Who says shopping is not a man’s thing? Contrary to popular opinion, men are shopping like women thanks to online startups that offer convenience and a fast shopping experience.
“We launched the business at a time when everyone was going after the female demographic in the e-commerce industry. It’s the group that retailers had also been targeting. So, e-commerce was a mirror of what was going on in traditional retail, and no one really believed there was a men’s market,” said Jerry Hum, CEO and co-founder of Touch of Modern.
Founded in 2012, Touch of Modern (also known as ToMo) is an e-commerce site and application for men. It displays a wide range of products including furniture, electronics, fashion, accessories, and other lifestyle goods.
“The perception was that men didn’t shop because 85 percent of household spend was controlled by females. However, this was not the case for e-commerce. At the time 42 percent of e-commerce shoppers were male. And the men’s market was growing faster than the women’s,” said Hum.
“We had no idea how big the market was going to be. But we saw a space that was not being served.”
That is how four Ivy League graduates Dennis Liu, Jerry Hum, Steven Ou, and Jonathan Wu decided to launch Touch of Modern. All founders are originally from New York, but the company is based in San Francisco.
Since inception, Touch of Modern received more than 1.5 million orders and has 10 million registered users. Although it is geared toward men, it has a large number of female shoppers, which represent 20 percent of the audience.
The company currently employs 150 people. And it has reached a $100 million annual run-rate, which is a projected annual revenue based on the most recent month’s performance, assuming the company will continue at the same pace for a 12-month period.
The company has achieved all these by raising only $13 million in equity from venture capitals and $4 million in debt.
“We never believed in the traditional Silicon Valley model: Keep raising money. We focus on building the business, and for us raising money is not a goal, it is a means. Right now we are growing at a rate that is sustainable. So, we do not really see an immediate need to raise capital,” said Hum.
Touch of Modern has worked with nearly 5,000 vendors including designers, distributors, and manufacturers from all around the world.
The products displayed on the site are unique, in-season items from well-known brands and up-and-coming designers that can’t be easily found in mainstream retailers.
“What is unique about us versus a lot of other e-commerce offerings is that our partners see us as a marketing channel. They are getting exposed to an audience that is unique. So they get exposure to a new audience that they often can’t reach themselves,” said Hum.
Staying Ahead of Mobile Revolution
The increase in mobile usage in recent years has had a big impact on men’s shopping behavior. Especially mobile apps lure men to spend more time browsing, follow new trends and make purchases online.
“Mobile is now bigger than it was before and it is a huge thing for men as well. The shopping experience, and especially the checkout process, on the mobile phone is pretty easy on the Touch of Modern application. There is little friction when it comes to men shopping on mobile,” said Hum.
Morgan Stanley’s former star internet analyst Mary Meeker predicted back in 2008, that mobile would surpass fixed internet access. Many thought it was a bold prediction. Today more users connect to the internet over mobile devices than desktop PCs.
Touch of Modern is one of the early adopters of this mobile trend. It developed its application called ToMo.
“We started to see the shift to mobile devices two years ago. Our mobile application was initially driving 15 to 20 percent of the revenue. Over the course of a year, mobile has become two-thirds of our revenue,” said Hum.
The company focuses on user retention rather than just user acquisition and 70 percent of its revenue comes from repeat purchases.
“We think this is what distinguishes good businesses in e-commerce from bad businesses. User retention is the most important thing in the long run. For us, our mechanism of user retention is to make people want to come back to discover what is new and interesting on Touch of Modern,” said Hum.
Hum believes many big e-commerce companies fail because they focus too much on user acquisition. “They keep buying new users to support revenue growth. However, if you have high loyalty then you do not have to spend as much on acquiring new users,” he said.
And Touch of Modern has a reputation for showcasing unique and modern design products at the lowest prices.
“When the product is running on our site we always provide the lowest price. You cannot find the products on Amazon,” said Hum.
The company currently focuses on growing in the United States and Canada and is not going global for the near future. There is still ample room for growth in the U.S. market, according to Hum.
From Architecture to Computer Coding
All of the software is built in-house and is vertically integrated including the website, mobile app, CRM, warehouse, calendaring system, payments system, and fulfillment system.
Hum is a self-taught coder. When they first launched Touch of Modern, he together with his business partner Steven Ou built all the software.
Hum studied architecture at Cornell University. Before founding Touch of Modern, he was working as a junior architect in New York. But he was more interested in UX (user experience) design, so he learned how to code.
“I taught myself how to code. My office was in Soho. I used to go to the Strand bookstore during lunch breaks. I was walking there once and I saw the book titled ‘Ruby on Rails for Dummies,’ which is a coding framework. I picked up that book and the next several months I read the book on the subway,” said Hum.
Hum’s interest in coding that started as a hobby got him into the whole startup scene.
“For this business, I think understanding coding is crucial. Otherwise, it becomes a lot more expensive. If you don’t understand coding, it is very hard to optimize. People think code is free. But it really is not.”
No Regrets
In a fast-paced environment, one of the challenges Hum and his team face is to stay on top of marketing trends.
“The marketing landscape is always changing. In order to build a successful business in e-commerce, you have to learn how to generate more value from your customers. That costs money and the costs are constantly changing. You need to be on top of numbers day in, day out so you can recognize small changes before it is too late,” said Hum.
Like many other tech startups, the biggest challenge, however, is building the talent pool.
“The biggest challenge in terms of scaling I think is always employees. In the beginning, you work with a small team and it is easy. As you keep growing, you need to build the team and keep the talent. It is no longer about the customer life cycle, but it is more about your employee’s life cycle. It is much more complicated than how you build the business,” said Hum.
For Hum, every challenge he faces in his business journey is a learning experience so he has no regrets.
“My personal philosophy is that if you are happy with where you are now you cannot really regret anything you have done before because all leads up to this moment. Looking back, there is nothing I would have changed,” Hum said.
Friends Read Free