In Berlin, we met and interviewed the founder of Mornin’ Glory, Nicolas Stoetter.

In this interview, Nico shared his background, details about the business model of Mornin’ Glory, the market situation for male cosmetic and shaving products, as well as his advices for the first time entrepreneurs.

 

Interviewer: Hi. Today we are in Berlin with Mornin’ Glory, with Nicolas, and we will show you today how to make men beautiful again. Nicolas, who are you and what do you do?

Nicolas: I am Nicolas Stoetter, I am the founder and managing director of Mornin’ Glory. Mornin’ Glory is a European direct to consumer online brand for European male grooming products. We started out in 2012 as an inexpensive subscription service for razor blades.

Interviewer: What did you do before you started this company?

Nicolas: Like a lot of European ecommerce founders I started my career in management consulting, a couple of years with Boston Consulting Group, both in Germany and the US, doing traditional resturctuing and transformation projects. Eventually got bored of that – that’s another parallel I share with a lot of people here – and went on to work as a social business consultant for Nobel peace laureate Muhammad Yunus in Bangladesh. The idea was to consult corporations and setting up social businesses. I was sent to Bangladesh, very interesting experience also for my stomach. And then eventually I decided that I wanted to start a company again.

Interviewer: For profit this time?

Nicolas: Yes, for profit or at least for shaving. To make that transition I pursued my MBA in Chicago and started Mornin’ Glory.

Interviewer: Did you know the founders beforehand?

Nicolas: No we didn’t. Fabio, my cofounder, is quite a bit older, so we didn’t exactly go to high school together. I met him here Berlin on the scene and we connected.

Interviewer: Tell us a little bit more about how the business model works. From my understanding you started out as a basic subscription model for shavers. What does your current business model look like?

Nicolas: We are in the process of changing that. The whole subscription element for the blades will remain, simply because we see that it works both from an economic and from a consumer perspective. And what we are in the process of adding to that is the transactional component with different grooming products that basically complete the whole blade shaving experience. So in the first step we’ll launch a Mornin’ Glory branded range of pre- and post-shaving products.

Interviewer: Something like this you can look at?

Nicolas: Quite similar.

Interviewer: When did you make this decision going from this mono-product company to adding more features and products?

Nicolas: I think that’s pretty much baked into our vision. Our vision was not to be a subscription company for blades, and it’s also not the way we pitched it to the outside world. The vision was always to build a male grooming brand which will eventually also go to other categories. I think that was very much the plan from day one.

Interviewer: Can you tell us a little bit how the value chain is structured. Where do you source the different supply material or even finished and branded products, and how is the operation working here in Berlin, and then how are you selling this and to which type of markets and what types of customer segments?

Nicolas: I think it’s very different depending on whether you look at the blades or the shaving products. The blades we source from the biggest private label manufacture for system razor blades. There’s really not that many out there, which is also the main difficulty, to get into the market and to convince one of those big guys to work with you and to supply with you on a long-term basis, not just ship a couple of blades in bulk and then you go. So that’s something that we get from the US.

The shaving product we developed ourselves in the last two years in Italy. We work with a small private label family on outfit there, and we get the tubes that you see here delivered to our warehouse in Berlin and there we package everything. We’re surprisingly vertically integrated till today, so we get all the pieces and put them together and then ship to the consumer. In terms of market, it’s very much focused still on the German speaking countries, Germany, Austria, Switzerland. Recently we expanded into France, and we definitely have other countries on the agenda as well.

Interviewer: And when you look at the person who is buying your products, is it 100% male, or are women also buying for their husbands or boyfriends?

Nicolas: 99.9% male. There is the odd woman, and I do think that women have a role as re-purchasers for blades, not necessarily as brand decision makers. A woman wouldn’t say, “You know Martin, I think you should start shaving with Mornin’ Glory instead of what you’re at now.” So it’s very much men, and they’re pretty much the whole range, there is the very price sensitive consumer that just wants to save a couple of Euros on blades, there is the white collar busy guy that appreciates convenience, so it’s the entire range.

Interviewer: How do you attract these male persons as potential customers coming to you website?

Nicolas: I think one of the big challenges we have is that we’re selling a product in a channel where today the consumer is not buying. Mostly blades are sold offline and at the big retailers under brands which nobody knows, Mornin’ Glory versus Gilette Wilkins and the big guys. And then we have this subscription model. So I don’t think it’s a trivial seller trust in our marketing, we’re still very much focused on performance-driven online marketing, which is probably not a surprise. We’re adding more branding-related channels to that as we go on, always looking at cost and monitor and improve.

Interviewer: You told us that you have one supplier from whom you get the blades, and that is one of the major companies in the world that is offering these kind of blades, this would lead me to think that the margins are quite low, and that’s because he might have a quite strong negotiation power with you as there are no other suppliers you could go to. Is this correct, or are there other smaller production facilities you could get the blades from?

Nicolas: There’s a handful. There is not just one, but there is also not ten, so it’s probably four or five outlets in the world. It’s a fair point that you’re making, I don’t think that they are necessarily using their power to negotiate on price. Even before that, you need to convince them that you’re complementing their offline business rather than cut into that. You need to convince them that you’re not just two confused guys sitting in a Berlin coffee shop trying to change the world, but you actually know what you’re doing. I think it’s those kinds of hurdles that you need to get over. And then at some point they just have standardized price lists and you go with that.

Interviewer: Did you talk to them in person in order to convince them?

Nicolas: That was the very first thing that we did, and I was very naïve in thinking I’ll just pick up the phone and clearly they’re going to want to sell to me because that’s their job, it really didn’t work out that way. So I personally called them like 20 times, left them voice mail messages, they hated me, but they did get back to me and eventually we got the opportunity to convince them.

Interviewer: Let’s talk about the corporate strategy. What kind of growth initiatives are you trying to do in the future, regional expansion that you told me about in terms of France, for example, or product-wise expansion? What is your long-term goal with Mornin’ Glory?

Nicolas: I think if we are serious about being a European male grooming brand, there’s probably three components in there. You talked about the international reach, that’s just adding country by county until we eventually have a full European coverage, that’s mainly a marketing exercise, not so much a logistics exercise because our entire product range is in front of you, it’s not super-complex from an operations point of view. It has a product component, but I can’t credibly claim to be a European grooming brand if I just sell two sets of blades.

And then, thirdly, and it’s probably the most subtle one in a way, we are really serious about building a brand and not just an online shop. That means that we strongly believe in doing products ourselves under our own brand, so we are very much private label driver, which makes it a bit harder, because developing your own product is probably harder than call up a distributor and just get in the warehouse. It also means that our online marketing is great, those performance driven low CPO channels are great, but eventually we need to grow up and also be in print and all the channels that the big brands are very much present. So I think it’s also about getting into those channels cost-effectively.

Interviewer: Are you trying to build a brand because the typical products like blades etc. are perceived as a commodity, just to justify higher earnings once you’ve created this brand?

Nicolas: There is a very personal reason. I think that building brands online is more fun than just building online shops and big warehouses with nice front-ends. From a business point of view we’re trying to change the grooming landscape out there a little bit. I think if you go out there and look at the regular shops that are out there, whether it’s online of offline it doesn’t really matter, men are always an afterthought. You walk into a Douglas shop, for example, which Germany’s biggest retailer for cosmetic products, and the whole experience is made for women. As a guy you feel very uncomfortable. And there is this one isle in the corner with the wooden couch which is made for you. But if you look at the market size and growth for male grooming it doesn’t really add up, it’ a very dynamic market, it’s a very big market. We want to start with men and really build and experience that is catered to them.

Interviewer: What is the reasoning behind only focusing on Europe, is it because there are some other player already settled in other regions or is there some other logic behind that?

Nicolas: If you look at our current product range, shaving, there is a lot of online competition in the US, and I wouldn’t rule out going to the US eventually, it’s not low hanging food, it’s definitely a big market. If you look at emerging markets, they really don’t shave that much. Imagine the average Asian guy probably not very strongly haired – I’m trying to be politically correct – but it’s not a huge market. If they do shave they use disposable razors, those very cheap ones that you throw away after initial use, so not great markets for us.

Interviewer: This gets me to the point of talking about the market. Can you give us some rough numbers in terms of market size for razor blades or for maybe even grooming products for males in Germany or in Europe or even worldwide?

Nicolas: Let us look at Europe, because that’s the market that we’re going after. It’s roughly two and half billion Euros per year for razors and blades, and then easily another half a billion for pre- and post-shaving products, and probably closer to ten billion if you look at the entire grooming range.

Interviewer: How does this distribute over the major countries and major distribution channels?

Nicolas: No big surprises. The big countries are also the big markets. It’s very much population-size driven. If you look at Germany, UK, France, Italy you probably have 50% of Europe.

Interviewer: How much percentage is distributed through offline channels?

Nicolas: Depressingly, the number is almost as high as our share of males in the overall customer base. It’s definitely above 90%. That is a conversation we have all the time. Is it because online is not interesting for the category from a consumer point of view, in which case we have a biggish problems, or is it because – and that’s what we believe – there is no one really pushing online. Sometimes you have to make take channel switch also from a retailers’ perspective. And if you look at blades as the core category the retailers are very happy with their offline business, they don’t see any reason to push online. They’re also under pressure sometimes from the big guys and the big guys not to change that. So I think it’s very much a situation where the established players are quite happy in their entrenched positions.

Interviewer: Nicolas, we always try to give some kind of advice to people interested in entrepreneurship so they start a company and make less errors. What have been your major lessons learned over the last years?

Nicolas: For one, I mentioned this calling up suppliers and being a bit naïve about it earlier. I think that is one of the major lessons. If you’re young and you’re starting a company you think that clearly online is well established by now, clearly people want to work with me. I think what you will experience is you will need to earn that right, initially you’re nobody, nobody knows you, nobody knows your brand, so you have to sell all the time, and you have to sell hard. It’s not always fun, because you’re the kind of the beggar, but you need to get through that and you eventually sit on the other side and enjoy that. That is one of the things that we learned, and maybe that’s because we were also going into a very consolidated market. But when I talk to other entrepreneurs I think that applies across the board.

Secondly, and this is something that I think comes up all the time, pick your partners carefully, both from a team perspective, because you’re going to be stuck with them for a while, especially your co-founder, you’ can’t get rid of them easily, and I am quite lucky in that respect in that I don’t want to. But also in terms of investors and strategic partner, those people with you for a long time, there will be great moments and there will also be less enjoyable moments, and you want to make sure that you’re with people that you trust.

Interviewer: Thank you very much Nicolas.

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