Case study: Scaling back to survive, Courier Media, published November 2020
SCOON, founded by beauty and fashion world alumni, Guusje Wentrup and Marloes Garben, is an online marketplace for conscious fashion and clean beauty products.
In 2019 — their first year — they focussed on audience testing and their marketing mix. They tailored brand assortment with customer insight sessions to clarify their target audience. The intention was to demonstrate aggressive marketing in February and March of 2020 and fundraise later in the year.
‘When Covid hit…our world was obviously upside down,’ explains Wentrup. They knew they had to invest heavily to reach their KPIs and attract investors in the summer. However, investment meetings they had lined up were postponed or cancelled. Without investment, SCOON would chew through funds too quickly. ‘We scaled back, we decided to bring our burn-rate down drastically to see if we could stretch the lifespan of the company,’ Wentrup adds.
Extending the runway
Marketing was the first expense to go; all advertising activity ceased. Then, SCOON downsized content creation, which meant no longer creating in-house shoots for web and social channels. Instead, they recycled what they had and used brand-partner content, which ‘makes much more sense.’
Tech developments were reduced. Key enhancements to the user-end of the marketplace went ahead; the rest were put on hold. Luckily, SCOON operates on a drop ship model. They scrapped the office lease and the team worked from home.
Despite minimising expenses, it wasn’t enough to save the company. A low burn-rate gave few interesting KPIs, therefore limited fundraising opportunities. In response SCOON successfully applied for Corona Bridging Loan, a specific start-up government loan that maintained momentum.
Change agility
With retail stores closed and customers spending more time online, SCOON realised a unique opportunity to flexibly respond to challenges. Upon receipt of the grant, they sank money into what worked well.
SCOON hired a social media expert to take advantage of low advertising rates and capture their target audience. It yielded positive impact on click-through and conversion rates. ‘In March there was nothing, in April we started slowly investing and you see some traction…as soon as we had that grant we were able to invest heavily in May, June, July, every month was getting better.’
Ultimately, scaling provided SCOON community and customer insights; now a long-term focus of the business. Already strong, Covid strengthened their stakeholder partnerships, ‘I think these past months have only improved that.’
Images courtesy Scoon Store