I met Luke Jedeiken a few years back when we were both training at The Harrington Street Boxing Gym. Back then Luke was working for an agency doing strategy or something like that, so I was impressed when I heard that he was one of the dude’s behind hip new online retail store, The Superbalist, and invited him to meet up for a beer.
But before we talk about The Superbalist, we must first discuss group buying and the company’s former life as Citymob.
Okay, so Luke left the ad game after two of his buddies – one was an engineer doing high level tech for MTN, the other a suit at Allan Gray – started a group-buying thing based on the fastest growing business of all time, Groupon.
Groupon was one of those darling companies and soon every blue chip company – Naspers had Dealify, Avusa had Zappon – was doing their own version of it. This made it tough on the twenty-somethings that had started Citymob from their apartment, but they used this tumultuous period to cut their teeth, scale the business and wade in. Ultimately they weathered the storm, but realized that they’d gone from being a cool business to an uncool one.
“It started to suck,” says Luke. “Being a traveling salesman asking people to give us deals on their stock. Sure the customers loved us, but the merchants hated us.”
At its core group buying is a genius idea. Small business needs people to try its product and market it and so this is how it works: a beer costs R50, I get you to agree to sell it for R25, half price, if I can get 1000 people to buy it. So you agree because you’re getting rid of product and the evangelical marketing is great for brand awareness.
Group buying hit its tipping point when too many buying sites saturated the market. The competition killed it. So Citymob had Devil’s Peak at R25 a beer for 1000 buyers, then Groupon did &Union for 500 buyers and a third buying site said they’d do another craft beer deal for only 100 buyers…
“The fall was the commodification of the service and today Groupon is just a coupon warehouse. The caliber of the customer has changed. We went from organizing sky diving experiences to being forced to sell cheap Tupperware. We pivoted, to use a tech term, and decided to focus on selling stuff online that you couldn’t find elsewhere.’
And e-commerce was cool, until they hit the next ceiling – the perception of their brand. Citymob couldn’t get meetings with certain brands because of the stigma attached to group buying companies. Luke needed access to a certain caliber of brand. To do this he needed to rebrand.
If Citymob was mobbing a certain area with a certain deal then the Superbalist was all about the individual. It’s not about discounts. It’s about selling brands and doing it well.
After trips to NYC and Miami Luke realized that South Africa doesn’t have department stores like, say, a Barney’s or a Saks.
“Our local buyers aren’t actually buyers, they’re rip-off artists who go to Europe, buy a bunch of stuff, rip the tags off, come back and see how cheap they can reproduce it. But they’re in trouble now because those brands that they’ve been ripping off are now available here. So now we’re seeing these same guys trying to secure brands because they can no longer just imitate them.”
Luke’s quite vocal as to which business are guilty of this, but because some of them are our advertisers I’m loathe to mention them. Instead I’ll mention a business that Luke does look up to – YuppieChef.
“On paper it’s a terrible business. I mean, how many toasters can you sell? Once you’ve bought a knife you’ve bought a knife. And knives last forever. However, the loyalty that they have with their clients is massive. And it’s been proven that the enthusiasts that they’re appealing to don’t flinch at price.”
To illustrate his point about loyalty, Luke draws me a diagram, a funnel tapering from Awareness to Consideration and Purchase at the smallest end. Then another triangle coming off of that, loyalty, so the diagram looks like a badly tied bowtie. If a customer costs you R1000 via awareness, consideration and purchase, and then spends R1000 you’ve made nothing. But when that customer comes back to buy from you again, well, that’s where you start to see your profit.
Loyalty is about experience and service. It’s not about spray and pray, but catering to the individual and making brand loyalists. The Superbalist’s attention to detail and curation is about making the world smaller again.
At time of writing The Superbalist’s daily newsletter was being sent out to a database of 600 000, which Luke reckons will be a million by the end of the year. That’s reach. They have good-looking offices at The Biscuit Mill with a good-looking staff of bright, young things. That’s rad. And with plans on ushering in retail 2.0, which we can’t speak about just yet… Well, that’s just plain exciting.
Copyright 2013 Men's Health