How Two Ecommerce Entrepreneurs Took a Side Business from $100k to $3M in Revenue in Three Years

Have you heard of Crossfit? It's a strength and conditioning system that was started in 2000 and has become extremely popular in the fitness community.

It's also a movement a lot of smart entrepreneurs are building businesses around. 

One such person is Peter Keller, an entrepreneur from Texas and owner of FringeSport, a Crossfit and home gym equipment supplier.

Peter and I connected on Reddit over at /r/entrepreneur after the Beardbrand case study we published generated a lot of discussion over there. 

He introduced himself and shared his story (as well as some pretty incredible sales numbers for such a young company).

I got Peter to take us behind of the scenes of his extremely successful ecommerce business and show us how he achieved such phenomenal growth so fast. 

Describe your business and product(s) in 1-3 sentences.

FringeSport is bringing the tools of elite fitness within reach allowing anyone to build a truly world-class strength and conditioning facility in their own garage.

We combine U.S. engineering and global manufacturing with a bricks and clicks business model to get better strength and conditioning equipment to our customers faster and cheaper than ever before. From barbells to kettlebells and beyond, we outfit the functional fitness enthusiast and "Workout-of-the-Day"-junky with everything they need. FringeSport offers solid gear, great prices, and world-class customer service!

How much revenue are you currently generating?

Since we were founded in 2010, we've been on a steep upward trajectory. In 2011, we did $100k, running the business as a side hustle while both founders worked day jobs. In 2012 we quit our jobs, got office and warehouse space in Austin, Tx, and built a team. We did just over $1M in revenue. In 2013, we've expanded to Dallas and San Antonio, and we'll pull in $3M (projected).

We've been serving our customers with a "bricks and clicks" approach that we stole from Bonobos and Warby Parker. Since we're literally shipping weights, our freight costs can be astronomical. To combat this, we've been experimenting with showrooms in Dallas and San Antonio. This approach has been very successful. YTD, we've generated about 60% of our sales online, 35% from the "bricks" locations, and the remainder from our wholesale/dropship program.

How did you come up with the idea for your business? What kind of market research did you undertake?

I've always been entrepreneurial minded. In 2010, I was working for another ecommerce business and I wanted to do my own thing. I ran through a niche selection exercise and came up with the idea to start a strength and conditioning company focused on the fast-growing CrossFit market.

I'd been CrossFitting since 2005, and I loved the community and the movement but the equipment was expensive and hard to get. With my background in product development and ecommerce, I knew I could bring the gear to market and do it better than my competition. I approached my brother as a partner, and we were off to the races!

For market research, I found our first product - gymnastic rings. I placed an initial order for two thousand dollars worth and I figured that if those sold, our market would be validated. If not, I figured I could liquidate them for what they cost me. Luckily, they sold!

How do you manufacture or source your products? What were some key lessons you learned during this process?

We currently use a mix of product that is engineered in the U.S. and contract manufactured for us, original equipment manufacturer (OEM) gear that we buy factory-direct, and product from U.S. brands. Over time, we're moving more and more to contract manufacturing.

Products that we have contract manufactured are always best for our customers and us, because they are designed better than the off-the-shelf products. We leverage our deep integration into the strength and conditioning community to continuously test and improve our designs. And, when we use contract manufacturing, we have better control over costs.

In manufacturing, relationships are huge. You're building long term partnerships with your factories so treat your interactions with this in mind. Also, everything takes longer than you think it should - build lots of buffer time into your projects.

How did you promote your business initially and where did your first sales come from? Any major media mentions or PR wins since then?

Initial promotion was largely through Google Adwords. I would not recommend this unless you really know what you're doing, as you can throw a lot of money away while you learn. In hindsight, I would work social media much harder.

Currently, Facebook is a great marketing channel for us. Also, we're members of a number of forums online and the traffic we get from the forums is very targeted.

We have not reached out much on the PR front, but we did get a great mention in Lifehacker this year, which came from outreach to the author some months prior.

What channels are currently generating the most traffic and sales for you?

Organic and direct traffic are our top sources, with direct converting best - which makes sense because these visits come from people who have an idea of who FringeSport is. Facebook and forums drive a god amount of targeted traffic. Additionally, our PPC (mainly Google Adwords) is pretty dialed-in these days, and our spend there is ROI focused - so this traffic converts or it gets shut off.

Our physical locations drive excellent traffic and sales, plus a high level of repeat business.

A lot of your products are heavy. How do you handle shipping and fulfilment and organize the back-end of your business? Key lessons/tips for doing this successfully?

Shipping and fulfillment is a key core competency for us. From an early stage, we emphasized shipping product as fast as possible. What this means today is that we promise to ship out all in-stock product ordered by 2pm CST on the day it is ordered (business days). Shipstation is a lifesaver in this regard - we route all shipping through the app. We also recently installed BrightPearl to handle much of our backend - this should streamline systems as we scale.

To ship heavy products cost-effectively, we go to the mat with UPS, freight carriers, and USPS to find the best rates and service. In negotiations with UPS, finding a sales rep that believed in us was huge! Our previous rep didn't care about us and basically was forcing us to prove our volumes before he gave us the rates. Our new rep believed in us and our story and gave us some preferential rates based on our growth projections.

Finally, have you seen that post office campaign, "If it fits, it ships" for Priority Flat Rate boxes? We use and abuse that program.

You operate three physical locations in addition to your online store. What challenges does this present and how to you tackle them? What advice do you have for other retailers looking to do multi-channel?

The physical showroom initiative has been a huge success for us from a customer engagement and service perspective, as well as a financial perspective. However, it has created a lot of inventory and backend problems including carrying costs for additional inventory, avoiding stock-outs at our showrooms, and managing the front-end point of sale (POS).

We've recently implemented BrightPearl to help us manage the backend, and Shopify POS (we were formerly on Square) for the front-end.

I would advise other retailers to give a look at how they could implement the bricks and clicks approach. Shopify's app ecosystem has a lot of solutions to help manage this approach and you can drive the highest level of engagement by allowing your customers to have real-life, face-to-face interactions with your brand.

And of course, it's a multi-channel world. Find out how to best reach your customers, and pursue the options that make sense.

What software, tools and resources are crucial to your business?

Shopify, of course! Additionally, we share documents on Google Drive as much as possible, plus we use Dropbox as well. We use Basecamp for project management and Google Apps for email. Google Analytics is hugely important and free, so get that installed and learn how to use it.

I'm a big Apple fan, and we use Mac + PC in the office, but our tablets are all iPads running various apps, and most of our team use iPhones.

A few great apps are Shipstation and Meta Tagger. We recently installed Yotpo and we have been amazed. We now have a steady stream of user reviews coming in and it's great! And we have high hopes for BrightPearl and Shopify POS.

What were your biggest mistakes or wastes of time and money (if any)?

We were slow to move strict oversight and accountability over our PPC campaigns. We now have a process by which our PPC campaigns have a few months to prove themselves out on an ROI basis or they get the axe. We should have moved to this system earlier.

We should have utilized social media, especially Facebook, Instagram, and Twitter earlier and better. Social media is time consuming but "free", so while you have time, get online and hustle. Even now, we can use those networks more efficiently. I see a lot of young brands using Instagram really well, and I know we're not there.

We were slow to start building our email list, but we have recently started focusing on this, and sending emails regularly. These don't take much time with properly formatted templates, and they drive sales and engagement with your fans. So get a MailChimp or Aweber account from the start and build your list!

What other key advice can you offer to entrepreneurs looking to start a successful ecommerce businesses?

If you have an idea, get to work! Shopify makes it super fast and easy to get a great looking site live. Plus there are a ton of resources online to help you. One of the best ways to validate is to just (cheaply) get your idea out there and get real-world market feedback.

Once you've gotten rolling, figure out where you will truly add value to your customers' lives and hit that angle hard. Don't ever stop improving your product offering. If you build a better mousetrap, keep improving it, plus keep expanding your selection and finding other ways you can help your customers.