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How Two Former Silicon Valley Engineers Amped Up Sales For Their Yarn Company With Subscriptions
This story appears in the November 23, 2015 issue of Forbes.
This August Laura and Doug Zander, the founders of Jimmy Beans Wool, a small but rapidly growing online yarn retailer based near Reno, Nev., launched what they thought would be an easy experiment: selling their customers subscriptions. It’s worked almost too well.” These are phenomenal problems to have,” says Laura.
The Zanders, both former Silicon Valley software engineers, have always been aggressive about growth. Since starting the business as a brick-and-mortar shop for knitters in 2002, they’ve grown–sometimes faster than was good for them–by trying everything they could think of, including working social media, writing books, pushing CEO Laura, 41, as a brand spokesperson, creating knitting classes and offering how-to videos on YouTube. Last year the 45–employee company had $8 million in revenue. (Here’s a profile of a company that makes the software that drives subscription businesses.)
The subscription idea began two years ago when Jimmy Beans (a fanciful name) started selling yarn samples online. Enough people were trying the big 20-yard balls at $1.50 a pop and going on to buy other stuff that the Zanders and their team started to wonder how much product they could move if they sold samples by subscription, the way BirchBox and Sephora sell b eauty products. Thus was born the Beanie Bags.
Sign up online for $10 a month and you (or someone you want to give a gift to) get a cloth pouch t hat contains four different small samples of yarn every month. You also get links to small knit and crochet pattern s to try out, along with small branded goodies such as knitting needles and crochet hooks. Customers can prepay their subscriptions for 3, 6 or 12 months. The decision to launch the subscriptions on Oct. 1 was made only in mid-August, Laura says, and announced in the Jimmy Beans e-mail newsletter, quickly generating 164 subscriptions.
Then Laura bought a Facebook FB -4.85% ad on a Wednesday, and “by Thursday night we had 1, 001 new customers,” she says. Panicked at the flood, she took the ad down and regrouped with her team to see if they could handle the volume–someone was going to have to pack all of those bags. “We had to take it down three times,” she says. ” It was like having a sales switch you could turn on and off.”
To date, says Laura, 5,400 customers have sign ed up, and she estimates the service has goosed Jimmy Beans’ sales by 15% to 20%. It has also allowed them to gather lots of new information about their customers’ tastes. “ We’re getting great data,” she says, and adds, “We’re helping other people grow their businesses. Our vendors are calling us asking, ‘How do we get in on this?’ ”
But growth has its problems, and the first was finding the people to stuff and ship all of those Beanie Bags. The Zanders first drafted the spouses and significant others of their employees to work weekends and then wound up hiring six new people. The next problem, still not completely solved, was figuring out how to manage the back end–how to sign up and bill a lot of new customers buying a range of subscription products. Laura says Doug has been putting in long hours writing software from scratch to keep track of subscribers’ credit card numbers, preferences and buying history. Everybody at Jimmy Beans is tired, she says, but Doug is ” really tired.” (She actually used a different word.)
Not that the Zanders have any intention of slowing down. Because of the subscriptions, Laura says, “ I do believe our sales are going to double in the next couple of years. ”