Last night, I appreciated the chance to catch up on much needed sleep and give my aching feet a break! (Ironically, we started our day at 10:15 this morning with plans to visit a shoe company.) After eating breakfast, we walked to a nearby hotel to learn more about the men’s shoe company, Velasca and their plans to expand their business.
Velasca is a growing shoe company that produces 100% of their shoes in Italy. They can truly say that all of their shoes are completely “Made in Italy.” Two young men started the company because they wanted to make it easier to find stylish quality shoes without spending €500. They researched the craft in Montegranaro which is renowned in the art of shoemaking. They started with just a few styles and now they have over 100 items in their portfolio. The shoes are handmade for men and specifically marketed towards businessmen and doctors, yet they have dabbled in women’s shoes as well. Velasca is unique in that they do not follow fashion trends- they choose to maintain tradition and timeless styles. For example, if “blue” is in during a certain season, they do not modify their product to conform in order to please clientele interested in that fad. Velasca has fourteen employees ranging from Co-producer, IT Manager, Digital Media Manager, Operations Manager and Sales and Marketing Managers. These individuals work together to create a business model that accommodates customers’ needs. There are also groups consisting of about five artisan shoemakers who are contracted to craft the shoes , but they are not directly employed by Velasca. Velasca wants to expand and eventually sell the company, but getting investors in Italy is more difficult than in the US. When they do get investors their monetary contributions are less significant.
Velasca has a business model unlike many American businesses in the shoe industry. In America, the B2B (business to business) model commonly supplies retailers like Nordstrom’s and Macy’s or shoe stores such as Famous Footwear. Velasca focuses on the customer and removes the middleman by following a B2C model (business to customer). Customers shop for company products online and offline at a Bottegas (“workshop”) where they experience the shoes directly. By minimizing overhead in various ways, the company avoids the pitfall of high accrued costs that retailers contend with and can produce high-quality products at a greater profit margin. The closest US company resembling Velasca is Zappos, since they only sell products online and ship them to the end user. Customers of Zappos will frequently buy multiple pairs of shoes and return unwanted items back to the distribution center. Although Zappos’s shoes are not artisan, their business model is similar since they focus on online sales – not retail shops. Furthermore, they have a broader product base inclusive of shoes, clothing, and accessories for men, women and children.
Velasca’s primary marketing strategy utilizes the internet as a funnel method to promote products and guide consumer purchases. In addition to their website, they utilize Facebook, Instagram, and Google. Roughly 80% of their marketing strategy is through Facebook. They are able to reach a larger global market via the web. Establishing connections with bloggers and social media figures with many followers has been an effective form of internet marketing. For those who do not like online shopping (especially Italians), the Bottegas serve as storefronts and assist in establishing their brand. The original vision was to have no shops. Fortunately, these Bottegas were profitable from the first week they opened. Currently, 70% of sales come from online shopping and 30% come from Bottegas. They rely on word-of-mouth from satisfied customers as well. Prices are the same online and in their storefronts. Additionally, they launched an online magazine to promote a new brand.
During the informational session about Velasca, I learned more about their Value Network Principles. Velasca is a small quick growing company that hopes to double in revenue annually. They focus on Italian made men’s footwear sold from business to customer. Their product is produced by contracted artisans who use sewing machines and other tools to hand-make each of their products. Quality materials are shipped primarily from England to Italy so they can craft products on Italian soil. The products are high-quality shoes sold at more affordable prices than similar products. Since this company continues to grow, they must think about contingencies such as capacity. If they want to continue to be profitable and maintain their “Made in Italy” product integrity, they might have to limit the number of Bottegas operated. Eating shipping costs for delivery and returns to customers may need to be re-evaluated depending on continual financial analysis. As the company grows, providing this service may not be beneficial to the company. Regarding safety concerns, it is important for the artisans to use be well trained and use equipment properly. (The logistics center for Velasca – Fiege Logistics, must also maintain warehouse safety standards for machinery. Environmentally, sustainability is also a concern. Velasca must consider the environmental problems of material waste, transportation (shipping/returns), and disposal of rejects failing to pass quality assurance inspections. Customers are increasingly ordering several products in different sizes with the intention of returning one. This leads to excess packaging waste and fuel consumption related to shipping versus the Bottegas option of customers trying products before buying. The workforce for Velasca consists of the fourteen managers who specialize in the business aspects with IT, Sales and Marketing, and Operations. Artisans are vital to the continued success of the company due to their specialized skills in producing traditional style handmade work of handmade shoes. This business model successfully blends the concepts of old-school training and craftsmanship with innovative technological skills to run their business successfully.
Tomorrow we will be spending time with the ESN students again and visiting the Armani Museum! Stay tuned for the next blog.
|| Alaina All’Estero – “Alaina Abroad” ||