Building a New Niche Brand from New Hampshire: Yogibo CEO Eyal Levy (Part 5)

Sramana Mitra: By the end of 2014, what was your level of e-commerce business?

Eyal Levy: Because we grew the business through other options, the percentage of the online business remained within the 15% to 20% range. Domestically, it grew. It went up to 25%.

Sramana Mitra: I have one question which I can’t help asking. This is one of the reasons why so many e-commerce brands have done so well. It’s because of not having to invest capital in opening stores, which as you state, is very capital-intensive and hard to finance in the growth phase.

How does the revenue that you generate through e-commerce compare with the revenue that you generate through these capital-intensive stores. Can you build this brand largely through e-commerce and not through all this retail expansion?

Eyal Levy: Obviously, the brand can grow to a certain point. In 2016, we only opened just one store. Still our online increased by more than 30% through investing in SEO, online marketing, and PR. In our case, our product is so tactile. People read articles in magazines about how comfortable the product is, but until they try it, they can’t understand. There’s so much we can’t explain in words.

In the bean bag section, having people to try it is extremely important. That has a strong correlation with the offline presence. However, in some of the other products that we have, it’s definitely more scalable online. It really depends on the product. For a product that is more tactile, the importance of offline presence is higher.

Sramana Mitra: I just did a story yesterday on a luxury mattress company that has built its own private-labeled brand. They did it almost entirely online. That also is a tactile product. I think this is a decision that a lot of entrepreneurs are faced with and you see so many stores closing down right now, because they’re unable to compete with online. People’s online shopping habits are growing. Your point is well-taken that tactile products need to be touched and actually be sat on.

At the end of 2016, where are you?

Eyal Levy: At this point, I’d rather not share the revenue figures. We have 26 stores domestically and have distribution in Canada, Japan, Korea, Middle East, Australia, and Denmark. Right now, our goal is to increase our domestic presence through franchising. We’re launching the franchising program by the end of this quarter.

Our idea is to franchise the entire activity for a territory such as a state including the offline and online businesses. We think that just offering the franchising for the brick-and-mortar is not so compelling. We’ll continue to grow and expose our brand without investing more capital on our own. We are investing a lot this year on product development to increase our line and increase the number of SKU’s in order to increase the revenues in the existing channels.

Sramana Mitra: Great. Thank you for your time.

This segment is part 5 in the series : Building a New Niche Brand from New Hampshire: Yogibo CEO Eyal Levy
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