Velocity Commerce is a Cambridge-based e-commerce firm that was founded in 2013, and has since become one of the country’s biggest companies within the online marketplace sector.
The company was founded by Eddie Latham and PJ Scott while they were at play.com, and were part of the team that led this business’ transition from an online retailer to an online marketplace.
Through their combined knowledge of the industry, and just £1,500 each of their own money, they started selling products out of Latham’s garage.
Almost seven years later, the business has experienced incredible growth. In year one the business had sales of £500,000, while the following years saw them achieve sales of £1.5m in 2014, then £4m, £8m, £13m, and most recently, £20m.
The company is expecting sales of around £30m in its latest financial year.
From disillusioned to enlightened
Velocity Commerce’s journey started out of the combined frustration that Latham and Scott had experienced with their employer, play.com, during a period of extensive change.
Latham comments: “After a few months into this transition, we were quite disillusioned with our day jobs and decided to start our own company. We started the business selling clearance products from my garage. We worked on the business part-time for the first 18 months, and in that time, we built it up from a couple of products in my garage through to a business turning over £100,000 a month.”
However, Latham and Scott had to quickly find a way to deal with their growing demand. Latham continues: “In that time we moved warehouse three times. We employed one of my friends to work for us during the day, while we were working. We woke up at 5am and worked before we went to our day jobs, and then worked until midnight after work, and then throughout the weekend. We had a lot of fun and the business grew a lot quicker than we ever thought it would.”
It wasn’t just their determination that helped the business grow, but also the decision to make it a full-time career.
Around six years ago, the pair took voluntary redundancy from play.com and Velocity’s sales grew massively year-on-year.
They did this through buying bulk clearance and end-of-life product ranges so they could control the market prices and profit margins. This meant that any competition couldn’t undercut their service.
The value of SEO
Velocity Commerce offers a range of services that aim to help retail brands create a stronger online presence and then see the returns through online platforms and marketplaces.
But how does the company get its customers’ products viewed by potential buyers, especially in such a crowded sector? Search Engine Optimisation (SEO) is the answer.
Latham comments: “Our business is built out of our knowledge of SEO in terms of search results on Amazon or eBay. We have used the knowledge gained by selling clearance products to then grow into selling products for major brands, such as Hoover, Brita and Sony. And for each of those brands, we offer a different service. This is to help them with their products through our years of experience in the online marketplaces.
“Some major brands just put their products online and expect them to sell – they don’t understand the way to market them on marketplaces. They don’t understand the algorithms or how to describe their products.”
What was the plan?
The founders have clearly maximised their skill sets to achieve incredible results since 2013.
So, how does a company achieve exponential growth in sales? Velocity Commerce never intended to see this growth and it was just a learning experience to begin with.
Latham comments: “Initially we were not looking to see a return, we were just here to learn, and both of us were prepared to give up our time in order to learn about this industry. We weren’t concerned with profits – we were concerned with what to learn and the experience we gained selling those products.
“Off the back of that we did turn a profit, although we had zero expectations. I think people start a business and expect to make a profit from day one, but all I wanted to do was give up some time and learn about the processes of cashflow and profits to then gain knowledge in order to forge a business. When you start a business, most of the time, you do not have money and the only resource you have is time, so making sure you are labour intensive is key to that growth.”
It was this mentality that led the company to be recognised as one of the fastest growing in the UK last year.
Latham continues: “The best way to describe us is that we are a hobby that got out of hand – to then be ranked as one of the fastest growing business in the country is phenomenal. We just keep trying to push the limits of what we think is achievable.”
Learning as they grow
By learning on the job, the founders managed to see huge year-on-year success. Also, by living in the moment, rather than having a long-term concrete goal, they were able to adapt to the industry and the demands of their customers.
Latham comments: “We were learning on the go and seeing where our business would end up. If you have people that are young, keen and hungry, they can create something new and different, which is very important for a growing business.”
Velocity Commerce investigated ways they could create an inspired and driven team that were hungry for knowledge and always looking for ways to keep ahead of the curve.
He continues: “We have done a lot of work with government apprenticeship schemes, as we are looking at taking on people who don’t necessarily have the skill set but really want to learn. We have then gone on a journey with them. Through this, the business has retained its agility.”
Creating the right environment
Learning and analysing the mistakes made along the way has played a vital role in Velocity’s success.
Scott comments: “It is very important to nurture an environment where your staff can make mistakes and learn from them. We both worked for a corporate business in play.com that made its staff petrified to make a mistake, so they always played it safe. The business effectively died slowly because of this. For your business to grow, you need to make mistakes and learn from them. Too many corporate companies don’t let that happen and it holds them back.”