Adam Jacobs

Alan Kohler: Joining me now is Adam Jacobs, who's the co-founder and managing director of The Iconic, the online retailer. G'Day, Adam.

Adam Jacobs: Hi Alan. How are you?

AK: Thanks for joining us again. We spoke to you a while ago, but I first spoke to you in 2012, four years ago, when... then I wrote an article for Business Spectator saying, you know, how terrific the thing was and, you know, it was all good. And then you'll probably remember, I certainly do, there was a... about a year later... a piece in Crikey which said that you were losing forty-five million dollars and it had this memorable sentence in it that's probably imprinted on your memory - the slow collapse of the iconic is a bit like watching a drug addict spiral into eventual destruction.

AJ: I do remember, thanks for reminding me.

AK: So, that's got the interview off to a fabulous start for you, Adam. But the thing is, that was four years ago. The piece in Crikey got stuck into me for, you know, puffing you up, saying my article was a bit like a P.R. release.

AJ: Yeah. You finally got your revenge on Crikey then.

AK: Well, yeah, the thing is that it's four years later, you're still going, you didn't collapse. Are you making a profit yet?

AJ: We, so we are in our fifth year now, as you've mentioned, we started late 2011.... this will be our fifth year of operation. And we are expecting our profit, our first profit in the next twelve months. So, we're definitely on track against our plan originally. And I think what was under appreciated in 2013, and you can probably relate to this point of view in terms of tall poppy syndrome which can occur in Australia, is the time and investment it takes to make a successful e-commerce company. From most of our peers around the world, if you look at companies like Amazon or Asos, it's a five to seven year time frame. We're going to be turning a profit at the early end of that range in our fifth year and that's a fantastic timeline, and we're really happy with that.

AK: You came on this program as well, I think in 2013, and lot's changed even since then I would have thought. One of the things that's changed has been the growth of smart phones. How is that changing online retailing?

AJ: Yeah, it's a great question and you know, our goal since we started the company in 2011 has always been to focus on what a great customer experience looks like when it comes to online shopping. So, you're right, in year one it was a web based experience and we put a lot of time and thought into how do we innovate in terms of our website experience, how do we back that up with market leading logistics and delivering customer service. In the last few years, it's much more about mobile shopping. What we've seen is, let's say two years ago, under a third of our traffic would have been on a mobile device. Today, it's well over half, and that rate is growing very quickly. So, we believe in, you know, three to five years time, eighty, ninety percent of e-commerce transactions are going to be not only on a mobile device, but probably in app as well, given the rise of app usage. So, that's where our thinking and our innovation is going today around how we build a great customer experience. We totally rewrote our app about a year ago on new technology. We're focusing on personalisation because when you deliver an app shopping experiencing, you have the opportunity to personalise it based on what you know about the user of that device. And we're rethinking the experience for a smaller screen with more frequent interactions with a greater sense of instant gratification. And so far we're seeing a really wonderful response from our customers.

AK: And the other thing that's occurred at the same time, of course, is the growth of Facebook, in particular, but all social media more generally. And how fundamentally is that changing your business?

AK: I think that, if we think about our target customer, which is our core target is 25-35 in major metro regions, probably Instagram is having a bigger impact in the last year or so than Facebook. Both of them are directing the way that a customer thinks about using their mobile device and they're, you know, they're short, frequent interactions I was talking about. It's almost like we're living our life in short-form these days, you know, we have a couple of minutes here and there on a bus ride or, you know, in a coffee break, we just check out what's going on. And largely when we're checking out what's going on, it's social media. What that means for us is that we want to communicate to our customers through social media and that's a really great space for us to build our brand. And we've been focusing on some really fun campaigns on Instagram. The most recent one was our denim campaign. And we're directing people once we talk to them in their social world back to the products that they want to see in our website. So, I would say that Facebook and Instagram has had a really large impact on the acceleration on shopping through mobile devices. Today we've got over one million downloads of our app. That's the most downloaded fashion app in Australia. And the integration between the experience and our social platforms like Facebook and Instagram and our app shopping platform is a really tight integration.

AK: And to what extent is the other end of the business changing, the delivery side of things? Is it turning out to be different and you're having to do different things to get the products to people than you thought?

AJ: You know, I think we were quite ahead of the market when we launched our delivery offering in 2011/12. We launched, very close to launch we introduced three hour delivery. Over time we introduced same day delivery to capital cities around Australia. Saturday deliveries, we were the first to do that. And, you know, all of these innovations have really allowed us to construct a customer experience in retail that is well ahead of our peers.

AK: Who have you done that with though?

AJ: We've done it with a number of companies. So, we've worked very closely with Australia Post. And I would give a lot more credit to Australia Post around innovation than they typically get credit for. They've been very receptive to our ambitions around innovating in the supply chain and they've been walking down that journey with us and trying out new methods of constructing the supply chain, and that's been successful. And we've also done it with Mail Call who have a product called Want It Now and we use them with the three hour delivery in Sydney and we've got a great relationship with them too. So, I would definitely say that over the past four to five years we've thought hard about what a customer expects and a really great delivery experience, and how do we work with our partners to construct it? That's lead to a Net Promoter Score of 90 consistent month to month for us. So we're definitely hearing from our customers that the experience we're delivering is one of the main reasons why they're shopping with The Iconic over other retailers.

AK: I think it started off probably four to five years ago, it started off, you know, the parcel gets delivered and if you're not home, well, you go down to the post office to collect it, but now nobody wants to do that anymore. So, I suppose what you're talking about really is getting it to the point where people can get the parcels wherever they are and in a much more convenient way.

AJ: I couldn't agree more. I think you've phrased it very well. I think having to go down to the post office is everybody's least favourite experience. They're often open quite narrow hours of the day, there are lines, and it's out of your way. We introduced a few years ago a partnership with ParcelPoint. ParcelPoint is a network of about a thousand locations around Australia; service stations, pharmacies, newsagents that have extended opening hours. And our customer can ask for their parcel to go to one of those locations and pick it up on the way home. And we've seen a lot of great experiences coming out of that. So, we are constantly thinking about how do we not demand or not require that our customers go our of their way for a delivery experience, and how do we just fit into their life as it already exists.

AK: And, has the ownership of Iconic changed? You started off as a part of the Rocket internet startup incubator. Is that still the case?

AJ: About a year and a half ago there was a portfolio formed called the The Global Fashion Group. And Global Fashion Group was born effectively out of Rocket and its investors that were behind The Iconic and a number of other companies that were similar to us around the world. In fact, there's six such companies in different regions around the world. And, so we would say that we're part of The Global Fashion Group, where in the past we were incubated by Rocket. Rocket is not the major shareholder in Global Fashion Group. In fact, it's a Swedish investor. And that group for us operates at the forefront of e-commerce in about thirty different countries. So, what we're able to do is share experiences and knowledge, some data and benchmarking, at times even talent, tools, connections... with all those different companies to make sure that together we're on the forefront of what a really great online shopping experience looks like.

AK: Well, it's been great talking to you again, Adam. Thanks very much.

AJ: Thanks, Alan.

AK: I’ve been talking to Adam Jacobs, who’s the co-founder and Managing Director of online retailer, The Iconic.