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Lessons Learned: Fall of Communism Leads to Affordable Sheds’ Success

Citizens of Hungary were prohibited from owning and operating their own businesses from World War II until the communist regime fell in the early 1990s.

With no exposure to entrepreneurialism for around 50 years, one Hungarian household, the Panczels, bravely opened a convenience store in Szolnok, a regional city about 75 miles southeast of Budapest, in 1993.

Their young son Krisztian obtained invaluable experience by working for his parents in their shop after school, on weekends, and vacations.

Krisztian met his wife Maria at Szent Istvan University, in Budapest, in his agricultural science courses. When they graduated in 2001, the downturn had hampered their odds of work so that they backpacked to Queensland in Australia, coming with $200 and speaking no English.

Maria and Krisztian Panczel

Despite their levels, they worked as farm hands for four decades, studying English, and later worked for the Queensland Departments of Transport, and Natural Resources and Water, as administrative and project officials.

The growth of Internet-based retail captured Panczel’s focus, telling Maria they ought to start an internet store of some type. He soon found a possible product to sell.

“The backyard shed for our first house was so poor we had to throw it away and then I believed we could build a company based on good, quality backyard storage,” Panczel stated.

He discovered Terapeak, a Canadian firm that lets prospective retailers access eBay sales market intelligence from the previous 365 days.

“After a couple of days of research we began to contact discard manufacturers to see if we can sell their goods online.”

The couple spent less than $1,000 to begin selling sheds on eBay in 2008, where they turned over $250,000 in their first financial year.

Revenue grew rapidly to $1.3 million in 2009 when they assembled CheapSheds.com.au. Revenue more than tripled to $4 million by 2012.

Shopping Carts

Panczel estimates he lost hundreds of thousands of dollars in sales via three insufficient platforms for Affordable Sheds until January 2013.

He spent approximately $5,000 on the business’s first site, developed by a colleague’s relative who had no clue what the platform should do.

Panczel hired a freelance programmer to complete the cart, but it was still sub-standard in what it might do.

After Affordable Sheds outgrew this first cart, it utilized a debatable Australian hosted cart for almost four years that Panczel doesn’t want to name.

“Unbelievably, the CMS [content management system] exhibited pages in the cart’s other online retailers — like an ac website — and lots of our pages disappeared”

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Panczel estimates that the shopping cart dropped Cheap Sheds an estimated $350,000 to $400,000 in sales as he and his staff used live chat to contact clients unable to complete transactions on the site.

Following a first trial with PrestaShop for Cheap Sheds New Zealand, he switched that website to the Magento community open source platform, which he uses for Cheap Sheds Australia — the business runs separate websites for each country.

“We heavily customized Magento for our backend system and utilize it for our CRM [customer relationship management]. We can’t imagine we will outgrow it, and I really don’t see the need for an enterprise level platform for virtually any time soon,” Panczel stated.

Web Design

Cheap Sheds retains its web designers and programmers in-house.

Customers have higher expectations for companies to have a pleasant and functional site and we are continuously striving to improve usability and design,” Panczel stated.

 

CheapSheds.com.au

 

Credit Card Payments

After successfully growing its sales on eBay, Cheap Sheds currently has a PayPal relationship manager.

“PayPal has been a really reliable merchant processor through the years. In addition, we have a merchant account with an Australian bank, but we prefer to use PayPal,” Panczel stated.

Order Management

Cheap Sheds created a custom-built order management system in Magento to cope with seven different suppliers’ products, the majority of which are heavily customized and almost all them shipped in another way.

“We took years searching for an order and customer management solution; we had to construct our own,” Panczel stated.

Hosting

Cheap Sheds utilizes VPS.NET for hosting, which lets the company grow as required, and hosts pictures, videos, and specific scripts on Amazon Web Services to guarantee reliable scalability.

“Hosting is a substantial cost, and you need to select one that you can depend on,” Panczel stated.

Employees

Starting with just the Panczels, by 2012 Cheap Sheds had a client support group, an operations supervisor, and a graphic designer.

From 2013, Cheap Sheds had grown to 20 employees, including 13 fulltime staff, including a marketing manager, internet developers, videographers, and a group of graphic designers, many of whom work remotely from their homes.

Panczel employs the Basecamp project management platform for everyday cooperation and Skype to communicate with people and for staff discussions, in addition to Google Hangout or GoToMeeting for teleconferences.

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Search Engine Optimization

After two years working with three Australian search engine optimization companies, Panczel attracted SEO in-house.

Website traffic rocketed after Affordable Sheds started providing how-to movie content, ranging from how to pick out a garden shed, to building the merchandise.

“No one is enthusiastic about a storage shed. So we had to figure out ways to create the market more exciting and more engaging,” Panczel stated.

The group found the Reduce Contest and the Affordable Sheds video game which helped grow traffic.

“We have been better off thinking outside the box than attempting to control the search engines with hyperlinks.”

Shipping

Cheap Sheds holds no stock, relying on a drop shipping procedure.

Clients can either opt for free delivery to the producers’ depot where they can collect their merchandise, or delivery to their house for a small charge.

“Shipping is quite important on our schedule. Shipping in Australia lags behind the U.S. and Europe and the [low] degree of customer support from transportation is shocking,” said Panczel.

Product Sourcing and Inventory Management

Panczel started working with his first Australian provider on a drop shipping arrangement, handpicking the merchandise. Cheap Sheds currently has similar contracts with producers from the U.S. and Israel, which eliminates the need to carry, or manage, stock.

From 2012, Cheap Sheds sold approximately 14,500 products, such as garden sheds, carports, garages, aviaries, and pool pump cover kits — all sourced from 10 manufacturers.

Cheap Sheds upgrades and provides products regularly and now also stocks plastic, resin, and wood sheds.

Accounting Software

Panczel utilizes Xero for accounting, which can be incorporated in the Magento back-end.

“PayPal has been programmed into our Xero account, so customers who call up and request a statement can pay in the bill itself,” Panczel stated.

Social Media

Like many online retailers, Cheap Sheds attributes on all the significant social media platforms.

Panczel has taken it a step further, linking his eBay and Affordable Sheds sites to social media websites to reply product queries from clients.

“Over time, our brand has developed a Cheap Sheds community,” Panczel stated.

Expense Control

Panczel controls expenses by not having warehouses and fancy offices. He invests instead in content production — especially video — and spends heavily on technology and marketing.

He adjusts marketing expenditure based on earnings, but as yet, hasn’t reduced his spend.

“That is not something you can do if you had high overheads; there would be no flexibility to cut back from one month to another,” said Panczel.

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Customer Service

“As an internet business, customer service is all we have in a marketplace that’s not renowned for this,” said Panczel.

Besides accessing telephone, Skype, email, live chat, the contact us form, mobile app, Facebook, and Twitter, clients may also ask questions directly from some of Affordable Sheds’ product pages.

Panczel prides himself on how he makes Affordable Sheds ever more user friendly with videos and articles showcasing products.

The business has made a video game, the Shed-A-Gram (which allows it to share sheds via Instagram), Cheap Sheds TV, and a wind-rating calculator to help clients identify the perfect sort of shed to purchase for their area, terrain, topography, and density.

Biggest Mistakes

Panczel admits that he has no shortage of big mistakes.

“When we launched our first site, it was an embarrassing-looking home made website and worst of all, we’d sheds showing for $19; we were frantically trying to determine how to change the prices as rapidly as possible,” Panczel stated.

“We had customers calling up and wanting the goods for $19 and we had difficulty describing what was happening, as we had no idea ”

Biggest successes

“We’ve grown into the largest online retailer of backyard storage products in Australia, but our main accomplishment is being showcased by an Australian government site for our distinctive company and client support model,” Panczel stated.

“We celebrate our wins and success, however we play at a really competitive marketplace rather than take being a market leader for granted.”


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