Material Retail Revenue (2024)

[00:00] ShopTeeks was launched back in way back in 2010. They helped merchandise or sell online. One of those merchandisers was Elliot's company called door la door at nyc.com. They that company does 5 to 10,000,000 top line revenue, but eventually, said, you know, I like the software, and I like Shoptix more. Let me start consulting over there before you know it. He's now running it as co CEO of the platform. They make money in three ways. They'd have [00:20] a take rate on revenue that goes through Shoptix. They sell software. We call materialretail that folks pay a $125 for. Again, these brand boutiques use it to grow their business. And then lastly, they actually ship POS systems, and they actually take a smaller percent flowing through those systems. 72,000,000 in GMV through those systems last year, hoping to grow their revenue, their total revenue, not not like some big GMV number, but their actual revenue to about 1,500,000 [00:43] this with a small efficient team, which we love of four full timers. Hey, folks. My guest today is Elliot Djmal. He's an experienced entrepreneur, successfully led an independent retail business with eight locations for eight years. He's now the a co CEO of a dynamic startup called materialretail.com. They build software and services for independent retailers. Elliot, you ready to take us to the top? [01:04] >> Definitely. Definitely. [01:05] Alright. So what were you using material retail when you were running those eight retail locations, like, as a customer? [01:12] >> Yeah. Definitely. So materialretail has a lot of parts to it. The main one, which most people know is called shoptiques.com. It's a marketplace for independent retailers. Shop what? Shoptiques.com. [01:25] Teeks? [01:27] >> Like, tiques, like boutiques. [01:29] Oh, like boutique. [01:30] >> Shopeeks. So we as an independent retailer, we were putting our products on that marketplace, and it was super successful. We went two routes for e commerce. One, we launched our own website and the other one we started selling on Shopeeks in the marketplace. And we had much more success on the marketplace. We didn't have to worry about the tech, the logistics, the marketing, and we just kind of posted the good product and got orders and fulfilled. [01:57] >> So it worked really well. [01:59] What year did you launch those independent locations? [02:02] >> So we launched DoorLatdoor as the name of the retail company in 2010. [02:08] Okay. 2010. Sorry. Doortodoor.com? [02:11] >> Doorlatdoor. So the website's doorlatdoornyc.com. [02:15] Do so Dor, l a, Dor? [02:18] >> No. Dorldornyc.com. [02:22] Dor. Dor Ladore. Okay. Nyc.com. Okay. Interesting. And what was your main product? What were you selling? [02:28] >> So it's like fast fashion for a 25 to 35 year old girl. Definitely like going out clothing and things you'd wear to a club. Called disposable fashion, like a step up from Forever twenty one. [02:41] Okay. No. The obvious question, people are gonna look at you here and thinking, the hell is this guy selling clothes to, like, you know, teenage girls? [02:48] >> Well, so, you know, it's in my blood, to be honest. My grandfather was in fashion retail. My dad was in fashion retail, and we all just kept doing it. [02:58] >> Yeah, my dad worked for my grandpa, I worked for my dad, and yeah, so that's what we learned. We look at you know, there's definitely a lot of ways to look at fashion retail, some of it's by like what's fashionable, the other is looking at numbers and see what's selling, and at end of the day, a style is just a number in a spreadsheet and see what's selling, and you go after that. Good vendors, good things [03:16] >> like that. [03:17] That's wild. Okay. So you you get doorladoor going door doorladoornyc.com in 2010. Is that so is it still operating, Tate? Do you sell it or what? [03:25] >> Yeah. No. It's still operating. There's eight locations. My family still runs it. And [03:31] Interesting. So okay. So there are eight locations. So do you rely more on virtual marketplace revenue through Shoptiques or actually physical people walking in your eight locations? [03:41] >> Definitely, the eight locations are the majority of the revenue, but we were able to use the eight locations and leverage all the inventory and all the stuff we have there to have a profitable ecommerce. We don't have to add really any expense or any inventory, any overhead, like, any overhead and just, you know, have incremental sales. [04:02] Interesting. So how many how many, like, unique people bought at least one thing from door la door last year? [04:10] >> In store, I'd say in the five tens of thousands online in the, you know, one to 5,000 people. [04:18] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:41] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [05:06] get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here, Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:28] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple. Maybe you're [05:53] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if [06:15] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the [06:42] interview. Interesting. And can you give us a sense of revenue size? Are we talking like 1 to 5,000,000, five to 10? Where were you guys generally? [06:49] >> It's like five to 10. [06:50] Five to 10. Wow. Okay. So I guess why leave that and go deep into door to door oh, sorry, and go deep into materialretail? [06:58] >> Was a slow transition, so I was very involved in Shoptique's materialretail as a customer, really spearheaded that in door to door, made a lot of friends at the company, and over time slowly got involved, started consulting there two days a week in 2018 actually, so did that for two years, two years I was there two days a week and really kind of fell in love with just helping with [07:27] the for that or you're just doing it because you it helped door the door grow? [07:31] >> Yeah. No. They paid us for that. Paid me for that. I definitely I wish I could work for free. We can't do it one day. And [07:40] >> yeah. So it was like a slow transition. It made it really easy because I knew what I was getting into. You know, after two years doing it two days a week, I really knew the business. I knew what I can add to their business, and then also what I could bring to the boutiques to help the boutiques be more successful using their products. [07:59] And what year was that? So the consulting started what year? [08:02] >> 2018. [08:03] 2018. Okay then. So so I guess fast forward, when did you realize, oh, maybe the founders wanna leave or they're getting forced out and you're gonna jump in as co CEO? [08:11] >> So it was like 2020, early twenty twenty, right when COVID was happening, kinda happened really, really quickly. Me and my co CEO, Mark, were put in place by the old CEO and Founder and the Board, and we hit the ground running. COVID was a very busy time. We're definitely e commerce focused business. Interesting. [08:32] So you mentioned Board. Had they raised a bunch of money? [08:34] >> Yeah. So Shoptix's story history. It's launched in 2012, [08:40] raised Wait. Sorry. Just to be clear. Are we talking about Shoptix or materialretail? [08:43] >> So Shoptix, we rebranded to materialretail in 2022. [08:50] Oh, same company. So, [08:51] >> yeah, Shoptix is the marketplace that materialretail owns. Shoptix.com was the only business that we had for about eight, nine years, and then we launched a software suite, which is materialretail in 2019. And slowly over time, a lot of the focus moved towards the software suite as opposed to the marketplace. So now shopteaks.com, which is the marketplace, is a subsidiary of materialretail. [09:19] I see. When you look at total revenue like last year, what was the split between Shoptix versus the software materialretail? [09:25] >> So software is like 70% of the revenue. Oh, wow. Yeah. But a lot of the economic activity happens in the marketplace. The marketplace is not really profitable for us. We use it as G channel. Called a funnel. Yeah. Marketing funnel. And we also use it to add value to the boutiques. Like the boutiques use our software. It's one of our biggest differentiators. Like why would you use material versus Shopify? It's because you come in and you [09:49] >> start getting online sales right away without having to pay, you know, Google or Facebook for ads. [09:53] That makes a ton of sense. How many unique website hits a month does Shopteaks get? [09:57] >> So it gets, like, 200,000 unique hits a month. [10:01] That's not easy. How did you learn how to do SEO and content marketing and get traffic? [10:05] >> So a lot of it was, I'd say luck that I was put into the position in 2020 because a of it was done for us. But a lot of it, I think, I would attribute to the network effect. So we have like 500 boutiques selling on the marketplace. So with that comes a ton of recognition from the owners, the employees, their customers, things like that. And then there's a ton of product listings. So we have 60,000 [10:27] >> active styles and we have everything from a no name brand that you've never heard of before to big brands like Birkenstock or cool brands like Queen of Sparkles and Buddy Love and things like that. Mhmm. And so we need to rely on the boutiques to do all the merchandising and the product descriptions and things like that. [10:43] Help me understand, I mean, did the founder of the company not wanna be involved anymore or what happened there? [10:50] >> Yeah. So she has a family now and she was going on her third kid, I think, at that time. I think she gave it ten years and just I think it was mutual. [11:02] Interesting. Yeah. This is Olga. She, I assume, owned a 100% of the company until she sold some to VCs? [11:08] >> Well, it was VC backed for a while. So I don't know the exact splits or anything, but she definitely had investors, seed rounds, series a, things like that. [11:16] How much total have the company raised? [11:18] >> It was, like, 19,000,000 in total. [11:20] Oh, wow. Have you raised any more since you've come in as co CEO or no? [11:24] >> We have not. [11:26] Okay. [11:26] >> We kinda shifted to profitability, and we got there, which is great. [11:30] That's great. When did you hit profitability? Do you remember? [11:33] >> So last year. [11:34] Congrats. It's you don't seem very excited. [11:37] >> It's exciting, but it definitely changes the game a little bit. Right? We went from this, call it, like, high growth, like, aspirational startup going for let's get to Wall Street as quickly as possible. It's like, alright. Let's have a sustainable business where we know we can continue to grow sustainably, a little more slowly but still sustainably for years to come as opposed to, you know, let's just go for a grand slam and hit it or miss, [11:57] >> basically. [11:57] That's awesome. What so give me a sense of how merchandisers are paying the software arm of SHOT, so materialretail today. What what are they paying on average per month and what do they get? [12:07] >> So for, like, the, you know, base plan, call it, which gets you access to the full platform, to the marketplace, inventory management, employee management, some marketing tools, a website, and all that stuff, it's $1.25 a month. Then [12:21] $100,125 dollars? [12:22] >> $125 a month. And then we also have with that, the centerpiece of that is a POS system where they're running transactions in store. The boutique's [12:33] actually a physical? [12:36] >> Yeah, so it's iPad based, so everything's done on an iPad. We'll ship them a credit card terminal, get a receipt printer, barcode scanner, and you go to a retail store, you pick up a dress, the cashier scans it into the system, tells you it's $80. You insert your credit card or receipt gets printed. That's all us. [12:52] How much does that cost to you? Just hard goods cost upfront to ship that stuff? [12:56] >> Thousand bucks. [12:58] Interesting. That's the shipping cost plus the actual barcode scanner, card reader, the whole thing. [13:02] >> Yeah. And most of the time, the boutique pays for it. A lot of times, also, if the boutique is coming off of another POS at Shopify or Square, they'll have some of the hardware already because it's iPad based. A lot of us use the same stuff. As long as connected long as it can with Bluetooth, it'll probably work. So we also get a cut of the credit card revenue. [13:22] What percent? [13:23] >> Which is nice. So it depends on the boutique, but it's a minimal amount, let's say a quarter of a percent to a half a percent. But the beauty is we also have a deal with our credit card partner that they beat the merchant's current rates, so it's like a win win. They switched our POS, they saved some money on their credit card rates whether they're coming from Square or Global Payments or whatever, So we'll save them [13:45] >> money on the credit card rates and we'll also be able to get a cut, so win win there. [13:48] Interesting. That makes a ton of sense. And how many boutiques are paying for materialretail today? [13:53] >> So we have 200 boutiques who are using the like, full software suite and then, like, another, call it, 300 on top of that who are selling on the marketplace. We do also have a services arm of the [14:04] 300 are not paying the $1.25 a month? [14:06] >> No. No. [14:07] Interesting. [14:08] >> They're just Why don't you [14:09] require that? Why don't you require they pay the software for you in order to get to the marketplace? [14:13] >> You know, we try that a lot of different times. It just doesn't work. Yeah. Yeah. We definitely give better we we give better economics if you're a POS user versus not POS user on the marketplace. Lower commissions. People see your products more and things like that. [14:29] So the 300 that sell only on the marketplace, what like, what do you take from them? Like 10% of sales or how do make money there? [14:35] >> So we charge usually a 30% commission on marketplace sales. We do pay for shipping and things like that. So we end up making, let's call it 10% to the bottom line. For boutique on the mark on POS, we'll charge them 25% and we, you know, probably break even on most orders. [14:51] Yep. Yeah. That makes a lot of sense. And then can you give me a sense of, obviously, any marketplace, the big numbers, gross merchandise value, right, volume, right, over a period of time, what was your average GMV last year? [15:03] >> So it was called 2,500,000. [15:05] Okay. And would you consider that successful year, not successful year? [15:09] >> So I consider it a success because again, we shifted to profitability. It's really easy to burn money on the marketplace, especially when working on a commission and you don't have high margins. We could very easily raise that GMV, the trick is how do we raise it without burning cash. So it's a little bit hard for us because we don't have the same economics as a lot of other e commerce players, so we can't go out and [15:32] >> just do the standard stuff because let's say a Revolve or another big fashion brand, they're gonna work on let's say fifty-sixty percent margins, where we're working on 25% at the most for any of our expenses. I'm sure they'll have the same expenses when it comes to shipping and things like that, but they're working on, called, double the margins. They could have double the ad spend. And So just put that in sense, [15:55] Shoptix is your marketplace. You make money there off 30% cut. You did 2,500,000 of GMV last year there, so what does that work out to? Like $750,000 of top line revenue there, and you'll take 10% of that to the bottom line. [16:08] >> Yeah. [16:09] Or 30%. 30% of the $7.50 k to the bottom line. [16:12] >> Yeah. We pay for all the shipping costs, credit card fees, things like that. Is it then discounts? We give a 10% discount on the website. We pay for that, so 30% turns into 20%. Yeah. It's definitely not as pretty as it sounds. [16:26] Yeah. I know you're all in one. It makes a lot of sense. I didn't say it sounded pretty, by the way. I'm just trying to understand the margins. I hate this business because I had to I don't like dealing with multiple SKUs. I don't like dealing with hardware. I don't you know, boutique's quite a business all the time, but you're uniquely positioned to do it because you you eat your own dog food. You came from that [16:44] world. So it makes tons of sense. Did does that GMV model also include in store sales or just the virtual Shoptiques? [16:52] >> Just the the virtual Shoptiques. In store sales is much higher, so including, like, the whole ecosystem, it's, like, 75,000,000. [16:58] Oh, wow. Okay. So you do the majority. I mean, you do $7,072,000,000 in in store volume each year. [17:04] >> Yeah. But we don't get anywhere near the 30% cut of that, obviously. And that's just the GMV that we like, the process through our system. [17:15] Yep. Yep. Yep. That's the one where, like, we could multiply 72,000,000 times, would you say, point 5% or something like that? Yeah. Point two to point five. I mean, yeah. So on the low end, point two five of that would be what is that? 18,000,000, something like that in in your cut annual? [17:28] >> Point 25%, not 25%. [17:31] Oh. Oh. Oh. Oh. Oh. Got it. Got it. Sorry. A $180. Yeah. Way different. 100.25 on 72,000,000 would be a $180 of revenue there. Definitely. Interesting. When you think about expanding the business this year, can you increase your percentages, or is it all about just getting more GMV? [17:47] >> It's all about getting more GMV and merchants, and we have a services part of the business that came in a little bit after, and basically we take what we're good at and we layer it on top of our existing products, so we're really good at web design and call it e commerce marketing where our boutiques are not. We offer very basic email marketing and web design for those boutiques, and we charge them for it. So we've [18:17] >> been doing that for years, but what we're doing now is we're trying to partner with a bunch of our boutiques and take their websites to the next level. So let's say in my example, dueldornyc.com, Shoptix takes it over, runs the website for them, all design, all the marketing, all that stuff. They're still responsible for the merchandising, the product sourcing, that stuff, and can we grow their e commerce? Then in that case, we'd take a bigger cut. [18:43] >> And there's no expenses behind that, which is because we're gonna pay for shipping or anything like that. It's just the revenue share of the [18:49] So so, I guess, what percent of your last year's revenue would you attribute to your services arm? [18:57] >> Call it 15%, 20%. [19:00] Okay. So that's not small, that's getting up there. Is that generally decreasing or increasing year over year? [19:06] >> It's increasing year over year, but it's kind of bittersweet because we really want to grow the software because we install and as long as the boutique doesn't churn, we offer them good support and it's really profitable, whereas services, you got to do work every month. And we have it down to a science, but it's not sexy. [19:25] That makes sense. How many folks are full time at the company today? [19:28] >> So we have an interesting team. We have four full time in The US and then 14 full time in The Philippines and a few part timers in The US also. [19:38] Interesting. What functions do you have in The Philippines? [19:41] >> So customer support, graphic design, and, you know, other, call it, random tests. [19:47] Interesting. Interesting. Alright. What what what do you wish I asked you about that I haven't asked you about? Something you wish you could talk about but no one ever asks about? [19:55] >> Yeah. I think why why materialretail versus Shopify? [19:59] Okay. Why materialretail versus Shopify? [20:02] >> So you know what I'd say and what I really believe, I actually do this in my own life, is Shopify is just one size fits all, right? It's e commerce first, brick and mortar second. It's like jump in and figure it out for yourself, whereas materialretail is a very specific set of tools for a very specific customer. So brick and mortar first, e commerce second, everything's gonna be, I don't wanna say handed to you, but it's [20:26] >> designed specifically for you. So you come in, you customize it to your liking, and it's just ready for you. Super easy to set up, someone will really help you along the way as opposed to Shopify, just We take [20:44] >> pride in a boutique success because that's where we make more money. When a boutique grows, we make more money. When we can increase a boutique's sales online, that's where we make our money. [20:54] What's your goal this year, Elliot? What do you hope to grow revenue to? [20:58] >> So we wanna end the year with a million 5 in revenue and in real revenue, not GMV or anything, and we want to end 2024 with hopefully 2,000,000. [21:09] Now is that aggressive growth? Based off my math, make about last year about 750,000 on Shoptix, $300,000 on your software business. That's 200 customers paying $1.25 a month. That's 25 k of monthly recurring revenue. That's 300 k there, so we're at a million. And then you make another 180 k on your in store volume, so point two five percent of 72,000,000 GMV. So you are didn't last year you do about 1.2 or 1,300,000 already? [21:32] >> Yeah. [21:34] So why not be more aggressive on I mean, can you grow faster? [21:37] >> If we wanna take more risk and burn a little bit of money, probably. [21:40] Okay. So you can't grow faster without spending more money. There's no way to use creativity to grow faster. [21:44] >> There's definitely ways to be creative and grow more, but we are a very small team. Right? Mhmm. So we really have to be very focused and methodical with what we work on. [21:55] >> Definitely set 2023, at least the first six months, we set the table for the next call two years. We built a big replatform of our marketplace, we did a couple of big integrations for the POS, and now we gotta just take that to market, basically. [22:10] Yep. We're rooting for you. We appreciate you teaching us about your model and who you're serving. Let's wrap up here with the famous five. Number one, favorite business book? [22:18] >> Drive by Daniel Pink. [22:20] Number two, is there a CEO you're following or studying? [22:24] >> Yeah. Toby Latka from Shopify. Sure. [22:28] Number three, what's your favorite online tool for building materialretail? [22:36] >> I don't know. [22:37] Number four. [22:38] How many hours of sleep do you get every night? [22:41] >> Seven, eight hours. [22:42] Alright. And situation, married, single, kids? [22:45] >> Married, three kids under five. [22:47] Oh my gosh. You're busy guy. How old are you? [22:50] >> I'm 31. [22:52] Oh, you got plenty of energy. Alright. That's fair. I don't feel as bad anymore. What's something you wish you when you were 20, Elliot? [23:00] >> Just jump in right away. It's whatever you believe in. Just jump in and just pour yourself into it, and it'll work out. If it doesn't work out, just keep going at it because it'll work. [23:09] Shop ShopTeeks was launched back in way back in 2010. They helped merchandise or sell online. One of those merchandisers was Elliot's company called door la door at n y c dot com. They that company does 5 to 10,000,000 top line revenue, but eventually, said, you know, I like the software, and I like Shoptix more. Let me start consulting over there before you know it. He's now running it as co CEO of the platform. They make money [23:29] in three ways. They'd have a take rate on revenue that goes through Shoptix. They sell software called materialretail that folks pay a $125 for. Again, these these brand boutiques use it to grow their business. And then lastly, they actually ship POS systems, and they actually take a smaller percent flowing through those systems, 72,000,000 in GMV through those systems last year, hoping to grow their revenue, their total revenue, not not like some big GMV number, but their [23:51] actual revenue to about 1,500,000 this year with a small efficient team, which we level four full timers. We'll see what happens. Elliot, thanks for taking us this off. [23:59] >> Thank you. It was a great meeting. [24:00] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday, 1PM [24:26] Central. 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In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. [25:29] We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right. I'll be in the comments. See you.