Summer, 2019. California. As the sun beats down on eBay’s San Hose HQ, applause breaks out from the 1,500 employees within. Two Brits wearing eBay hoodies have just taken to the stage to address the eBay leaders’ conference. One of them, Eddie Latham, looks out at the audience, sees eBay’s CEO, and thinks: “How the hell did we reach this point?” A similar thought strikes his business partner, PJ Scott. They swiftly refocus and tell their story to eBay’s core team, who reward them with yet more applause and – as is traditional in these parts – a few whoops.
To answer the question, ‘How the hell did we reach this point?’ we must rewind to 2013 and observe a rather more humble scene. This time, Eddie and PJ are standing outside a row of terraced houses in Cambridge, England, frantically ripping open hundreds of cardboard boxes and stowing the contents – 3,592 laptop rucksacks – in PJ’s downstairs loo. Eddie recalls: “We’d bought the rucksacks for £3,000. We weren’t expecting them to arrive on 26 pallets!”
Del Boy and Rodney eat your heart out. However, the comparison only goes so far because the laptop bags spawned Velocity Commerce – a company worth £30m today, and still 100% owned by Eddie and PJ.
Hatred at first sight
The co-founders met while working at Play.com; it was hatred at first sight. PJ laughs: “When Eddie first joined the team, I thought he was an arrogant so-and-so! He seemed to know all the answers. But we went for a beer, and I soon realised that he was actually a lovely guy.”
Eddie recalls: “We were on the same team. PJ’s background was retail and mine was small business. He was from the old school; I was the new boy with all these new ideas.”
Having navigated their early distrust of each other, they bonded and started to share ideas, culminating in the launch of a small start-up. Their idea was simple: buy in-demand, end-of-line products and sell them for a profit on eBay and Amazon.
They learned lots, fast. “We soon realised it’s easy to get sucked into a race to zero in online sales,” says Eddie. “A distributor sells you a product for £10. You sell it for £15. The same distributor then sells the same product to a competitor for £10 and your £15 sales price soon gets undercut. Before long, you’re in a race to the bottom.”
Eddie and PJ’s solution was end-of-line stock. “The beauty of clearance stock is there’s no more of it,” says PJ. “You’re buying the whole market, so you control the price. You can also take a product that’s been unloved first time around and tweak the marketing, re-angle the description, update the images, and give it a new lease of life.”
The post fairy
In the early days, the duo still worked full-time. “I was boxing up our online orders every morning from 5am,” says Eddie. “After work, I’d update our online listings and answer customer emails.”
Each morning they’d take parcels to the local post office, but before long Royal Mail called to say they were overloading the system. Eddie negotiated. “Royal Mail agreed to collect our parcels from our self-store unit. I gave them a key and while we were at work, the post fairies would collect our packages! Royal Mail are amazing. We recently spoke at their AGM and told them how brilliant they’d been. When they saw we’d grown from that self-store unit into a £30m per year business, they just couldn’t believe it.”
Eddie and PJ continued to buy and sell clearance stock, focusing on laptop bags and similar products. The strategy led to great margins. “We’d sell at four times the price we’d bought at, so once we’d sold a quarter of our stock, we could buy the same again. One product became four; four became 16; 16 became 64. By Christmas of year one we were selling 64 products exclusively and turning over £100,000 a month, all from our initial £3,000 investment – and we hadn’t borrowed a penny.”
Profit is for wimps
But turnover isn’t profit. The figures are impressive, but at first their new business didn’t pay them anything – it ate time and swallowed cash. However, the pair were still ecstatic. “We have this jokey line: ‘Profit is for wimps’,” says PJ. “If you enter a new market or start a business and tread water, you’re doing OK. You’re building knowledge and putting the foundations in place.”
PJ and Eddie knew they had found a winning horse – now they had to tame it, look after it and ride it skilfully.
Not for the faint-hearted
They took voluntary redundancy and soon learned another vital lesson: to thrive in online sales, you can’t afford to wait and test the water. You must dive in before knowing whether the pool is warm or icy.
PJ explains: “Everyone wants to buy ten units, see how they sell, and if they fly, go back to buy 1,000 more. It doesn’t work like that. If you want to win big, you have to commit. Buy the whole lot, and think…‘This is going to work. Go for it! What’s the worst that can happen? OK, you might make nothing or suffer a small loss, but the potential gains are huge.’”
And Velocity Commerce has, of course, suffered the odd loss. Soon after taking redundancy, for example, they completed their first wholesale deal, buying a load of phone cases for £10,000. They had a buyer lined up, who promised them £14,000. “But then the buyer reneged,” says Eddie. “So we sat on the cases for a month and then sold them for £7,000. We lost £3,000 but we still high-fived each other because we’d lived to fight another day. We’ve never bought a wholesale package again. At the time, that was a huge loss for us.”
Next stop: China
“We wanted to launch our own brand,” says Eddie. “So we flew to China.”
The above quotation shows how big this pair were – still are – prepared to think. Not content with their Midas touch when selling end-of-line products (their ability to know exactly what product to buy and how to market it online is worthy of a separate article), they wanted to become brand owners. It made sense. It continued their strategy of owning the entire market, only this time with the option to order more. Such a move would, if successful, enable them “to stay on page one of Amazon forever”.
And that’s precisely what they did. They found a Chinese manufacturer, ordered some radios, branded them ‘Majority’ – and now own the second-largest DAB radio brand in the UK.
This sort of fearless, can-do thinking is the fuel that’s driven Velocity Commerce from the off, and it’s one reason they’ve managed to stamp their authority on the wild new frontier of online retail. In this new game with new rules, old ways of thinking hold you back.
“People said we couldn’t compete with the old established brands,” says Eddie. “But we’re now the second-biggest radio brand in the UK, and we only sell on Amazon and eBay. The established brands used to say they weren’t interested in Amazon or eBay, but now they very much are. We always focused on those two sites, so we’ve built up the knowledge.”
Expertise to sell
Little wonder, then, that older brands are now flocking to Velocity Commerce for help with their online sales strategies. Another fast-growing part of Eddie and PJ’s business is consultancy services. Their clients include Sony, Lego, Hasbro, Hoover and Brita. “We help them with their sales cycles,” says Eddie. “That involves optimisation, building up reviews, marketing and so much more – skills we learned while building up our business.”
Expect to see bigger, more fearless moves from Velocity Commerce in the future. Eddie and PJ are eager to avoid the stagnant thinking that they feel blights so many corporates. They believe their biggest strength is their agile, courageous, fresh approach.
“You have to look at different parts of your business and put a stop to the ones that aren’t working. Say no. Be brave. Ask critical questions,” says PJ.
Eddie agrees: “Owners tend to go around their business just pruning small parts, trying to make it look nice. Sometimes it’s better to take an axe to it. Often you can only find the root of a problem, or the seed of a great new idea, if you look at things completely differently, see the bigger picture and dare to ask ‘stupid’ questions.”
That’s what this pair have always done. Independent thinkers to the last, they’ve never stopped dreaming big and believing that they can achieve what everyone else thinks is impossible. That’s why they brought the house down at eBay HQ in San Hose in the summer of 2019. And that’s why their entrepreneurial journey – only six years in – has only just begun…