Luna Spas

www.lunaspas.co.uk

Whirlpool baths, heated towel rails, bathroom mirrors, cast iron radiators, column radiators, fireplaces and granite hearths: who’d have thought people would be buying such bulky, expensive and hard-to-ship items online even a few years ago? But these are just some of the products sold daily by the two brothers, Nic and James Auckland, from their rapidly expanding chain of ecommerce stores: Luna Spas, Luna Home Store, Trade Radiators and Tap Buyer, all powered by Actinic Business Plus. This case study tells how the pair turned £1 into a multi-million pound business empire. And it also illustrates the advantages of adopting a niche ecommerce strategy and examines the impact of the recession.

Once upon a time

The story began in 2004 when Nic (then aged 24) saw how the luxury bathrooms installed in the property conversions he was involved with gave the ‘wow’ factor that made them fly off the books. But would whirlpool baths sell online? To find out he tested the waters (so to speak) with a £1 advert on eBay and got a big response. So Luna Spas was born, and with help from his elder brother James, a graphic designer, the business has blossomed.

Quickly outgrowing their eBay marketplace, they launched their own Luna Spas website in February 2005. Just two years later, in 2007 the brothers expanded beyond the bathroom into the rest of the home with the Luna Home Store site. Nic explains,

"We wanted to appeal to a broader range of customers who are happy to shop from their armchairs for larger items like period fireplaces, mirrors, home and office furniture and lighting. We soon had manufacturers approaching us to represent them and it made us think about more shops."

Nic and James saw the advantages of specialising:

"Niche sites based around one product group are easier to market. The customers also benefit because they can review a greater selection and being more knowledgeable, we can advise better." says Nic.

Thus the Aucklands set up their first specialist website, Trade Radiators, in 2008, quickly followed the next year by Tap Buyer.

The technology

All the ecommerce websites are run on the latest version of Actinic Business Plus software.

"It is a very stable, mature platform and after a training day I felt confident enough to build the sites myself," enthuses Nic. Brother James values features like,

"the anti-fraud screening which alerts them to potential fraudsters. And the Actinic Payments card processing has proven slicker and more cost effective than other payment providers for the numbers of orders we get. Plus we can manage all sales, whether by web or phone, on a single system."

Online benefits

Ecommerce has several advantages over traditional retail as Nic has discovered:

"A key plus for us is being able to develop and test new ideas very quickly, be those for whole new ventures or just fresh stock. And we can easily redesign site pages to follow trends, fashions or just seasonal events, without expensive shop re-fits."

Not to mention the possibility of accessing overseas markets; they’ve shipped (smaller) items as far afield as Auckland in New Zealand!

Furthermore, the ecommerce model allows the two to operate the businesses smoothly despite the fact that James is in Nottingham handling the finances while Nic lives in Glasgow running the front end. The business has gone from a totally virtual set-up to an office with three staff in central Glasgow, including an office manager hired in Autumn 2009. Julie Morrison manages all four sites on a day-to-day basis and frees up the guys for developing new ideas.

But despite listing over 10,000 lines they have minimal overheads – another bonus of online trading. Nic explains:

"We only hold stocks of very popular lines including whirlpool baths, heated towel rails and designer radiators, as many of the goods can be shipped straight from the manufacturer. We have developed a multi-pronged approach utilising local and national courier networks allowing us to distribute a large range of products to the whole of the UK and beyond."

Establishing trust

However shopping online isn’t all rosy. For the customer there is often a frustration with the impersonal nature of the experience and they need to feel secure before spending a lot of money. The Luna staff make sure their visitors are reassured:

"Many are surprised when they call as they imagine we’re a big, faceless outfit. They are delighted when we take an interest in their project and can give advice, almost consultancy, on what style, colour or sizes will work best in their scheme. We look after the customer as an individual; it’s not just about the sale for us. And the result is that people come back when they are doing further renovations and also recommend us to friends and family,"says office manager Julie. Nic continues,

"People interested in refurbishing their homes with focal features like vertical slimline radiators, cast iron fireplaces and home spa baths, will spend a long time researching as they are spending hundreds, or even thousands. So it’s important to give them detailed information and good images that display fast, even if visitors browse our sites from a smartphone or an iPad. We find our detailed videos of the spa baths in action help too. Other mechanisms for building trust include a price match on branded goods, long guarantees, answering email and phone queries promptly, and of course testimonials from happy customers. In life things don’t always go to plan, but we’re 100% committed to sorting out any problems and learning from them, and we always take the customer’s side,” assures Nic.

The challenges

But ecommerce presents many challenges that Nic and James have had to overcome. The relentless competition, especially on price, is a big issue. They have countered this by streamlining their business processes, cutting costs by sourcing products direct from manufacturers, and using the local branches of national plumbing chains to deliver some of the more awkward products.

Silver lining

The economic slump isn’t all bad, home owners are staying put and doing up their property instead. So to attract the more price-conscious buyer, Trade Radiators has introduced lower priced ‘own brand’ models and energy-efficient products like aluminium radiators that require less energy to run, and electric towel rails with a thermostat giving a two hour drying cycle.

"Our designer ranges like home spas and jacuzzis have been unaffected by the downturn, and in fact our top-end customers are happy to pay more for higher quality finishes and longer guarantees,"observes Nic.

The Luna group is a good example of how the web enables entrepreneurs to build successful companies, even in a recession. It took just two years to break the million pound barrier and since then turnover has almost doubled year-on-year. Site traffic has tripled in the last three years with the four sites getting around 2,000 unique views daily.

“Our prices range from £3 to over £3,000 across our websites and the biggest single sale was £10,000-worth of cast iron radiators for a country house hotel conversion – we celebrated that day!” remembers Nic.

What next?

As for the future, the duo have seen the benefits of a niche strategy for marketing and customer experience, so they are looking at realigning Luna Spas and Luna Home Store along these lines. Plus adding more content and videos to bridge the gap further between the showroom and the online shopping experience.

Is it time you splashed out on your own ecommerce venture?