Surfstitch on crest of a wave

The Australian enterprise claims to be the world's largest online sports apparel and fashion retailer, writes Alexandra Cain.

Having just started to dominate European online fashion retailing, after already becoming the market leader in Asia and Australia, Surfstitch is now considering an initial public offer on the Australian bourse.

Co-founder Justin Cameron said the business is assessing its options, with an IPO or trade sale on the cards. "It's something being considered," he said.

According to Cameron, the business is already the largest online action sports and fashion business in the world.

In the US, the business's main competitor is swell.com, which is owned by Billabong, which is also a shareholder in Surfstitch.

"So I know what that business is doing and it's not doing anywhere near what we're doing [in terms of turnover]," Cameron said.

In Europe its main competitor is Blue Tomato, which reported annual net sales of $42.3 million for the year to 30 April 2012, of which 75 per cent was generated through e-commerce. (Its sales figures are now consolidated into its parent's, European apparel business Zumiez.)

"We do significantly more [than our competitors' revenue]," said Cameron, who said Surfstitch would turn over $80 million this financial year.

It has been a wild ride for a business that was only founded in 2007. Aside from the Australian online shop, Surfstitch now has five European online stores and also runs Billabong's e-commerce platform. In total, it manages more than 20 different websites, which Cameron said has enabled the business

to achieve significant scale from

a technology perspective. The

business was also a finalist this year in Deloitte's Fast 50 technology businesses.

"We represent more than 500 brands and have the ability to touch consumers across a number of different genres, including surfwear, sportswear, street fashion and accessories.

"We have seen a significant shift of consumer spending to online and we have been able to capitalise on that," Cameron said.

He said consumers can access a massive 20,000 different products through the business's sites, something no other online surf brand can come close to matching.

He said the enterprise's first mover advantage was one reason it had been so successful.

"We launched before there were daily deal sites. When we started, eBay was really the only option [for buying apparel online]. In the fashion space there was only us and ASOS. Being first allowed us to build awareness and scale very quickly."

Surfstitch has only lately started to advertise offline, recently broadcasting radio and TV commercials, as well as investing in outdoor advertising. It has done this to try to reach a broader audience, after investing heavily in its technology platform to ensure it can cope with the increase in business mainstream advertising should deliver.

Initially it advertised on Google. Cameron said word of mouth

referrals have also helped build the business.

He said it is a marketing model that is vastly different to The Iconic, another big online fashion website. "The Iconic has tried to buy market share, but we've grown organically and virally, which means we are strong and profitable."

According to Cameron, Surfstitch is the first home-grown e-tailer to have a domicile outside Australia. It now has a base in south-west France to service greater Europe.

How to create an online business

Here are Justin Cameron's top tips for online success.

Choose your technology partners and IT platform carefully, because this is what underpins the business and its potential to grow. "Lots of start-ups invest in the wrong choice of platform and it hampers their ability to develop," he advises.

Choose staff who are engaged with the business and willing to participate in its journey. He says when Surfstitch moved its headquarters from Sydney's northern beaches to Queensland only two of 80 staff (Surfstitch now has a team of 250) remained in Sydney. Of those, 95 per cent of staff are still with the business.

Make clear decisions about which parts of the business you want to own. "Our point of difference is delivery and customer service, so we own all parts of our business, including distribution."