Online, Directly to Customers!

On the 11th day of our trip, the group traveled to a nearby hotel to listen in on a presentation given by a member of Velasca, a shoemaking company. Also, we were able to tour the warehouse where their shoes were packaged and shipped. Lastly, we went to an actual store of Velasca which was very small, mainly because of their focus on selling their product online. This company is an up and coming leather shoe making business, which was created in 2013 by two males who quit their corporate jobs and risked it all to pursue their passion of being an entrepreneur. One owner told us that he used his whole life savings of about 40 thousand euros to start-up this company. Obviously, the risk paid off because this year alone, Velasca has generated a revenue of 1.2 million euros. Although the profits are split between the fifteen workers that have roles such as marketing, operations, graphic web design, product management, customer care store management, designing, and manufacturing, this company has more than doubled their revenues each year. Their main goal is to keep doubling their revenue, and by 2020 they aim for a revenue of 19.2 million euros. Through their various marketing techniques, the company will most definitely reach their goal and possibly even surpass it. A company similar to the business model of Velasca in the United States, which mainly sells their products online, would be the company Etsy.

Velasca is a company that models their business by acting as the wholesaler. This is not your normal business model because it skips the downstream supplier and directly sells their products to the consumers. Because they had a hard time getting into the retail market, they began to market their high quality leather shoes, on the internet. This was the cheapest and easiest way to jumpstart their business. Targets of the company include doctors and businessmen that often need to wear high quality shoes that will stay in good condition. As stated earlier, they mainly focus on marketing and selling their products to online customers. What hurts the business is that Italians are not too keen on buying their accessories online because they are not as technologically advanced as other countries like the United States. To combat this, they have begun to advertise their product in other countries, such as Japan, Australia, and the Philippines. One day they even hope to open up a shop in New York City. Because they focus their model on skipping the downstream supplier by selling their shoes online, over 70% of their revenue comes from online shoppers. Also, since customers cannot actually try on the shoes in person, each customer usually orders two shoes one of which they will eventually return. This does add a little bit more money to the shipping as Velasca pays for all of it, but it is still a much more profitable method than selling their products to a downstream supplier. They also face the challenge of selling the product through words, rather than touch. To fix this problem, Velasca has recently added a reviews section to their website for customers to get a good idea of people’s thoughts on their quality. Currently, they do have two shops, one in Milan and one in Rome, however as I mentioned, these shops are very small. Online wise, the company uses Facebook, Twitter, and Instagram to market their product. They hire people who have lots of followers to mention their product in posts. The company has also launched an online magazine to display their new shoes. To remain funded, they seek investors. For example, they have had people give them 50 thousand euros and 700 thousand euros. This is small when you compare it to other investors in the United States, however Velasca has only been established for three years. A company that compares to Velasca in the United States is Etsy. This business also mainly relies on the internet to sell their products. Similar to Velasca, Etsy serves as the wholesaler that sells their product directly to online customers. Although it has a similar business model to Velasca, Etsy does differ in many ways. The company does not focus on one product like Velasca does. Etsy sells all sorts of accessories such as home and living appliances, jewelry, clothing, toys, and crafting tools. Because this company sells so many products, it generates a lot more money than Velasca does. Also, it has been established for a much longer time. In addition, Etsy is an American company. This means that they have much higher investments given to them, and they have a much greater audience to sell to because of our technologically savvy population. Other than differences in the amount of products and clientele, Etsy and Velasca share the same business model.

I do think that Velasco’s business model is correctly selling their product to yield the highest revenue possible. I believe this because more and more people are becoming internet and technology users everyday. Also, when they generate enough revenue, they will be able to open up more stores. They will then become a vertically integrated company that has two ways of selling their product, online and in their own retail stores. Also, I agree with their approach because they began on such a low-budget. Internet is the cheapest way to market any product. Overall, Velasca has correctly created a successful business model that accounts for the evolution of internet use.

After visiting these sites, myself and Rahul went shopping near the Duomo. We then got Italian pizza, where the cheese was in blotches. This showed me how the culture of pizza in Italy is way different from the United States. Well okay, goodnight blog readers, I’ll be back with another blog tomorrow. Ciao!






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