MBA2413 Business Breakdowns: True Classic- A New E-Commerce Brand Stealing Ideas

0:09Heyo! Welcome to the$100 MBA show because a better business begins with you. That's why we deliver practical business lessons. I'm your host, your coach, your teacher, Omar Zinhome, and today is a Business Breakdown episode. Business Breakdowns are a new segment of the podcast where we break down successful, innovative businesses doing amazing things in their market. I'll show you exactly what makes them successful and how you can do the same in your business. It's like a documentary, How to Baby with an Online Course. If you haven't listened to our first business breakdown, Virgin Voyages, and how they reinvented cruising by being completely different, make sure you listen to that episode after this one.

0:51Today's business breakdown is True Classic, an e-commerce brand that is winning by stealing what works in other industries. By the end of this episode, you'll learn five compelling strategies that True Classic used to become one of the fastest growing e-commerce brands, making over a quarter of a billion dollars in revenue in just a few years. Founded in 2019, e-commerce brand True Classic was started by Ryan Barlett, the CEO of True Classic, and two friends of his, Nick Ventura and Matthew Winnick. The three of them pooled their money together to start True Classic with just$3 ,000. They went to$100 million in revenue in just two years, bootstrapped and profitable.

1:37But that's not the craziest thing about their story. They got started the first two years by selling one product, solving one problem. You see, most t-shirts look horrible on men, unflattering in the chest area and arms, and too tight around the belly. So they decided to create and sell the perfect t-shirt for men. And that's all they sold for two years and$100 million in sales. One product with one skew, six colors. That's it. Today, they sell a whole lot more than t-shirts and are a huge success. But how did these three guys turn$3 ,000 into$250 million in sales? How did they grow so fast with so little?

2:20What did they do differently to drive their explosive growth? What secret tactics did they steal from other businesses to do so much with so little? And how can you do the same? Let's find out. Let's get into it. Let's get down to business.

2:41Retail and even online retail is notoriously difficult. The margins are thin. Customers are hard to please. the overhead is monstrous and the marketing is hard to crack. I know this firsthand because I ran my own custom clothing line for men for years in the late 2000s. Inventory, warehouses, so many products and not enough customers. This is why when I came across True Classic, I knew I needed to do a business breakdown episode. True Classic is a value clothing brand for men. They sell products like t-shirts, casual pants, chic hoodies, and stylish outerwear. Now, online shopping or e-commerce is nothing new.

3:17It's been around for over 20 years now. But it's really hard to do well as an independent, self-funded company. Sure, Amazon, The Iconic, Target, they can do it with hundreds of millions of dollars in funding. But what about three friends with just$3 ,000? Well, True Classic did it, and I'll show you how. Today's episode is more than about the story of True Classic. It's about what happens when you steal ideas and strategies that work outside your market and apply it to your own market. True classic to growth, marketing, sales, and product strategies from industries like SaaS, software as a service, course creators, gaming, bloggers, creators, and influencers, and bootstrap their way to a quarter of a billion dollars in revenue.

4:06I went through their whole sales cycle. I studied it. I took notes from my first marketing touchpoint to point of sale to delivery to reordering. And let me tell you, these guys have their customer acquisition and sales process dialed in better than any other online brand I've seen. I'll walk you through the whole process and share with you the strategies they use from other industries to become one of the fastest growing e-commerce brands. But before we get into all of that, let's explore what makes an e-commerce business successful. E-commerce is basically three businesses in one. A physical goods business.

4:46This means you sell real tangible products that need to be shipped to customers. This is unlike software or digital products like online courses or music that can be delivered instantly online on demand over the internet. This means you have to deal with suppliers to create the product. You have to deal with shipping and delivery, warehousing the product. These all need to be done right for you to have a chance at success. You're also an online business. The experience your customers have on your site, your online store, will make or break your business. This means you need to create a killer website and a store that is not only good looking, but easy to use.

5:28This is kind of like creating an easy to use web app or social media app that we all use every day. Thirdly, you're a service-based business. You need to speak, chat, email with customers every day to close sales, deal with after-sales issues like returns and exchanges, and handle complaints and reviews just like service-based businesses in your local area, like a hairdresser has to. You're serving and trying to delight your customers 24-7. I want to start by pointing this out, that an e-commerce business is really three businesses in one, because most aspiring entrepreneurs think that selling physical products online is an easy business to start.

6:06Now, it might be, but it's difficult to do right, and it's really difficult to stand out. It's also very hard to grow and scale because of all the competition and all the plates you're spinning constantly. This is what makes True Classics' journey so incredible and a real masterclass at leveraging practices from other industries to be successful with all three parts of an e-commerce business. So let's jump into those five strategies and practices that True Classic used from other industries to dominate their market. Let's start with strategy number one, building an unstoppable founding team through self-awareness.

6:52CEO and first founder of True Classic, Ryan Barlett, had an eye for business and loved marketing and sales, but didn't have any experience in fashion. He loved looking good, but didn't know what it took to build a fashion brand. Ryan also didn't geek out about the numbers and finance. He was more of a big picture guy. Ryan was self-aware enough to know that he can't do this alone. He knew he needed help if he was going to build something great. That's why he teamed up with Nick Ventura, who has been in the apparel game for a long time and sold his own apparel business. They then teamed up with Matt Winnick, who was a startup and finance whiz.

7:33This created an unstoppable team of founders with no major weakness. This is a familiar story in big tech. Steve Jobs was a great visionary, sales and communications master, while his co-founder, Steve Wozniak, was a technical genius and a champion of streamlined technology. The founders of True Classic knew that the founding team and their skill set would give them a leg up, like many tech companies they admired. The most committed people in your company need to be able to do everything at the start, because they won't have a choice. They'll have to do it. Strategy number two, nail your MVP before you expand.

8:14MVP stands for Minimal Viable Product, and MVP is the simplest solution to a singular problem. Amazon started by only selling one thing, solving one problem, making it easy to buy any book at any time delivered straight to your door. It became the world's largest bookstore. And then they became the world's largest retail store, period. But they started with just books. True Classic also followed the MVP model and only sold one crewneck t-shirt their first two years. They became known for the home of the world's best t-shirt for men. All that you could buy from their website was one t-shirt offered in six colors.

8:55They nailed their MVP and because people loved that one product they focused on, they were hungry for what's next. So when they rolled out their new products like Activewear and Men's Bottoms in 2022, customers flocked to their side to buy their new products. They knew that if their new products were anything like their t-shirts, with the great fit and feel, then they're going to be happy customers. Eyeball and Wear several of True Classics products, and their quality in both fit and fabric is shockingly good. It rivals brands like Lululemon, Uniqlo, and Nike. I would even say their products are better in many other ways that I'll mention a bit later.

9:33The lesson here is to be great at one thing first. Nail it. Own it. For True Classic, it was the classic crew neck t-shirt. What is your game-changing, minimal, viable product? Strategy number three. Digital ads and retargeting done right. Before you can become a customer of any business, you first need to know that they exist. and you're probably going to want to know why you should even care to check them out. True Classic does this with very simple yet compelling ads on Facebook and Instagram. In my research, I found out that True Classic spends over$100 ,000 daily on meta ads. But it's not just blind spending.

10:14True Classic serves different ads at different stages of the buying cycle. For example, the first ad I got was further t-shirts as I was looking for a high-quality black t-shirt. The next ad I got served was after I visited their site. I was looking at a pair of their casual pants. The next time I was on social media, guess what I saw? I saw an ad about their pants, the last product I saw on their site. I then went back to their site and added a few items to my cart, but I didn't check out. This is quite common for people that do online shopping. But what True Classic did is that the next ad I saw on social media was about how their products compare to their competition.

10:52They also showed me some customer testimonials and reviews of their products. This is very powerful as they're aware that I'm considering buying their products. I wouldn't add them to my cart otherwise. But I'm still not sold. True Classic knows that case studies and social proof are powerful tools to close sales. These ads helped me make an informed decision and keep True Classic top of mind for me. Their ads were elegantly designed, and they gave me just enough of a push without being pushy to go back to their site. Digital ads and retargeting are nothing new, but they borrowed the same sequence of ads that Amazon does, even showing you product-specific ads based on the products you browsed on their site.

11:37They also use social proof and testimonials in their ads. This is very, very popular with successful online courses and coaches that sell their programs during a launch. Absolutely brilliant. Strategy number four, gamifying the buying experience. This is one of my favorite strategies. Buying from True Classic felt like an adventure game with levels to unlock as you added things to your car. As you added items to your car, you saw on the right side panel of the site the different gifts you can unlock if you reached certain levels of spend. Level one, spend$100 and get free shipping. Level 2, spend$150 and get a free pair of boxer briefs.

12:20Level 3, spend$200 and get a free active long sleeve shirt. This made it easy to justify adding a few extra things to your cart to round up to get some free gifts. This is a strategy from the gaming industry, getting you to play longer to earn badges or virtual currency that you can use in in-game activities or upgrades. Some games flat out entice you to buy with real money their virtual currency to upgrade your experience in the game. True Classic knows if you have items in your shopping cart, you're in the buying mood. This is the perfect time to encourage you to buy a bit more. This is incredibly important in the retail world because average revenue per customer is the name of the game if you want explosive growth.

13:08Let me break it down. The difference between 1 ,000 customers spending$100 on their order and$150 is$50 ,000. That's 50 % more revenue. But to each individual customer, the difference between spending$100 and$150 is not as big of a deal or a big difference. So pushing average revenue per customer a little bit higher makes all the difference for the business. Very powerful. Strategy number five, follow up that works. So I bought a bunch of True Classic gear and you can check out my Instagram for my unboxing video and a few extra lessons. I'm Omar Zinhome on Insta. So after I made my purchase online, they kept me up to date with the delivery of my order via WhatsApp.

13:55I love this because most people associate WhatsApp with a communication tool with friends. And you tend to check your WhatsApp messages if you use the app. True Classic knows the sale is not done until I receive the order and I'm happy with it. So once my order was at my door, they sent me an email telling me that my order has arrived. And in that email, they had a big button that said, reach out. Above that big button, reach out, it said questions, concerns, returns. Reach out to us at any time. We want you to love it. So even before I even got to the door, opened my order, I felt taken care of.

14:37I knew that even if it didn't work out, I can easily go to my email and click that big button that said reach out. And things would be sorted out. This is great service at all costs. This is a level of service and a strategy from companies like Disney that have policies around delighting customers. Here's an example. Did you know that in Disney parks, if a staff member sees somebody drop their ice cream on the ground, it's their policy to go out of their way to replace the ice cream? They want to make sure that your day at Disney is not ruined by any means possible. And true classic is making sure that I am happy.

15:17I am satisfied. They know that they're in the service industry. A few days after I received my order, I got a short and fun message on WhatsApp that said, Hey Omar, we miss you. So we're giving you 20 % off your next order. Don't be a stranger and don't miss this special offer. You won't regret it. I mean, these guys are retargeting me on WhatsApp. I love it. There you have it. Those are the five strategies that I pulled out, extracted from the True Classic story so you can do the same. True Classic is just getting started. They're barely four years old, but I'm confident that their success story will continue.

15:57But will yours? Will you apply what you learned from their success and from today's business breakdown? That wraps up today's business breakdown episode. I hope you loved it. Let us know what you think of this type of episode, this type of lesson. Leave us a rating and review on Spotify or Apple Podcasts. We want to hear from you because we have other business breakdown episodes in the works. So give us a review and tell us what you think. And while you're at it, don't forget to subscribe or follow so you get our next episode automatically. Thank you in advance for being amazing listeners and supporters of the show.

16:36Before I go, I want to leave you with this. True Classic doesn't only do good in business. They also do good in the world. 40 ,000 shirts per month are given to homeless shelters. I actually had to do a little bit of digging to find this out. So it's inspiring to see a business give back without using it as a marketing ploy. Very inspiring. Thanks so much for listening. I'll check you next time. Until then, take care.

17:16Thank you.