Digital Nomad Building a $5M+ E-Commerce Business: IntelligentLabs CEO Rus Hughes (Part 4)

Sramana Mitra: The bulk of the business is based on doctor recommendations?

Rus Hughes: I would say word of mouth. When we started, it was heavily weighted to doctors. Brand reputation is the crux of the business. More and more brands are doing it now. When we started in 2014, there was a scandal with a few of the larger brands in America. All of the supplements they were selling had to be pulled off from the shelves.

From day one, we’ve been doing full analysis testing to show that our products have exactly what’s on the label. We spend a lot of time working on trust. We put a lot of our energy on trust so that you can trust the brand.

Sramana Mitra: You mentioned Tiktok. Is this other people’s social media channels and they randomly reference you? Do you also run a significant content marketing program?

Rus Hughes: We have a content marketing strategy. We also post on Tiktok. That doesn’t really carry the business. We’re testing that out. Our current demographic isn’t a Tiktok user.

Sramana Mitra: It’s an older demographic.

Rus Hughes: We’re expanding into new products in order to hit new demographics. We recently launched a collagen product which is more suitable to Tiktok and is more into health and beauty. We’re keeping our brand principles. Now, we’re applying it to new supplements.

Sramana Mitra: You said you reached one million in 2017. How did the business grow from 2017 to 2022? When did you reach $5 million?

Rus Hughes: A year or two ago. The COVID pandemic pushed us over $5 million. Our business doubled in that three months.

Sramana Mitra: Why is that?

Rus Hughes: Because of people’s focus on their health. We didn’t change our marketing. We were on top of our inventory. We have products in stock whereas other brands might have run out. Also, public awareness. Those two combined. E-commerce grew in general because of COVID. The supplement industry grew massively. Because we put a lot of effort into inventory forecasting, we were able to handle the increase in demand whereas a lot of our competitors weren’t.

Sramana Mitra: What about team?

Rus Hughes: We do everything ourselves from labels to bookkeeping. It’s just us two. In 2018, our first two hires were a bookkeeper and the biggest impact is our inventory manager Tony. She took the responsibility of doing inventory forecasting.

Sramana Mitra: It’s just the four of you running the business today?

Rus Hughes: We have a core team of 12, a dozen translators, and contract medical professionals to review our content.

Sramana Mitra: It’s a small team.

Rus Hughes: Right.

Sramana Mitra: It’s one of the beauties of these e-commerce businesses. You can do so much with small teams. You talked about inventory. Is inventory still organically financed?

Rus Hughes: Yes. We’ve managed to control growth, so we’re organically financing it. We’re launching new SKUs and bringing existing SKUs to new markets. We haven’t raised money. In 2015, I did have to lend the business an extra £30,000 to meet our Omega 3 demand, but that was the last cash injection.

Sramana Mitra: Your largest geography is the United States?

Rus Hughes: Canada. Canada is a lot harder to enter than the USA. The USA has very little regulation. There’s the FDA, of course, that has the oversight. The USA has a blacklist policy. You can do what you want until you get in trouble.

With Canada, they have a whitelist policy. All of our products and suppliers have to be vetted. We need additional testing for the Canadian market around product stability and content. There’s a lot more work to do. It could take up to a year to be approved for the Canadian market.

Sramana Mitra: You entered the market through the US?

Rus Hughes: We launched in the US.

Sramana Mitra: Then you decided to enter Canada.

Rus Hughes: Yes. The only market we’ve not managed to crack so far is Japan.

Sramana Mitra: To apply the 80/20 rule, where is the bulk of the market for you?

Rus Hughes: Canada and America.

Sramana Mitra: Where are you now?

Rus Hughes: I’m in Valencia, Spain.

Sramana Mitra: Is that permanent?

Rus Hughes: I’ve been here for two years but my landlord told me that he might be selling his apartment. So, no guarantees.

Sramana Mitra: Thank you for your time.

This segment is part 4 in the series : Digital Nomad Building a $5M+ E-Commerce Business: IntelligentLabs CEO Rus Hughes
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