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‘It was intuition,’ Nancy Mudford says of her decision to add to her inventory. ‘In the past, every time I added a brand we would find new, brand-loyal customers.’ (Rafal Gerszak For The Globe and Mail)
‘It was intuition,’ Nancy Mudford says of her decision to add to her inventory. ‘In the past, every time I added a brand we would find new, brand-loyal customers.’ (Rafal Gerszak For The Globe and Mail)

TURNING POINT

Her retail startup was in the red. Her response? Radical Add to ...

An online store was not in Nancy Mudford’s business plan in 2003 when she decided to open a full-service day spa in Vancouver. But three years after she launched Le Petit Spa – a successful venture that she sold in 2012 – Ms. Mudford took a tentative step into the world of online retail.

“A friend of mine who was doing my website suggested selling our spa products online,” recalls Ms. Mudford, who had worked previously as a call centre manager for Telus Corp. “And I said, ‘Oh my God, I don’t want to do that.’”

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Despite her initial reluctance, Ms. Mudford’s gut told her the idea had merit. She was already selling products from several brand lines to customers who came to the boutique for spa services. And at the time there were few, if any, online retailers carrying skin care and cosmetic brands – such as Guinot and Yonka – that were usually sold only in spas.

After persuading her suppliers to trust her to faithfully represent their brands online, Ms. Mudford launched Spa Boutique in 2006. She thought her online venture would be something she would do on the side, but it took off and grew quickly.

But while revenue was growing, the business was running at a loss, Ms. Mudford says, and growth was starting to slow down. New players were also coming into the online beauty space, which meant Spa Boutique now needed to work harder to keep its customers.

By 2012, Ms. Mudford knew she needed to do something radical. She decided to significantly increase the number of brands and products sold.

But there was no hard business case behind this decision, she says.

“It was intuition,” she says. “In the past, every time I added a brand we would find new, brand-loyal customers. And when we would go to trade shows we would find so many opportunities with so many skin care and cosmetics companies.”

Ms. Mudford knew it would not be easy to execute her brand expansion strategy. Even as skin care and beauty e-tailers had multiplied, many high-end spa brands were still hesitant to put their products online because they were concerned consumers would not know how to use them properly without in-person guidance. Some also worried that online retailers might start selling their products at a discount, eroding the prestige associated with their brands.

They also were concerned about quality control. Would Spa Boutique handle storage and shipping in a way that would ensure the integrity and efficacy of the products?

“It can take months, sometimes even a few years to get a new brand to sign on,” says Ms. Mudford, who has a head office, warehouse and a bricks-and-mortar store in Vancouver. “It took me five years to get hair brands because, as much as it seems straightforward to deal with a new supplier, it can take a long time to get a commitment, have the contract signed, and get the product images and information we need to put online.”

It took six years for Ms. Mudford to sign up the roughly 90 brands she had by early 2012. But with competition heating up and her company’s financials in the red, she knew she needed to work much faster to boost her roster.

She spent several months in 2012 travelling to Toronto and Montreal, where most of the suppliers representing skin care and beauty brands are located. While she still needed to assure suppliers that she would maintain the quality and integrity of their brands, she now had a negotiating advantage: Spa Boutique had become a well-known beauty e-tailer with a reputation for carrying upscale brands.

“Some of the brands and suppliers that wouldn’t see me before were now opening their doors to me,” Ms. Mudford says.

By the end of 2012, Spa Boutique had doubled the merchandise on its online shelves to about 12,000 products under roughly 180 brands. To support her expanded product offering, Ms. Mudford hired three merchandisers.

The return from all this effort and investment was “pretty quick,” Ms. Mudford says. “As we were adding each new brand, we started to see revenue going up right away,” she recalls. “So we knew we were on the right track.”

Spa Boutique’s revenue in 2013 totalled close to $3.5-million – about $1.4-million more than total sales in the previous year – and the company was back in the black. At the same time, Spa Boutique doubled its customer base.

There’s been little time for rest. After her year-long blitz to secure more brands, Ms. Mudford says she spent the better part of 2013 planning and overseeing her company’s migration to a new Web platform – another turning point whose outcome is still unfolding.

She also added two new lines of business to her company: Lifestyle Boutique, an online health and wellness store, and Pleasure Boutique, which sells adult accessories and sex toys.

“I tripled our team in the last two years,” says Ms. Mudford, who now employs about 30 people. “When I look back, it’s been a flurry of activity, but look at what we’ve accomplished.”

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