When Dorry Kordahi first looked at Swanky Socks, it had been running for three years and was turning over $40,000. Not per month. Per year. He called it a hobby and bought half of it anyway.
Swanky has now moved close to 4 million pairs of Australian merino and bamboo socks into more than 30 countries. Most of that volume comes from corporates who put their logo on a sock with a $29.95 retail price. And that B2B volume is what feeds the online store.
In this article, we cover three things ecommerce teams can take into their business:
- How a retail brand can sell B2B on its retail value, and win new customers from it
- Why holding your price protects a quality message better than constant discounting
- How to check your own numbers before an agency talks you into spending more
This episode is supported by Convert Digital. Thinking about moving off Salesforce Commerce Cloud? Read their guide, The Journey from Legacy to Modern Commerce, on making the move to Shopify.
From His Dad’s Salon to His Parents’ Garage
Dorry failed most of high school. Basketball kept him there. His dad was a hairdresser and wanted him to take over the salon in Punchbowl. Dorry spent a lot of his time in the back room, he admits, asleep. At 21, a cousin gave him a sales job in the rag trade, and he knew straight away that this was it.
He was hired to sell, but he went much deeper. He visited the factories, learnt how fabric was cut and how many metres went into each garment, and worked out how to buy from China. After three or four years he started DKM Blue from his parents’ garage, importing direct from China. More than 20 years later he still runs it.
He also goes against the usual advice to hire people smarter than you. In a B2B business that runs on relationships, he thinks the founder has to be the smartest person in the room early on. Train young staff to sell the brand your way, and don’t hire senior people too early and burn your cash flow. The specialists come later, in areas like paid media, where he knows he isn’t the expert.
A $40k Hobby With a Retail Price Tag
Dorry saw Swanky pitch on stage at a startup event. It looked good online, but sales were mostly the founder door-knocking menswear stores.
I go, what’s your turnover? He goes, 40,000. I go, is that per month, per quarter? He goes, no, in the year. I’m like, well, it’s not really a business. It’s probably more of a hobby in your third year in. So I acquired half the business.
Nobody was really doing custom socks for corporates, so Dorry built Swanky as a retail brand first. A corporate client could buy a customised pair for around $14 and give away a product with a $26.95 retail value, the price back then. Inflation helped too. A promo t-shirt or cap now costs more than a pair of custom Swanky socks.
I say socks is the new tie. You’ve got to look at the corporate world, who’s wearing a tie now?
B2B Volume That Feeds the Online Store
B2B is still the biggest part of the business. Swanky has worked with Google, Microsoft, Samsung, Pandora and most of the big fast food chains, mainly on gifts with purchase, activations and promotions. Alpro, part of the Danone group, ordered 85,000 pairs through a Romanian distributor as a gift with purchase at McDonald’s. Each pair carried a retail value of 17 euros.
A collaboration with TAB went further. Swanky designed socks in the colours of famous Melbourne Cup winners’ jockey silks and sold them online for $22.95. They sold more than 30,000 pairs and raised $150,000 for an equine charity. As a promo sock, Dorry says, they would never have carried that price or sold those numbers.
Every pair handed out at an event is a first trial. People feel the quality, look up the brand and buy more. With that cash flow behind it, Swanky is now putting more into retail. It’s already on SurfStitch and is about to launch on THE ICONIC. It also has a multi-year collaboration with Brazilian footballer Douglas Costa.
Quality You Don’t Discount
So why would anyone pay $29.95 for a pair of socks? Dorry’s answer is the fibre. Swanky’s merino socks are 70% Australian merino wool, and he tells buyers to check the fine print on competitors that call themselves merino. Australian merino travels well too. It’s known as some of the best in the world, which helps in the UK and US.
Nobody buys one pair of socks, and Swanky’s average cart sits between $90 and $180. Fresh colours, seasonal drops and collaborations keep the drawer topping up. Bundles of five get free shipping and a lower price per pair. But that’s as far as the discounting goes, apart from some Black Friday clearance lines.
If you keep on discounting a brand, people are just waiting for the discounts. Growing up, sales were literally two times a year. Now there’s a sale every day. So why would I pay full price for something if it’s always on sale?
Google Got Five Times More Expensive
On Google, Dorry says it now costs Swanky five times as much to win a customer as it did three years ago. People are searching through ChatGPT instead, and sales are harder to attribute. Google and his agency still wanted him to double the spend. Then he compared Google’s conversions with what HubSpot was reporting, and Swanky was spending more than it was selling.
If I was an idiot and I didn’t look at numbers and I just kept on doing what you were telling me to do, chuck more at the wall, and we didn’t have the cash flow. This is where companies go broke.
He pulled the spend back, and Swanky now spends less for a better return. It’s the same thinking from his book, Win Big Risk Small. Before starting DKM, he spent six months in Europe working through everything that could go wrong, from importing to accounting. His advice to anyone about to scale is to work in the industry first, know your numbers and plan for the downside.
The Takeaway
Swanky’s retail brand gives corporates something worth putting their logo on. Those corporate orders put the socks on new feet, and the new feet come back to buy at full price. Dorry protects that loop by holding his price and checking every ad dollar against his own numbers.
Frequently Asked Questions
How does Swanky Socks sell custom socks to corporates? Swanky built itself as a retail brand first, with merino socks priced at $29.95. Corporates such as Google, Microsoft and McDonald’s buy customised pairs for gifts with purchase and activations. They pay less than the retail price but give away a product with real retail value.
Should Australian ecommerce brands discount to win new customers? Discounting can feel like the fastest way to win first-time customers. Dorry Kordahi’s view is that constant sales teach customers to wait for the next one. Swanky offers bundle savings and some Black Friday clearance, but holds its full price to protect its quality message.
Is Google Ads still worth it for ecommerce brands in Australia? It depends on your own numbers. Swanky found Google now costs five times more to win a customer than three years ago. When Dorry compared Google’s reported conversions with HubSpot, the spend didn’t add up. He cut back and got a better return from less.
How can B2B sales help grow a direct-to-consumer brand? Every product a business customer hands out puts your brand in front of someone new. Swanky’s corporate orders have put more than a million pairs into the market, and people who try them often go online and buy more. The B2B cash flow also funds the retail push.
