Google, right? Google is where you start everything. Alibaba. Google.
[Voiceover]: Yeah.
Anna Ross: So I got onto Google and I was just like googling nail polish manufacturers and I found one and I emailed them and they refused to respond. Or they did respond. They just said no. And they said no for like a year and a half. It was. But I was very persistent and I think that they only let me place my first order, which, which was six colors and 30 units of each color. And it would have cost a thousand bucks or something, you know, like not much. But it would have bankrupt the business if it, if it hadn't worked. It's a huge Risk back then. And they, I think they just wanted me to go away and they knew that it would be a failure, so they just let me do it. And then like two weeks later I was back on the door going, okay, I need 100 units of each. So I think they were a bit shocked and surprised prize. But now we're one of their biggest customers and it took us about four years to get there. So it's nice success story.
[Voiceover]: Amazing. And was your, what was your point of difference at the start with your nail polish polish?
Anna Ross: So this is where this growing up in the countryside in New Zealand comes back in. Because when I was young, if we had any orphaned lambs, if any of the farmers had little lambs that needed looked after, I was their new mother. And I think my neighbors found a possum once that had fallen out of its mother's pouch. And so I was the mother of a possum for a while. So I really had a love of animals. And when the chemist who I found on Gumtree as a part of that said, do you want to make these vegan? I said, what? Why would you put animals in nail polish? Didn't make any sense to me. I thought he was stupid for asking, but I didn't realize that you put animal products and lots of cosmetics, especially nail polish. So it was just a common sense thing for me. So at the start it was cruelty free and vegan and that was sort of where it all took off.
[Voiceover]: Can I just backtrack to that comment about Gumtree? Did the chemist reach out to you on Gumtree or did you reach out to the chemist on Gumtree?
Anna Ross: No, I reached out to a chemist on Gumtree. I put up an ad saying I need a chemist. And that was all I knew. I didn't know there was different types of chemists. Like there are lots of different types of chemists now, but that's kind of like a really backwards way to approach the cosmetics industry. And most people don't know this, but generally the manufacturers hire the chemists and they own all of the IP for all of the cosmetic products that you make. So when we go and make lipsticks, they've just got like a range of 100 different formulas that meet different criteria. And they can change base formulas. So they might have like 20 base formulas. And you go, oh, but I've got a blacklist. And you can't. It can't have any animal ingredients in it. So they'll have like a animal based one and a vegan one. And so you start with the vegan one, they go, I don't like that ingredient. Change it out. So they do all that development for you once you get to the big guys, it's sort of like skin care and really small batch manufacturing of cosmetics is where you get your own chemist.
[Voiceover]: Okay, so you own the IP now.
Anna Ross: I own the IP for the initial stuff. But no, we've never bothered to buy the IP for most of our products because there's no need. And we have contracts with our manufacturers saying that they can't reproduce our specific formula, but we still don't own that specific IP.
[Voiceover]: Gotcha. Gotcha. All right, so fast forward to 2020 from your initial thousand dollar investment in a few $50. That's right, I fast forwarded to a thousand.
Anna Ross: I skipped half the journey.
[Voiceover]: Tell us where Kester Black is now in terms of team and kind of product range and what you can share around the size of Kester Black now.
Anna Ross: So we went from six nail polish colors and now we're sitting at about 60 and we have six lipstick colors. And by this time next year, I want it to be 60. It won't be that far, but it's been a really interesting change because for, you have to remember for like three or four of those years, I was just faffing about doing really nothing, sitting on Pinterest. I had a full time staff member who she just packed and sent me orders and did the marketing and I literally just did the Instagram and looked on Pinterest and we finished every day at 3 o' clock and we did yoga and meditation and I. We literally didn't do any work for like three years. We didn't believe in marketing back then. So we were doing nothing but just like spinning our wheels but with no overhead. So it didn't really matter. I was off for like six months on holiday, you know, traveling.
[Voiceover]: You're like, you're like the opposite of the Gary Vee hustle model.
Anna Ross: Yeah, yeah, I am. Well, I didn't know they had to do that, know anything about business. So here I was thinking like, this is, I've made it. This is the rest of my life, right? This is this lifestyle business everybody talks about. But like, that wasn't really that sustainable. And then it wasn't until like I won the T Business Awards, the Businesswoman's Awards, that I really learned about business. So I would say that I've been doing business for about two or three years now. And in that time, so many changes. Like we seem to have grown a lot and then we Dropped back down. So we grew our revenue a lot in 2017, but our profit margin was like next to nothing. And then it seems to happen. We've done this twice where we grow our revenue and make no profit, and then we drop the revenue all the way back down and buy a couple of hundred thousand dollars or something, and then we're really profitable. So it was kind of actually a confusion around what success was because I got really caught up in the revenue metric and didn't really care about the rest of running a really good business and a healthy business.
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Anna Ross: So now we're doing it sort of ranges, but always over a thousand orders a month. We're trying to scale it to 4,000 orders a month before the end of the year. So when you think of our business, it's a big, complex, successful business, but with low revenue because we've got friends that have a business and they make hair halos, and their average price point is $300 a product. Right. But the amount of units that we sell, like, far outstrips most product businesses that I know of because we've got such a low price point and people love nail polish. I didn't know that you could sell expensive cosmetics that nobody needed for a lot of money with high margin and people would buy heaps of it.
[Voiceover]: Did you love nail polish when you got into it?
Anna Ross: No, I had never worn nail polish. It was just. It was just like a. It was literally just an idea that I had that people might like it, and I had no idea how much they liked it. So our average order might be seven or eight nail polishes per order. Right. What are you doing with that many colors? Like, I still don't even wear it, really wear it that much. I definitely do my nails a lot more and I put more attention into it, But I still have my one go to color, and I never really buy any other color. Maybe I'm just boring.
[Voiceover]: No, I think it's brilliant because you. You're like the. The. The real entrepreneur story that we need to hear. It's like you don't have to be so passionate to follow your passions of do something you're totally passionate about. It's like. And sometimes you don't have this big plan. Right. Just.
Anna Ross: I am passionate about business. I'm really passionate about business and I'm really passionate about color and design. So I just found a product that people are willing to pay money for where I could express all of my passions. It's not necessarily the product.
[Voiceover]: Yeah. And obviously one of your passions is sustainability and being environmentally conscious and caring about the community. You were one of the first B Corp products in the beauty or beauty space, is that right?
Anna Ross: Yeah. It was like the first cosmetics company globally though, which was pretty cool, to get the BE certification.
[Voiceover]: Wow. And what made you focus in on that and say, that's something that I'm going to focus in on and strive to get? Because it's not easy to get, is it? B Corp status?
Anna Ross: It took us three years to get. It's not easy, but it's worthwhile. It's even just worthwhile doing the questionnaire to like make you realize how not good you are. So like we were talking about at the start we had vegan and cruelty free accreditations for the brand. And I thought all we were hot. I thought we were walking the talk when it came to sustainability. And somebody just told me about vcoff and I was like, I've never heard of it. And not very many people had back then and they probably still haven't now. There's a few big businesses now that are making it a real thing and they've got a great marketing team. So I did the questionnaire because I went on a woman's leadership conference and we did this exercise that was just working out what our personal values were. So they, we had cards, like 170 cards with value words written on them and we just had to keep like narrowing them down until we got to 20 and then we had to narrow them down to our top five. And transparency and trust and honesty were in my top five. So she said at the end of the conference, imagine if you integrated your personal values with your business. And I was like, right, I'm going to go and do that. And then I'd heard about the B Corp questionnaire. So I did the questionnaire and I didn't realize how much we weren't doing. Like just vegan and cruelty free is not enough. Right. So I was pretty naive in that. And there were so many things like just using green electricity in your office or paperless office or soy Based inks. There's a lot of those things we were doing, but they were. There were other lots of really simple things that we hadn't thought of.
[Voiceover]: So.
Anna Ross: So we were nowhere near getting the accreditation when we first took it. And then we had to change all of our company policies, like internal documents, we had to change offices. There's lots into it. There was like lots involved, but it took us three years to get there.
[Voiceover]: Wow. And that's obviously before it became trendy to do right over the last two years. You committed to it pretty hard before then.
Anna Ross: I'm just like a very sensible, practical person. Like, I still wear, try. I still try and wear bike shorts and runners to a meeting if I'm riding my bike there. So I'm not like the typical business person. I just go, well, why wouldn't you do that? Doesn't really make any sense to me. So it's just actually just a common sense approach.
[Voiceover]: Brilliant. And I do reflect on that. You said that, you know, you don't understand why some of your customers might have 10 different colors of nail polish, but you obviously understand your customers so well, you've connected with them on that level and that you've got customers that share your value, but obviously share your values but love your product as well.
Anna Ross: No, no, no, no. What we did was I just was me and the people came to me.
[Voiceover]: Yeah. So you've got customers that kind of attracted to you naturally.
Anna Ross: Like, I just was like, I'm just going to do whatever I want to do and I don't care what they want. Which was my attitude at the start. And we just. Awesome little niche group of people that are like, super cool.
[Voiceover]: So they're group of people. If you actually have a look on your website and have a look at some of your customer reviews, it's not a little group of people. There are bloody hell of a lot of people loving your product and giving you 4.8, 4.9 stars. There's thousands of reviews. You've obviously got a fantastic tribe that's following both you and the brand. So I think it's a really great lesson for everyone out there is like, don't be, don't be afraid of putting yourself into your brand because people will gravitate towards it, the right kind of people.
Anna Ross: It's hard to run a brand if you don't really align with it. That's what I found. You know, like, every time we try to do something that's not me, I'm just like, nah, boring. Don't want to so we always come back to whatever it is that I stand for. And I think the testament to all of those followers and people that really are our customers is the product. It's the product. It's a great product. And we actually got get our lipsticks, for example, manufactured at the same factory that does the Burberry cosmetics, which is in the Chanel cosmetics. So we are presenting like premium, premium quality products made in Italian factories and French factories to our consumers at a reasonable price. And we just have like a quirky brand thing on the side. So I actually think like, you just can't skimp on the product. We always pay more for stuff because it's premium and because it's higher quality.
[Voiceover]: And obviously that that brings great reviews. But I just want to touch on those reviews because you've got so many and so many great ones. Not like people are going, it was great. It was like bloody essays on the, on the product.
Anna Ross: Yeah.
[Voiceover]: How do you, how do you encourage and gather those reviews?
Anna Ross: It's a great story. Okay, so how we encourage them is we actually went with a Kendo because somebody had put me onto yopo and I'd gone down the, the route of like looking at YPO, but it was so expensive. Like 4 and a half thousand USD a month for a review platform. Again, it was like one of these marketing things. I didn't believe in reviews. Who wants those? I never read them. I do now. It's all about reviews. But so we found this like little, I don't know, they're like a little Australian startup called Aindo and they were really cheap, not really cheap, but way cheaper than ypo, like a couple hundred dollars a month. So we went with them and it just really worked. Actually. We started with the free review app on Shopify and then we moved it all to a Kendo. And the guys there are amazing. They like took downloaded all of the reviews currently in Shopify and put it all into a kendo. And they've just got such an awesome tech team that anytime we have a question, we just email them 10 minutes later, they've responded. Just really great guys. So we've been with a kendo and they told us that we have the most reviews happening with a kendo of all of their customers. And he said, what are you doing? He keeps asking our marketing manager what she's doing differently and she's like, we just don't do anything. We don't. We haven't really capitalized on that. People just love the product and they review it. We do actually give away a gift voucher every month. If you do leave a review, though. And we also love bad reviews. There is a little trick in the reviews where if we. If they give us any review, we respond with a thank you, and if they give us a bad review, we respond with a thank you and then try and solve their problem. So we actually use it as touch point to, like, keep our customers really happy.
[Voiceover]: Yeah. Nice.
Anna Ross: And then they usually. We don't really have bad reviews because we do that. And then they go back and they change their review. So even if they hated the product, we give them another color or we replace it or they love the customer service so much, they just take it down.
[Voiceover]: Yep. And what's the number one thing that you constantly get feedback on? Is it usually based around the product?
Anna Ross: It is around the product, but it's actually around how people use the product. Which is the hardest thing with nail polish, because nails are made of keratin. Like your hair that's made of keratin. They can get oily. And I was just doing this the other day, put moisturizer on and then went to do a manicure. And the next day, my kiss to black nail polish had all chipped off. I was like, this nail polish shit. And then I realized that I put oil all over my hands before I did the manicure, so. And then I did it properly, and I was like, oh, yeah, seven days. It's fine.
[Voiceover]: Yeah. Your FAQs is fascinating. As someone who doesn't wear nail polish, at least not on Sundays, then the FAQs that you've got in there are just fascinating to read because of all those little things like you said there around what can go wrong and all the little intricacies. It's almost like a how to rather than an faq.
Anna Ross: Yeah. And it's like, very technical. We're talking cosmetics that you apply to skin. Right. There is a lot of chemistry in that. There's like. There's a lot of important information around that kind of product. So I feel like lots of people don't know how nail polish works. Like, nail polish is actually a solvent. Right. It's 90% solvent with color solids. And the way that it works is the solvent evaporates off and then leaves the particles behind. So when you're. If you ever have a nail polish, Nathan, you. You can test. When you go and you haven't used it for a long time, it's half of it's gone. That's because the solvent's evaporated out. So to fix that, you just add that solvent back in. So there's lots of like quick fixes like that, which actually takes the chemical understanding to really understand what you're doing. Like don't mix nail polish remover with nail polish to thin it out because it will destroy it. But, you know, putting the solvent back in is a great idea, for example. So yeah, it's hard because we get the same questions over and over again. So we were just trying to explain it in a really technical way, but in a really accessible way in the fa.
[Voiceover]: Yeah. And because there's a solvent in there, can I assume that nail polish is a dangerous good?
Anna Ross: Oh yes, you can. So a little story at the start when I had was about two years into the business and we had, at that point we had 500 wholesale customers. It was nuts. And we were pretty much all wholesale and not very much online. We were using Australia Post to ship everything for two years. Right? For two years we were doing that. And then two years in I find out it's a dangerous good. Never heard of that before. And that you can't ship it in the post. And I was like, oh my God. So I had to go and get my license. Took me seven months to get my dangerous goods license because it's so hard. You have to learn how to ship flammable goods, biohazards, nuclear weapons, essentially explosives, you know, everything that's a dangerous good. Radioactive material.
[Voiceover]: Wow.
Anna Ross: So it took me ages. And what I didn't realize is like how severe the fines are if you lie about that stuff. So you could go to prison for like 10 years for shipping a nail polish through the post if you do it legally, knowingly doing do it illegally. And I had heard a story recently, last year, somebody who owns a paint company, like a Dulux kind of company, not Dulux, but shipped a tin of four litre paint through the post and he got done for seven years in prison. Pretty hefty. So not only have I been breaking the law for two years, but
[Voiceover]: so do you have to get your team trained up on that as well?
Anna Ross: Obviously there's only two of us, but getting a 3 PL warehouse is a nightmare because then it has to be trained and there are storage conditions and there's a lot to it. It's really complex and it's probably why it's taken us so long to grow because we could only really focus on the Australian market and couldn't export anything. But we've solved most of those problems now.
[Voiceover]: Nice. And does that. Do you have three Pl overseas now to handle that.
Anna Ross: We have one in the Netherlands, one in Australia and then we are doing it in New Zealand for the short term until we can get somebody else set up.
[Voiceover]: Yeah, cool.
Anna Ross: New Zealand.
[Voiceover]: Yep. And does it make those. That postage cost very expensive? Because I can see there that you've got free shipping over $58, which is a very precise amount. And it was 85 the other day internationally. But I can see you've dropped it down to 65 now.
Anna Ross: Yeah, so we dropped it because now we're in New Zealand and we can ship from here, whereas before we were in Australia and we had to ship from. From Australia. So it can increase the price a lot. I'll give you an example throughout Australia with Australia posts around six or seven dollars. So we depends on where it's going. And it's that price point for our shipping is like the medium of what we pay. So for in Melbourne it might be a little bit cheaper, but then anywhere outside of Melbourne it's a bit more expensive. So we sort of cut. We still cover the cost a little bit of shipping. But to send an 1 nail polish for $20 back to new Zealand, it has to go via an approved DG carrier, which is DHL or FedEx. We have really, really, really good rates with DHL. So one nail polish costs US$22 to ship, but plus a $7 surcharge for DG. So that's, yeah, $29 to ship one $20 product and then if it goes to a not main city where DHL doesn't actually drive themselves, it's like $59 per. $120 now Polish.
[Voiceover]: Whoa.
Anna Ross: So which is why we've moved back to New Zealand, so we can take over the shipping here for a while until we're big enough to move it into a 3 PL.
[Voiceover]: Gotcha. So your nail polish retails at about $20 each with those kind of shipping rates. Do you think these shipping rates actually help you in that they push up the average quantities or basket size so people get that shipping or is it more of a hindrance?
Anna Ross: Yeah. So look, we did a quite a bit of testing on this and the testing proved that it didn't actually make any difference. So if you're going to have to pay for shipping, it doesn't matter if it's five or eight dollars and, and, but you should test this yourself. And then we had really low. We had $5 shipping and then I think it was $50 free shipping or something. And obviously our average order volume was a Bit lower. And we wanted to increase that. So we put it up and we made it so that you could buy one of our sets. It's $58 because that's how much one of our nail polish sets are. So. So we didn't want to make it $60 to piss the customer off if they just wanted to buy the set. So it's actually, we did it. We did the testing, but we found it didn't really matter. So what we did was we looked at all of our other competitors and then placed ourselves kind of like in the medium to that because we were offering $5 shipping and everybody else was offering eight. Nobody offers $5 shipping. So it's like, why are we cutting our margin so much on that when we don't need to, when it's not the norm in Australia? So. And we were. We were like paying for freight at that rate because it would cost us seven or eight dollars for each parcel. So we just sort of made it up, but backed up our assumptions and testing.
[Voiceover]: Awesome. So I think that's a good segue as we're talking about shipping around your business model. So as we've. We're in Covid. We're in the middle of COVID We're recording this. What are we. We're about the 4th of August and Melbourne's in lockdown. Second lockdown. So your business model, from what I understand, you were. You were wholesaling into retailers. How has Covid. Covid impacted your shift or your acceleration direct to consumer?
Anna Ross: Because it's new and exotic or something.
[Voiceover]: I haven't got Covid. I've got Covid.
Anna Ross: It's been. Been really interesting because we had three channels, so it was like wholesale, B2C online, and distributors. And we did this huge analysis of our business as we were trying to grow it last year and found that distributors were a waste of time because we, they. They require so much attention and we make no margin on them. And we were kind of 30, 30, 30 mid last year. 30% for each category. And now it's like probably 90% online and 10% distributor and wholesale. When we started, it was like 85 to 90% wholesale, 10% online, and now it's like totally flipped. And last year it did totally flip, but not because we grew the online channel, but just because we lost a whole lot of wholesale customers. Because I feel like retail in Australia has kind of been on the downturn for quite a long time now. So we were always trying to get to that model of 90 online, you know, 10 off. The perfect balance, I reckon, is about 75% online, 25 wholesale and distribution. And it's, it's changed a lot because retailers are just closing down or they've been closed and so we haven't had any orders from them. One of our biggest stores in London called Liberty has been closed for like two months and they were our biggest account, so it was really for them, actually. But online growth. Have you ever heard of this thing called the lipstick effect?
[Voiceover]: No.
Anna Ross: It's an economic trend that happens when a recession hits and lipstick scales and nail polish sales skyrocket in a recession.
[Voiceover]: Wow.
Anna Ross: So our online store has grown by at least 900% every month, up to about a thousand percent.
[Voiceover]: That's huge growth.
Anna Ross: Yeah.
[Voiceover]: And. And is that lipstick effect, is that because people, even if there's less money going around, they still want to be able to have those moments to treat themselves?
Anna Ross: It's the small luxuries, the affordable luxuries. So even though you're at home, nail art has been huge. Like we are making some specific isolation nail art kits and that was what sort of like drove the sales initially in March. And then we've just managed to get our Facebook ads right and get our Google Ads working properly and do another couple of strategies that have maintained all of those sales. So we kind of went from like, we were doing well a couple of years ago and then we dropped down to about, at our worst, 300 orders a month. And then we just went to like 1, 300 orders the next month. And then we'll just sort of stayed there. Like we've been growing, but, you know, it was a big jump. We were. Everybody was locked down and having fucking holidays and learning to bake bread and we were like, just packing orders.
[Voiceover]: That's the same. I had this little. I had this little meltdown right at the start of COVID where everyone was. Was saying, oh, I'm so bored. I've read all these books, I've cooked all this bread. I'm like, I've never been fucking busier.
Anna Ross: Yeah. We got here and we're like having mental breakdowns, crashing because we've been capitalizing on it while it's going. So it's kind of sad. But even though we've had this huge business success, it means that we're on track for all of our revenue projections for the next three years. And our business valuation has been backed up by all of them numbers that we're doing. And we are like way exceeding what we thought we would be capable of doing actually. This year so quickly. But you can't be happy about it because all of my friends are losing their businesses. Like it's so sad. I'm still really shocked and angry at all of the different, you know, lockdowns and the way that things have been handled because, you know, I'm really lucky that my business is doing well. But, but we have a recession proof business, so that's a terrible thing.
[Voiceover]: And at the start you talked about the differences between Australia and New Zealand. Have you also noticed that in the way that the epidemic's been handled?
Anna Ross: Yeah. I feel like New Zealanders are much more compliant and so with harsher restrictions. I read a big report by the International Monetary Fund that said that New Zealand will be the second most hardest hit economy in the world from COVID because 21% of their GDP comes from export tourism. So New Zealand is screwed. But they don't. I don't think that people here know that. Right. And this is supposed to be like the worst economic recession anybody's ever seen, like worse than the Great Depression. So it's going to last for 10 years and people will start finding out in Australia on the 1st of October. So like, I don't know, heaps of people going to be made redundant on the 1st of October and then it will just like see a steady decline. Last time the global economic recession hit New Zealand, it was like three years behind Australia. So it took longer for people to understand or see the effects from it here in New Zealand. But I don't know, I'm, I'm in two minds about it. You know, this hard lockdown of the borders in New Zealand will kill the economy here. But then it means that I get to spend two weeks in a hotel room, which is actually not that bad. I've been trying to find things wrong with it, but it's fine and I don't have to wear a mask and I could just go about my day as normal. So we've like a ski season.
[Voiceover]: Yeah, you're living, you're living island. Island life.
Anna Ross: Yeah. So we're actually moving to Wanaka, which is like lakes, mountains, skiing, rock climbing, all the fun things that you're not allowed to do in Victoria.
[Voiceover]: So are you feeling optimistic about it from an E commerce perspective or do you feel like we're riding a high at the moment and that there's pain to come?
Anna Ross: I think that we're riding high and there's pain to come, but that those businesses that prepared for this will see huge growth. So businesses that have low price points, products with low price points that entertain people at home and that make them feel good about themselves will skyrocket. And I think that we're yet to see like the massive decline in spending. And it's hard because it wasn't until two years ago that I realized what E commerce was. I thought that having a website was E commerce, but E commerce is like a full time strategy systems based like hardcore business. And so a lot of my friends who have stores have come to me and said I've got a business, you know, I've got an online store, I'm just going to spend a bit more time on that. And I'm like, no, you need to spend like all of your time on that. You need to shut down your shop and just do all E commerce. But of course those people don't know where to start. And it probably took me what, five years to really understand what E commerce was. So if you didn't already have like some expert guru who could tell you that from the start.
[Voiceover]: I saw post last night from an agency owner and he was getting really frustrated before the second wave of lockdown as he was saying, I've put out this package for 5,000 retailers, I've offered it to 5,000 retailers and I'll build them a site for 2,000 and I'll take their traditional model and I'll put it online. I'm like, that's not E commerce. Like your website is the least of your worries. You could knock your website up tonight if you wanted to. It's the fulfillment, everything that you've gone through with dangerous goods, it's like, like understanding your customer, all that fulfillment.
Anna Ross: Yep, yep.
[Voiceover]: Yeah.
Anna Ross: And it's really interesting with that website question, you know, like I didn't know four years ago when we built out we like rebuilt our website because my ex boyfriend had made it and it was not great. It was all on WordPress. So we rebuilt it in craft and Shopify. We had a Shopify shop but all the content was in craft and I spent 40 grand on that and it looked beautiful and it was just like a nightmare to manage. And then we met this incredible guy from a company called Harvey in Melbourne just like because he was a B corp and he works with B corps and what a dude. He like rebuilt our whole website, the one that we've got now all on Shopify and actually we've got three websites on Shopify for like five grand.
[Voiceover]: And it's a beautiful site. Yeah.
Anna Ross: Off a template like it's got all the. We actually Got it quoted. Our last website to get the functionality that we've got now on our $400 theme was going to cost 17 and a half thousand dollars to build on the old one. So I was like, what? We're just going to rebuild it? But I didn't know that you could build a $5,000 website and it, you know, bring in millions of dollars a year revenue and look quite nice. Yeah, because it's like what I thought, you know, a beautifully presented website would do is bring you more money, but that's not true.
[Voiceover]: Foreign, I don't know about you, but sometimes I visit the larger e commerce sites and they have the slowest sites going around. In reality, the bigger your business, the faster your retail platform should be. It's not always the case with Shopify. Plus you can handle up to 10,000 transactions per minute because they believe that the future belongs to the fast. For an enterprise commerce solution at startup speed, visit shopify.com/that's shopify.com. You're really creative, right? Like you're the creative brains behind Kester Black. And what I've noticed is that your imagery is spot on. And even things like the filter on your menus being able to filter out by color and you show those colors, it's really vibrant. Everything about the site is vibrant. You go and your Instagram. It's amazing how you can make nail polish look so interesting in so many different ways.
Anna Ross: Yeah.
[Voiceover]: How do you keep that consistency and frequency going in terms of content?
Anna Ross: It's been really hard as a small business. So early on we were making these beautiful images that really set us apart from the get go. And we were spending $1,000 a photo with a photographer, a stylist, and like setting up all the themes and going and shooting it. Right. We'd get kind of like four photos done in one day. And then over the years I was like, oh, what? We're being ripped off. Everybody assumed that we're a really big company and so they were charging us like exorbitant rates. And. And then I just got better and better and better at it. And I found not cheaper photographers, but photographers that could like churn out more. So we got better at styling interesting photos that didn't take all day to put together. They sort of became less is more. And now we could go to a photo shoot and get out like 60 photos in a day, which makes them all 60 to $100, you know, depending on how many stylists or whoever we have on the set. I have been really Consistent, actually for a legal reason with working with the same photographers and designers. So stylists, because I get all of my photographers and stylists to sign IP deeds, and photographers are half and half about signing these things because they think they should own everything. But. So every time we found a great photographer who would give us a good rate, we just stay with them for years. And I have to. I have about two or three photographers that I love, like Sha, Fy Cube Studios, and Eve Wilson are my three, like, super favorite photographers. And then Nat Turnbull has been my stylist for quite a long time. But when we do a shoot together, we probably only shoot two times a year, actually. We, like, get as many photos as we can. We. We hit off as many collections as we can. We. We make all of our colors a year in advance so we can shoot them all on the same day, and then we sparingly use those images throughout the year and then we backfill with borrowed content. That is all about to change, though, because we're about to hire a content creator so that we can be creating more on brand content constantly. But we found content creation is really expensive and pretty hard to get consistent, which is why we've actually always kind of done our own shoots.
[Voiceover]: Yep. That's some great tips. Are you always on set when you do the shoots?
Anna Ross: There has been a couple of times that I haven't been on set, but generally, yes.
[Voiceover]: Yeah, yeah. Cool. You can like, just the consistency across everything is just phenomenal. I think you guys do a fantastic job.
Anna Ross: Oh, it's not. We. Before I got on the call with you, I actually had a meeting with my graphic designer about just pulling it all back. And we've never done a brand guide, so we've got like. I just found out that we've got two fonts. They look the same, but they're different. We're using two fonts across stuff, and so it's sort of like it's getting there. Now you have a look again at the end of the year and we should be schmick.
[Voiceover]: Well, you're speaking to a colorblind guy, so maybe don't take my advice. Follow your own gut feeling on that. Okay.
Anna Ross: Oh, so funny.
[Voiceover]: You touched before on some tweaks that you made to Google Ads and Facebook ads previously that helped accelerate some of your monthly sales. Can you give us any insight on what you changed or what you found there? What tweaks really made a difference?
Anna Ross: Yep. Well, first, it's really hard. Facebook is really hard. Like, it's Also really easy, right? Facebook is really easy and really hard. And we had been finding guys to do our Facebook ads, and they never really had that much success with it. We had one guy who was hitting like a two or three. Three or four ROAs, and then once we got in there, he actually had two pixels set up. And so it was counting every single transaction twice. So we were actually, like, not making any money on Facebook ads.
[Voiceover]: Should have put a third pixel in there. It would have looked amazing.
Anna Ross: Oh, man. Oh, it would have looked so good. And then he was spending. We were spending like two and a half thousand dollars on him a month to manage our ads and do them all, and then like $5,000 on the campaigns. So the. He was a 50% ratio of our spend, right. Which is sh. And then we waited and waited. And it was actually the same guy that did our website, Simon from Harvey, that helped us with the ads. Him and another guy called Andre, who we just been put in touch with through a friend of mine. And Andre just does Facebook ads full time. Like, he is a guru. And these other guys that say that they do Facebook ads full time, but they have, like 70 clients, and they're just creaming the money, right? They're not doing what he's doing. He was setting up, like, test sets, like campaign sets with like, maybe a thousand ads in them or hundreds and hundreds of ads. And he would have, like, a title, one copy, one picture, one. And they would change it around, and he'd do all the color, all the combinations, right? So he'd do all the testing, and then he'd pick the winning ads and just scale them. Scale them. Like a couple of hundred thousand dollars a day. Scale them.
[Voiceover]: Takes a special kind of person to do that, right?
Anna Ross: Yeah. And he reported from Russia. He's Russian. Like, my friend actually got him into the country because he is this expert, and he grew their business, like, heaps, you know, it was. He's a fascinating guy. So he actually trained us on how to do the ads. And I just realized for. For the last four years, we've just been faffing around, wasting money, just bleeding pretty much. And so now we've done all this testing on all these different creatives, and we're just spending, like, as much money as we can on them. Of course, the roas is still going to be above five, but we've got ads that are running at 17 times ROAS, so it's working. And what I've realized is you just need to really commit and you really need to know what you're doing. And yet once you've tested them all, you just need to like run them and let them.
[Voiceover]: Is there something, is there something nice too about someone independent to you setting up all those test ads? Because I think you'd have a gut feel or you go, oh, this is going to work over something else. Whereas if you've got someone totally independent, they're like, I don't care what you think, I'm just going to chuck everything into the machine and then see what comes out.
Anna Ross: Well, we did all the ads ourselves. Like we didn't actually end up getting him to manage them because he was, he's like $500 an hour. So he pretty much just gave us the framework and taught us how to do it. And then we went and just actioned everything and we tried heaps of stuff that we knew wouldn't work, that we thought might work but didn't work. And it's all about getting a really interesting idea. Like so here's a couple of examples for Kiss to Black. It's award winning nail polish or it's sell on quality nail polish or it's long lasting lipsticks. Kind of like any USP that you've got for any product, we set that up as a theme and then we try heaps of different ad sets within that theme and then we just run the ones that really work. So I had a hot tip from a guy who had black, he ran as a drop shipping switcher company from China. He's buying switches at like $2 a piece and then selling them direct to consumer from drop shipping like from China. And he put this really interesting strategy together where he called it the Assassin's Creed switcher. Right? Because there's heaps of gamers, they love Assassin's Creed and if you're really into Assassin's Creed, you search Assassin's Creed. It was just a black switcher and he did so well with these really interesting alternative campaigns. So I've always had that in the back of my mind, like how could we do. We kind of thought maybe we would do like a Handmaid's tail nail polish or something like that. There's so many interesting and different ways that you can do and use Facebook, but you've got to be really creative about it and you've got to test heaps of stuff and you've got to set up your markets and get your audiences sorted properly and test your audiences different to your ad campaigns. So there's a whole lot in it. And I think that finding the right person to do that is really important. And then committing to it. You know, if you want to do Facebook ads properly, you got to have at least 20 grand a month.
[Voiceover]: Yep, Yep.
Anna Ross: And we've actually bought it.
[Voiceover]: And I suppose because you can measure that directly through E commerce, you're not omnichannel. Then you can measure it.
Anna Ross: And we want to spend more money on it. Like, we want to do more prospecting campaigns that are going to have a lower roas. So we will continue to grow that. Like, I want to be spending 100 grand on Facebook ads a month if I can. They're like, how much is your budget? I'm like, there's no budget.
[Voiceover]: I think Zuckerberg just dropped into our call. He likes what he hears.
Anna Ross: There's also all of those big companies have boycott Facebook ads. And so I think that there's a little bit more space at the moment for the little guys to play. So it's been pretty interesting just to test it out.
[Voiceover]: Yeah. One of the things you mentioned in there is about award winning. You use that as one of your usps and having it. Having a look at some of your stuff. You guys do a phenomenal job at winning awards, obviously. Deservedly. Both yourself personally as an entrepreneur, but also for everything that you do at Kester Black. Is it a deliberate strategy?
Anna Ross: It wasn't the first time. And the first award that we entered was the Telstra Young Businesswoman's. It was. I entered it the Telstra Young Businesswoman of the Year. And because we just finished the. Getting the B Corp certification and we'd just done this big diversity campaign and we'd made all of our nail polishes accessible to Muslim women and we were doing all the sustainability stuff. Like, I felt like it was a really good time for me as a business leader to enter that award. And that was an 18,000 word assessment. Right. Took weeks, weeks, weeks, weeks to prepare. It was longer than my partner's thesis for his, like, undergrad degree.
[Voiceover]: And 18,000 words of writing about yourself, too. That makes it extra hard.
Anna Ross: And you're not allowed to. In that award, you're not allowed to use the word we. You have to always write I. And if you use the word we, then they don't think it was you. And early in those days, it kind of was me because there was. I only had probably two staff back then. So it all sort of changed at that point. Like, I ended up winning the state awards and I was. I actually had a really big feeling that I would win it. But then When I got to the nationals, there were people who were turning over like $20 million in my category, under 30. I only won it because I was under 30. Right. Otherwise, like, you get in with the big boys, like, Adore, beauty and stuff. Kate from Adore. And so I was surprised, I know one at the national level. But that just gave me this incredible platform to do lots of speaking, get lots of engagements, do win other awards. So after winning that award, because I'd written 18,000 words, we had a really good template for every single other award that would come through. And any other award compared to that was just going to be super easy because it took weeks. It took weeks. We had marketing managers, we had, like, my boyfriend wrote most of it. It was so complex. But then we turned it into a strategy after we saw the first success, because we knew what all the talking points, what all the points were. And actually entering the Telstra Business Awards, the businesswoman's. And then we did enter the Business Awards. It's really about what you make of it. It's about who you connect with when you're doing that journey. It's. It's sort of about the people that you meet. And I made really good friends with my judge. So after I had won the nationals. Sorry, the state. I got my state judge to help me win the nationals and she went through my whole entire application. She trained me how to do the interviews. So I had a judge that had been judging those awards for like 8 years Edit my entire proposal and then look over every single awards application that we did after that. So we were kind of set up for it. Yeah, we used it as a strategy and we, we, we still do, like, as more of a product. It's more of a brand thing now rather than a me thing, because I have. I really did it for the connections and I got the connections and now it's really good for investment and selling my company. Right.
[Voiceover]: Yeah.
Anna Ross: So that people take it seriously.
[Voiceover]: It's phenomenal and well done. It's just so good. Now what's. We've run out of time and that's gone so quickly. What's next for Kester Black?
Anna Ross: Well, it's everything all at the same time, which is how I like to do things.
[Voiceover]: It's a dangerous question during COVID isn't it?
Anna Ross: Yeah. We have actually just invested, like, really heavily back into stock, so we just spent shitloads of money on stock because we sold through almost all of it over Covid. We have not prepared for this kind of stock management. So we are buying heaps of stock. We're developing a new nude nail polish collection which will be out later this year along with new lipsticks. And then we've got new product lines launching next year and we're launching into international markets properly. We're already in those markets, but we're not paying much attention to them. So we're going to focus on international markets as well.
[Voiceover]: Dumb question. What's the point of a nude nail polish?
Anna Ross: I think that the confusing part for me, because I've asked that a lot is that by nude people mean pink.
[Voiceover]: Ah, okay.
Anna Ross: Or natural. But we keep making these natural colors. Like we make all these beautiful like browns and taups and you know, stony colors and people go, you don't have enough nudes. And I'm like, look at them all, they're all there. But actually what they want is light pinks. So it's really interesting in talking about color, you've got to be really descriptive about what you're actually looking for. But my favorite product is the Miracle treatment base coat. And it's kind of a see through nail polish, but it, it, it's got little light pigment pearls in it. So when you go out in the sun, your nails look really, really, really healthy and they've got this like glow to them. But it's really good for people who are not used to wearing color on their nails. Because the first time I started wearing nail polish, I did a bright purple. It was called our violet color. And every time I put my hands up to my face, I'd get a fright because there was something there that I wasn't used to. So I actually wear the Miracle treatment base coat cause it makes my nails stronger and I really, really, really like the color.
[Voiceover]: Awesome. It's a whole new world. It's a whole new world for this little colorblind boy.
Anna Ross: So even you'd better benefit from that product.
[Voiceover]: Oh, don't worry, I've had my nails done. My four year old daughter's often doing my nails for me and I guess some weird looks. Luckily I can hide them on conference calls now. Used to be a bit more awkward.
Anna Ross: That's why they're no video.
[Voiceover]: That's right. Yeah, exactly. Anna, thank you so much for sharing what you've done today. I love the story of Kester Black. I love what you guys are doing. We need to hear more of these stories from Australian and New Zealand entrepreneurs in E commerce. So thank you so much for sharing what you have shared today and look forward to seeing what's next.
Anna Ross: Awesome. Thanks so much Nathan. Awesome to talk to you.
[Voiceover]: So this episode got me thinking. What are my personal values? Not the values of my company or of other businesses that I've worked with, but the beliefs that I won't compromise on. Could I reel them off easily? I probably can't. I loved Anna's activity and it's one that I'm going to do myself of writing down and narrowing down to five core values that resonate with me. It's a simple exercise that can guide your decision making. It can fuel your passion and lead to success. This works whether you run your own business or are working within a larger organization. There's no reason, as Anna has shown, that you need to follow anyone's path or even try and crush it if you follow your own values. If you want exercises to guide you on that, there's plenty that we've googled and the ones that we've liked, we've put one that we really like in the show notes. Also, one of my personal favorite books is Ray Dalio's Principles. As one of the most successful investors of all time, Ray wrote down all the principles that he collected over many years of successes or failures in investing to guide his future decisions. Now, they're not all principles that I personally agree with or would want to, but I love the exercise and I love how he's shown how principles can guide and you can learn from them for future decision making. Now, for the first time in Add to card history we have a giveaway. Anna and the team at Kester Black have given our listeners a hundred dollar voucher to win. To go into the draw for this $100 Kester Black voucher, leave us a review in the iTunes store. Take a screenshot and then send it through to hellodtocart.com that's hellodtocart.com the review that entertains us the most will win the $100 voucher. Thanks again Anna and the team at Kester Black. If you're looking for more e commerce news, case studies and research, sign up to 12High's High5 newsletter. Each week I read all the e commerce news and send you the five things that I've found which I think will help grow your business. Visit 12high.comauhigh5h I G H number 5 to sign up for for free. Thanks for listening and until next time, keep adding to cartoon.
