Livestream sales are "QVC on Steroids" and turned this Alabama startup into a billion dollar business

7, 2021

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July 2021

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Mic Hensley doesn't wear a dress. His fans would die if he wore one, broadcasting livestreams on over a million phones and Facebook pages while making sales for Pink Coconut, which sounds like a club but is actually a womenswear boutique that he goes along with his wife Sheri in Olive owns Branch, Miss. "I'll put on a cardigan or a couple of handbags," says Hensley with a laugh. "But I try not to do that often because they just get inflated and want more."

Though that's not all they want more of. The livestream sale not only saved the Hensleys' business from falling victim to the pandemic. it has increased sales by 20 to 30 percent every month, which puts the Hensleys in a hiring mania that has now reached 48 employees, and the trend is rising. "When we started," says Mic, "somehow shot everything at the moon."

Widely referred to as QVC on steroids, livestream sales in the US usually feature a seller or influencer often demonstrating products in their living room (cables, tchotchkes and pets in full view) and staging online buyers in real time. Time video. Viewers can say hello or ask questions in comments that float across the screen, and the livestreamer will respond to them personally. Meanwhile, everyone watches a bubble that indicates the dwindling availability of the product until it sells out.

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It's already maddening in China, where live stream shopping revenue will hit $ 300 billion this year, according to Coresight Research. (The video productions there are more sophisticated and staged.) But the US market was pretty dizzy and was valued at only $ 6 billion in 2020. That could change. For one, Coresight predicts that the market will more than quadruple by 2023 as the pandemic helps accelerate existing cultural changes – especially as Facebook, Instagram, Amazon, Shopify, and TikTok have all strolled into the room in recent years are.

But none of these platforms is the one that catapulted Pink Coconut. The Hensleys and more than 6,000 other small businesses, mostly fast fashion, partner with a little-known company called CommentSold, founded four years ago by a serial entrepreneur in Huntsville, Ala. Never in his wildest dreams – or real nightmares – did this guy, Brandon Kruse, think he was in the women's clothing store. But here he is, a pioneer ahead of the tech giants trying to go "under the radar," as he puts it, and making a billion dollars in sales annually.

Livestream sales could be the future of online shopping. “And not in five years,” predicts Suketu Gandhi, partner at the global consulting firm Kearney. "It's been a two-year journey thanks to a virus called COVID." During the pandemic, we all got used to spending hours on video – sweating on Netflix, sweating on Peloton, or following influencers on TikTok. It's not a big leap to shop like this, argues Gandhi. Also, on the business side, the link between digital advertising and actual sales is slowly weakening. Add to this "the death of the cookie" – with browsers like Safari, Firefox and Google supporting hidden pieces of code that allow advertisers to track our online activities and contact us, and Apple lets iPhone users track personal information disable – and brands may be looking for new ways to reach customers.

Not everyone believes that selling live stream will be the solution. "We're trying to bring the kind of commerce that works in China to the US market now, but it's not that users are asking for it," said Juozas Kaziukenas, CEO of Marketplace Pulse, an e-commerce company Research company. "I think to most people it feels like a very obvious sale." It could work at the niche level, he says, but for everything on a large scale? "It's an uphill battle."

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Still, it could be a pretty lucrative climb. When a retailer hosts a livestream shopping event on their website, they can see conversion rates averaging 10-25 percent and even 40 percent, according to Ken Fenyo, president of research and advice at Coresight, who reports conversion rates for digital ads usually significantly lower. “People want to interact directly with the brand,” he says. “And for that entrepreneur or branch employee, it's a chance to bring their passion for what they're selling to life in an interactive way.” That can make a big difference, even for companies with small communities. "The amazing thing about our live streaming customers," says Kruse from CommentSold, "is how small the audience is compared to their sales."

Photo credit: Howard Rochelle with HR Elements

Without a repo man and an overbooked flight, Kruse would have had a completely different life at 31. The repo man showed up at 12 to take the family car after his father lost his job. To see that was like being thrown out of childhood for Kruse. “I wanted to determine my own fate,” he recalls. He started his first company in high school. By the time he turned 21, he had already sold DialMaxx, a telecommunications company, to MagicJack for $ 2.6 million plus a generous earn-out, and founded startups that did data storage for genome sequencing labs, call alert systems for the state of Alabama and various other things he could never explain at a party.

The overbooked flight would change that. In 2012, Kruse agreed to do some telecommunications work for Mitt Romney's presidential campaign. It meant teaming up with an old customer who brought his assistant, Amanda Halpin, to Huntsville on a visit. After being ignorant of Kruse's courtship attempts for five days, Halpin only accepted his invitation to dinner because her flight home was overbooked, where she finally picked up on her ahi tuna salad at the bougiest steak house he could find. A year and a half later, she moved to Huntsville to be with him.

By now, Halpin had become a nurse in the emergency room, but she had an oddly thriving sideline selling clothes on Facebook. She bought the things she liked wholesale from vendors on FashionGo, where the minimum order was typically six. She'd keep one for herself and sell the other five for a markup of $ 8 or $ 10 – still well below retail. After some experimentation, she found success with what is now known as "comment sales", where she posts photos of the clothes on her Facebook group and followers would comment on "medium sold" (or whatever size). She called her online store, Discount Divas, and soon so many of her colleagues had become customers that she took over a bank with lockers in the emergency room that she turned into makeshift mailboxes for her orders.

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One day in 2014, Halpin showed up at Kruse's office to talk to him about the growth of Divas. He worked in an old school building that he had converted into a business incubator called Huntsville West. Halpin figured that maybe she could be part of it.

Kruse couldn't imagine that. He was a telecom guy – Huntsville West was for technology Start-ups. "Do you have anything else?" he asked her. “Because women's clothes will be hard for me to figure out. I mean, you are literally being crushed by the big ones. "

"Do you think I can't do that?" she shot back. "I'm going kill I'll prove you wrong. "

“And she did it,” says Kruse affectionately. Halpin moved Discount Divas to a 50-square-foot closet in Huntsville West and hired her first employee to do invoicing and a 16-year-old named Madeline Daye, who came part-time and hung clothes on hangers. As they got busier one day, Halpin brought a striped dress with a tie around his waist to Daye and asked, “Can you try this on and make a video of just talking about how it fits and how it feels? “After that, she kept telling Daye to do more. "I literally hated it," says Daye. "I would go home at night and cry."

Halpin didn't know that at the time. All she knew was that the videos were slowly starting to work: that she had made $ 8,000 in the first year; now sales jumped to $ 30,000 a month. "Boxes of products came out of the closet and infiltrated the coworking space, so to speak," remembers Kruse. "When you see a company getting so busy and growing, it's super motivating to be a part of it."

Kruse also noticed that his girlfriend was up all night with her Google Sheets, trying to figure out who had paid and who hadn't, and if they didn't pay who was next. He had always found it difficult to leave out a problem that he could solve (and he was in love with her – that was it). “I basically jumped into entrepreneurial mode,” he says. "I was like, 'Let me write a program for you.' The joke is, I'm still working on it."

In April 2016, Kruse set up an e-commerce system for Halpin and the two married. Soon Discount Divas was making $ 100,000 a month in sales – and Halpin, who changed her last name to Halpin-Kruse, stopped grooming. Based on their success, Kruse created a platform for several retailers in 2017 and named the company CommentSold as a tribute. This year, when Kruse was thinking about ways to attract other customers, Divas' sales soared to $ 1 million per month.

"When I saw that Discount Divas had an automated system, honey, I was on a detective tour to find out where it came from," says Lorie Beth Thomas, who runs a store called the Kaley Jase Boutique in Windsor, NC nowhere "as she puts it). She was also an emergency room nurse and became one of CommentSold's first customers.

The company grew quickly. Kruse charged his customers a subscription fee (now between $ 49 and $ 149 per month) and took off too
3 to 5 percent of their sales. But in 2018, a hiccup would have filled almost anything and then provided a crucial insight. CommentSold – which at the time was nothing more than an e-commerce platform – primarily made it easier to sell on Facebook. But during Facebook's broader investigation into how outside parties used its data following the Cambridge Analytica scandal, the social network somehow blocked CommentSold from its system. "For one week, our customers' sales fell by 80 percent," says Kruse. “You have families to support. You have mortgages. And they were very upset. It brought us to our knees. "

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Kruse gathered his 25 employees and told them to drop everything and start calling and emailing anyone they could find on Facebook. He booked a ticket to San Francisco with dramatic visions in mind, even being arrested in the company parking lot if it was necessary to get someone's attention. Fortunately, his team found a random group chat with a Facebook employee's email address and picked it up again.

That changed Kruse's business approach. He had developed a mobile app for CommentSold, but few people used it. Now he was trying to roll it out quickly to all retailers so they could sell directly to customers. His customers would no longer be bound by the rules and unpredictability of Facebook. He said to them, “You have these consumers. "

The app turned out to be a smart move, but things were about to change radically. In 2018, that same year, Thomas, the North Carolina boutique owner, pinged Kruse with a crucial message: "Hey, I just made a live video with CommentSold on Facebook."

That confused Kruse because the tool didn't to do Live video. But Thomas, it turned out, had seen someone make livestream sales on social media and she wanted to try. So she managed to trick the system with CommentSold's e-commerce platform to facilitate these sales. She suggested that Kruse think of ways to make it easier.

Kruse knew that livestream shopping was big in China, where influencers stood in front of the camera eight hours a day selling their favorite products in online malls. But would it work here? Who would actually watch live video for an hour and buy products?

Nonetheless, he developed a way for retailers to broadcast livestreams to their Facebook fans on CommentSold, and Divas and Thomas & # 39; Shop started doing that. For example, they would go live every Thursday at 7 p.m. and for an hour or two about their families, the progress of the keto diet, the latest pet bird mishap, and how they loved it, how they wore that particular dress they wore and could be yours for $ 38 – and, by the way, there are only three left. You could see all of the comments scrolling in ("What's the size?" "Can you machine wash it?") And responding right back. They also received a notification that, for example, Sally was a new customer and Josie had bought a lot so they could shout, “Hey, Sally; Welcome to the group ”and“ Oh, hello, Josie; nice to see you again ”- a feature that Kruse added after realizing that the personal relationship was an important factor. They modeled one item at a time as people commented "Sold". Sales exploded.

Photo credit: Howard Rochelle with HR Elements

When CommentSold's live streaming capability began, Kruse often turned to his mentor, Jim Hudson, for advice. (The two met in 2012 when Kruse loved the energy of Hudson's Genome Research Center so much that he lied and pretended to be part of a biotech company to have his office there. "When Jim found out," says Kruse, “He thought that was great.”) “Jim was great at nailing down what has to change when you reach certain milestones,” says Kruse. “And that was of inestimable value to me because it is so difficult to see when you are in the middle of it.” Hudson asked Kruse how many employees he had. "When I said 15, he said, 'Oh, you're getting closer to my number,'" says Kruse. The number was 21: When you have that many employees, Hudson believes, you can no longer rely on everyone in your company to know everything. You have to hire specialists. "And actually," says Kruse, "at 21 I'm like, Even the people who were perfect in the role before are screwing up now.

Hudson's next number was 75. It was harder for Kruse to swallow. “Jim said, 'At this point you need to have a COO – you Really You need someone who is the operative head so that you can step back as a visionary, ”remembers Kruse. “I said, 'But I love to operate.' And he said, 'No, you don't. You really love to build. ‘"

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Kruse felt like he was losing touch with his company, but he followed Hudson's advice. The man he hired as COO was Andy Smith, former co-founder and CEO of Daily Burn training company. They knew each other from the small business community in Huntsville. At that time, Smith took a year off to play golf and got no better at it. “I'll be the first to admit, 'Oh man, I'm not really excited about selling women's clothing online,'” says Smith. “But what I liked was that there weren't any investors. And when I played with the tool, I thought it sucks – it was broken in many ways. So I said: 'This is just a great opportunity.' ”After the operational details had been clarified, Kruse was able to get his customers right to the point in order to really equip the platform. Soon, his retailers could run all of their social e-commerce business on CommentSold, with human experts to guide them.

Kruse tried all the time to keep the company under the radar. "We wanted to grow up and make sure we were building the right thing and being ahead of everyone," he says, "because someone could have raised a lot of money and definitely got to market faster."

But it was getting harder to stay invisible. In 2019, Amazon made livestream sales possible for influencers and brands on its marketplace. Since then, Facebook and Instagram have also been experimenting with it, and Walmart has partnered with TikTok for one-off shopping events. Google also accesses it. Brands like Nordstrom and Estée Lauder are playing with the medium. And other independent apps and platforms such as TalkShopLive, Bambuser and ShopShops USA are coming onto the market. "We have poured more than $ 100 million in capital into the area since December," said Chris Erwin, founder of RockWater, a market research and strategy consultancy.

The pandemic has only made it more attractive. For CommentSold, the gross value of goods increased by 150 percent in 2020. Of the more than 6,000 customers on the platform today, about 150 generate sales in excess of $ 100,000 per month; some do more than $ 1 million. Now Kruse plans to expand into other types of businesses.

"I mean, there's no way it's going to be hypercompetitive," says Smith. “But that keeps us up at night. We really want to win. "

This March, Kruse had something else to keep him awake: a three-month-old son named Camden. Divas had sales of $ 2.7 million that month. And Madeline Daye, the 16-year-old who cried on her first videos? Today she is the sales manager and one of the best livestream salespeople in the industry. She just bought her first house when she was 22 years old.

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“Compared to my other companies, it's so cool,” says Kruse, “because I was only trying to solve the problem for one person: What do I have to build to make your life easier?“That kind of thinking still drives him, even on the scale that CommentSold has reached. It now has a Facebook group for its top 100 customers where it posts designs for new features and asks for feedback. And Kruse just rolled out a policy for its now 170 employees that says everyone must spend one day per quarter doing things like onboarding calls and support strategies to make sure they know how the retailers work.

People always ask when he's starting a new business. "I miss it in a strangely sadistic way – the pain," Kruse admits, "because a startup is very exciting." However, his focus remains on solving problems for the CommentSold community. "Customers know what they need," he says, "and you just have to listen to the pain and be obsessed with it."

Photo credit: Howard Rochelle with HR Elements

Lights, camera, live!

Do you want to try to increase sales through livestream sales? You don't need an influencer; All you have to do is overcome your own awkwardness in front of the camera. Here's what the retailers learned from CommentSold to work.

Be consistent.

Think of live streaming like an old TV show: you want to strengthen the viewing habits of viewers. Go live at least once a week, on the same day and at the same time – let's say 8:00 p.m. Monday and Wednesday.

Create FOMO.

You have to create a reason for people to tune in – and buy! It doesn't have to be discounts or freebies. Having new items every time is important and limited quantities will increase sales.

Be yourself.

The more authentic you are, the better. “Don't worry about a set with cameras and several cut feeds and the like,” says Kruse. "If anything, we've actually seen these perform worse because it almost feels like you're being sold."

Get personal.

Make your customers feel like they are hanging out with friends and shopping. "We're going to see certain names and yell at them like, 'Oh, you're here!" "Says Lorie Beth Thomas, owner of the Kaley Jase boutique in North Carolina. "It creates a community."


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