By Andrew Patterson
In the world of online retail Mighty Ape has quickly become New Zealand’s challenger brand to watch.
Started in 1999 by founder and CEO Simon Barton as a gaming retailer, Mighty Ape has morphed into one of the country’s fastest growing online sites based in Albany on Auckland’s North Shore.
Alongside books, DVDs and toys, the business still retains its focus on gaming but increasingly other categories are beginning to dominate including a range of household products recently launched as part of its new Mighty Mart offering.
Typical of e-commerce and technology based businesses, there’s an irreverent, quirky and almost casual tone on the exterior but scratch below the surface and it’s all about the customer.
Service, particularly delivery and order fulfilment, is king.
Looking for a name that could be themed around monkeys, Barton, who goes by the title of Chief Gorilla, says he spent days researching a domain name that also included the ubiquitous dot com in its URL before finally settling on Mighty Ape.
Growing up quickly
With gorilla posters adorning the walls, a warehouse chock full of toys, video games and even an indoor cricket pitch that has played host to the Black Caps (Barton admits to being a huge cricket fan) it’s not hard to see why his four sons don’t mind hanging out with dad after school and why Mighty Ape’s 80 staff have plenty of reason to enjoy going to work each day.
Barton freely admits that even he’s surprised at how quickly the business has grown.
“We started out as a traditional retailer more than 10 years ago selling video games as the internet itself was really just getting started. We used to get lots of customers calling us wanting to know when particular games were coming out and so we decided the best way to handle that was to build a website and publish all the release dates in advance.”
“That proved to be very popular and then we saw what Amazon were doing and we thought selling goods online probably made sense so we turned that into an e-commerce site which ended up being mildly successful.”
“DVDs then started to become really popular so that was the next category we added and we watched Amazon getting bigger and bigger and so we thought awesome, let’s try and be like them.”
However, at the time the business was tiny in comparison to its U.S. role model.
“All of our DVD stock was stored in a couple of cupboards in the garage at home so packing was pretty quick and it didn’t take long to get the orders out the door each day.”
“Then in 2008 we decided to launch books, toys and music CDs and from there it’s really been a case of adding more categories and getting bigger.”
“Amazon has really set the benchmark for online retail, so for us it’s always been about aspiring to be as good as them.”
The tipping point for the business came in 2008 following its decision to change its name to Mighty Ape which included a redesign of its website that saw it switch from black to white.
Barton says that had a huge impact on the business.
“The day that we went from the dark games site to the much nicer white site with a more user friendly name our percentage of female customers for instance went from 15% to more than 50% in a very short time.”
“We were surprised because we had actually expected a huge backlash from customers because we had really gone from being a hard core gaming site to something much more mass market.”
“In the end the backlash was pretty minor and lasted all of a week.”
Customer Management strategy
Mighty Ape places a big emphasis on maintaining customer loyalty.
Scan the blogs and it’s difficult to find much in the way of criticism from customers regarding its service standards despite the challenge that goes with ensuring hundreds and often thousands of packages are delivered on time each and every day.
“We’ve got some amazingly loyal customers and we make sure we take care of them as best we can. Thousands of them are actually 100 plus customers which means they’ve placed more than 100 orders with us.”
“We’re still the biggest gaming site in the country and we want to maintain that speciality. Just because we extend into other categories doesn’t mean that we drop our existing categories. Our objective is to really nail every single category that we enter.”
So is there a typical Mighty Ape customer these days?
“Not really. It’s very hard to typify our customer base. The appeal is getting pretty wide and obviously we want to appeal to as many people as possible and I believe we are well on our way to achieving that.”
In what might be a threat to the media sector, Mighty Ape is yet another business that sees little value in the traditional advertising model choosing to spend the bulk of its marketing budget in below the line digital marketing.
“Trade Me has really set the standard in this area because they grew without spending any money on advertising. We could have spent money on TV but spending the money offline has been much more effective for us.”
“Our approach has always been that if you delight the customers they’ll tell their friends and that has been our number one marketing tool.”
“We use Facebook and Twitter extensively to make sure we stay connected. We also receive plenty of emails and phone calls from customers which has been one of the surprising features of our business. We’re actually in constant contact with our customers a lot more than if we had simply been a retail store.”
Turning customers into raving fans
Mighty Ape believes that in the world of online retail it’s all about converting your customers into raving fans.
“If you can do that then you’re creating both a happy customer and one who will attract others which in turn brings in new customers.”
“We have a range of performance metrics but our most important one is that we want all orders to be out the door by 4pm that day and therefore we work backwards from that point to make sure it happens. Any time that we’re not hitting that goal then we’re asking ourselves what part of the process is holding us up and trying to identify the sticking points.”
As for the future, Barton believes it’s very difficult to look more than five years ahead.
“It’s very difficult to look more than five years out. My only regret to this point is that we didn’t expand into Australia more quickly than we did.”
“I do believe that over time there’s going to be a lot more competition for sites like ours. In fact, I’m expecting there will be a lot more international competition generally and I think that should be very concerning for all retailers.”
“Right now we’re asking ourselves if we should be looking at expanding into the UK or the US because the online model means that you don’t have to be that big to be successful.”
“Our [stretch] goal is to get to $100 million in turnover and to get as big as we can as fast as we can in order to give ourselves scale."
“Potentially, we’d consider an IPO down the track, though I’m not sure if I’d be the one to lead it.”
Watch for more mini apes to materialise in the future.
|Sector:||E-commerce / retail|
|Annual growth rate:||50%|
|Fastest growing market:||Australia|
|Recent highlights:||NZ Net Guide Awards|
|Domestic : export sales split||80 : 20|
|Expect to IPO:||Possibly|
|5 year goal:||$100M turnover and 200 staff|