Selling kitchenware is in Hal Pritchard’s blood. His mother, Rosie Watson, runs Rosie’s of Pyrmont, an iconic emporium for professional cookware at Sydney’s Fish Markets, with his sisters. His brother runs The Tipsy Chef, a kitchenware store in Victoria.
After working at Rosie’s for several years Pritchard and his wife, Natasha Luke, opened a specialist kitchen supplier in the Hunter Valley, Waiter’s Friend. Then in 2003, the couple opened an online store that sells 8000 products ranging from mixers to knives.
That business, Everten Online, grew so quickly that it made the BRW Fast 100 in 2009 and 2010, with annual average revenue growth over the three years of 81 per cent. Last year turnover rose by a more modest 19 per cent to $7.5 million.
“We’ve still been growing but not quite as fast,” Pritchard says. “We’ve been more focused on things people don’t talk about as much – making sure our profitability is sustainable in the long term.”
To achieve this, Pritchard and Luke overhauled the website, appointed a new general manager and invested in infrastructure to make the business is scaleable. The general manager focuses on back end and logistics, which frees up Pritchard and Luke to be more strategic. “It’s been a massive project but it’s the basis for the whole company,” Pritchard says. “Making sure our IT, warehouse, logistics and product management systems will work perfectly whether we have 100 or 50,000 products.”
This investment has cost millions over the past few years but it hasn’t been to the detriment of profitability. “We’ve kept the costs proportional,” Pritchard says. “We wouldn’t spend $5 million on a big warehouse so that in five years’ time we’d get some return. The challenge of being sustainable is to ensure things work properly and affordably.”
It’s the same reason they don’t sell items at a loss or offer free shipping.
“Everything we do in the company has to be a sustainable contributor to our profit,” Pritchard says. “Lots of online retailers aren’t charging for delivery but the reality is freight isn’t free. We charge a small fee that is sustainable to the business.” He says online shoppers appreciate transparency. “Our customers understand we’re being honest about what it costs to deliver them a product.”
This approach has helped the couple maintain their margin. “Our profitability has been exactly the same from the day we started,” Pritchard says. “As turnover grows profitability can diminish, but we’ve made sure that hasn’t happened.”
Nineteen per cent sales growth in the year ending June 2011 is solid in the current market but Pritchard disagrees that consumer spending has slumped. “Retail is flat but I don’t think online retail is,” he says. “Online and offline aren’t competitors because they operate in different spaces. If someone decides to buy something on the web, it’s very hard for a shop to compete and vice versa.”
Everten Online’s customer base is growing as shoppers grow more familiar with internet buying. Pritchard says there has been a corresponding jump in the number of online outlets. “There’s no longer two or three people selling online – there’s 10 or 15 companies trying to attract the same customers.”
Notably absent from that list of competitors operating on the web are Australia’s biggest retailers. “I really don’t understand why the big bricks-and-mortar stores haven’t embraced it,” Pritchard says. “It’s mind-blowing. It’s been good for small players because we’ve established a decent hold and the longer they leave us alone the better.”
Popular TV cooking shows have been a boon. “We had a massive uptake during the MasterChef seasons,” Pritchard says. “It’s had a huge effect on people’s awareness of quality kitchenware.”
A wide range of stock and improving customer service is how Everten Online competes. “It’s been important to increase our service,” Pritchard says, “Adding new options like gift wrapping, bridal registries and making sure 98 per cent of parcels go out within 24 hours.”
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Natasha Luke and Hal Pritchard
Hal Pritchard and Natasha Luke
BRW Fast 100: 2010 (ranked 51); 2009 (ranked 31)
BRW Fast Starters: 2010 (ranked 33); 2009 (ranked 44)