We are quickly approaching our final days here in Italy. We made the transfer back to Milan yesterday for our final site visits and tours. Today we had the pleasure of learning about Velasca, a men’s shoe making company. This morning, we were given a presentation by Paola, the head of Digital Marketing. This presentation was based around the business model, history, and marketing strategies of Velasca. After lunch, we took a trip to the logistics company that Velasca outsources their business to. We learned all the processes, quality control checks, and planning that goes into getting a Velasca brand shoe to the consumer. As a future Industrial Engineer, this was my favorite part of the day, as this is similar to what I will be doing for the rest of my life. After the logistics visit, we visited the storefront, or Bottega, for the company (which is about the size of the hotel room I am currently typing this blog in). There we were greeted by one of the co-founders of the company, where he explained to us what possessed him to quit his job and start a shoe store.
The main business of Velasca is to create a quality shoe for men without an extremely high price, like those of their competitors. Each of the shoes is handmade by artisans (outsourced by Velasca) over a 4-week process. Because of the longer production process, the company must invest in stock and warehouse space, which is part of what the logistics service does. Each shoe design starts as an understanding of which audience the company is targeting. The design then must be created and sold to that target audience. Velasca is a very interesting company in the fact that it primarily operates online. Before any of the storefronts were opened, the company solely existed online. Because they are primarily online, the business model is business to consumer, meaning there is no middleman for selling the shoes. This allows Velasca to create similar products as their competitors, but sell them at lower prices. The fact that the company operates primarily online affects how they attract customers as well. Paola explained to us that they use social media sites such as Facebook for a large portion of their advertising. They then use data gathered on those searching the sites to target the user specifically depending on their preferences and their “likes” on these social media sites. This allows them to see a quantitative result on how many people are actually visiting their site compared to the number of shoes being sold, and so on. Originally, the company only targeted Italian clients. Their reasoning behind this was that if the Italian people liked their product the best out of the numerous companies here, then they will easily be able to expand to broader markets. In the next step, Velasca hopes to open storefronts in the U.S., U.K., and France. By opening storefronts here, they will expose people to their product and increase their online sales (or at least they hope so).
Velasca is very similar to a lot of the start-up companies in the United States. They promote their product in a similar way, almost down to exactly the same website design. This is not a bad thing; it shows the effectiveness of the way these companies go about business. One thing that is different in Italy is the difficulty to start your own company. In the U.S., you only need to pay a small fee and sign some paperwork to call yourself a business. The process in Italy is twice as complicated and takes twice as long to complete. Velasca also offers a quality product at a better price than most of their competitors, which helps them to stand out in the crowd of artisan shoe companies in Italy. The B2C model also is similar to many music companies in the United States. For example, both Spotify and Pandora Music both use B2C models for their streaming sites. This makes sense for music streaming, as there shouldn’t be a middleman for this type of business. Although Velasca sells a more feasible and touchable product, the business models are the same.
For Velasca, the basic line of the firm goes like this. A customer can come into a storefront, try on a shoe, and buy it there or online. This is the simple explanation. In a more complex description, the artisan will take the raw materials (leather, rubber, wood, etc.) and craft the shoes by hand. The shoes are then sent to Fiege, the logistics company, where they are either stored as warehouse goods, or turned around and shipped to the consumers (usually within 24 hours). From there, the shipping is either done by Fiege itself with the trucks that it operates, or by the basic ground shipping, like FedEx or DHL. There are some contingencies with the outsourcing of shipments to these other companies. Fiege does not manage the last mile of the delivery process. They pride themselves on fast turn-around time, but if the shipping companies are not on the same page, then the product will not arrive at the destination in the desired time. They also do a quality control check, so if the goods are not perfect when they arrive from the artisans, then they cannot be shipped. This shows the immense skill it takes to be a shoemaker, especially for Velasca and Fiege. They expect the highest quality and will not ship unless it is perfect. If the goods are not perfect, this is a waste of time and money for the company. The warehouse employees also must be skilled enough at getting the product out to the consumers as fat as possible, which helps them keep their working reputation with Velasca, and also helps them make money as well.