After failing to gain traction in a mass market and an ultimately unsuccessful pivot attempt, liquidators have been appointed to online retailer Shoes of Prey.
Launched in 2009, Shoes of Prey was a darling of the Australian start-up scene, enjoying strong organic growth and pioneering customisation in ecommerce. The business attracted venture capital investment from Khosla Ventures and Blue Sky Capital and formed strategic distribution partnerships with department stores David Jones and Nordstrom in the US.
However the company failed to gain mass market traction and in August 2018 the company announced it was no longer taking orders while it paused “to consider our options for the future”.
FTI Consulting was appointed liquidator earlier this month, after a attempts to find a buyer or improve the business failed.
Update 13/04/219: Kelly Trenfield, FTI Consulting Senior Managing Director, said they do not expect any creditors of the Australian entity to be out of pocket and any unredeemed gift certificates will be refunded.
“In Australia, we will commence a Members’ Voluntary Liquidation of Shoes of Prey Pty Ltd on a solvent basis and ensure the maximum return of funds to the US head entity as its sole shareholder. This will also involve a process to dispose of any remaining assets of the company including any available IP,” Trenfield said.
Yesterday Shoes of Prey co-founder Michael Fox has penned a post on Medium titled The Shoes of Prey Journey Ends, chronicling the rise and fall of the Australian ecommerce company.
According to Fox the business had attempted to pursue two new strategies: selling footwear to customers who have small, large, wide and narrow feet or using its factory to providing short, fast run manufacturing runs for other retailers and brands.
However, complicated operations, high fixed costs and price competition from Chinese factories worked against the 10 year old company.
“As with our customisation business, while there are strong early signs that the sizing and short run manufacturing markets might work for us, we’ve not been able to clearly prove that these customers are willing to pay us enough at a large enough scale to cover our fixed costs. And with the money we’ve already raised to date it hasn’t been possible to raise a round of funding to pursue these avenues,” Fox wrote.
A key learning, Fox wrote, was to better understand the consumer psychology when attempting to change their behaviour.
While early market research suggested the Shoes of Prey model would scale, ultimately designing your own shows failed to gain traction it needed to keep the business afloat.
“The customisation niche are creative people who enjoy spending the time to create something unique which they can wear. We learnt the hard way that mass market customers don’t want to create, they want to be inspired and shown what to wear,” Fox wrote.
“If we’d been able to understand that the mass market customer didn’t want to customise, we shouldn’t have gone down the path of raising venture capital and instead focused on building a strong but smaller business serving our niche of women who wanted to customise, as we did for the first 2.5 years of the business.”
Fox offered an alternative lesson to start-up founders: “to pick a business that doesn’t require changing consumer behaviour.”
Co-founder Jodie Fox is currently writing a book on the Shoes of Prey journey, Fox wrote, which is scheduled to be released this year.