Lessons Learned: T-shirt Retailer Launches in Dorm Room

You would think running a fledgling beer t-shirt company as a finance and marketing student would get you extra points with your New York University lecturers. But rather, in 2004, it got Roy Laniado thrown from his dorm room. Like most universities, NYU prohibits conducting a business for profit from student dorms.

Laniado, who was born in Myrtle Beach, South Carolina, moved to Israel and then to South Africa, where his father owned a textiles firm. As a kid, he spent every summer working for his relatives in South Carolina in their own retail shop, Bargain Beachwear, which offered shore supplies and tourist requirements — as well as accredited beer apparel.

He jumped to the U.S. in 2001 as a 17-year-old and after a year working for Bargain Beachwear at Myrtle Beach, started his major in finance and marketing at New York University. In August 2004, he found Corona beer t-shirts on eBay — the kind which were sold at Bargain Beachwear — in an inflated price. Realizing he could undercut the eBay seller, Laniado purchased some merchandise from his father and started selling it on his personal eBay account.

Approximately four weeks and 329 eBay transactions later, Laniado launched WearYourBeer.com.

In March 2005, NYU officials recognized Laniado was running a company and forced him to live , where he conducted his startup in an apartment in Queens.

WearYourBeer has risen steadily in revenue, from $97,700 in 2005, to $223,065 in 2006, $620,176 in 2008, and $1,300,000 in 2011.

Up to now, with the busiest quarter to start, WearYourBeer has listed $1,020,00 in earnings this year. Laniado expects it for a $10 million dollar business by 2015.

Shopping Carts

Laniado taught himself HTML from reading books and studying online and within a couple of weeks, had created the first website for WearYourBeer, with the open minded shopping cart osCommerce.

“Initially, it was simple to use, and cheap. I knew a tiny bit of code so I used to attempt and customize it myself. Then, as the site grew with more goods and more layers, it was becoming too complex.”

In May 2005, WearYourBeer switched to cart program CRE Loaded, which comes from osCommerce. Inheriting a lot of its features like inventory management, content management, and the capability to add admin accounts into the backend, and including others, it’s a one-time fee of $50.

Credit Card Payments

WearYourBeer originally used PayPal because it was cheap and simple to use.

“We started accepting credit card payments through Bank of America near the end of 2005 after realizing that not everybody has PayPal and that we had to provide more customers as many choices as possible to cover.”

The company switched to accepting credit card payments through Fidelity Payment Services in 2007 because it supplied the more competitive processing speed of 2.1 percent.

Order Management

Laniado started selling WearYourBeer products out of his dorm room, making daily trips to the U.S. Post Office to provide packages for transport.

“But I had been kicked out for running a company in the dorm building in 2005 and moved into an apartment in Queens, where the USPS truck would come and pickup orders daily.”

Two decades later in 2007, WearYourBeer relocated to a nearby warehouse and office in Queens where USPS collected items. In 2010, Laniado outsourced order management, inventory management and fulfillment to The Holcombe Group, a third party warehouse transport center in Pennsylvania, which was recommended to him.

“In 2012, we started to use UPS for a few imports because clients wanted to get orders sooner and we have been able to incorporate the UPS Mail Innovations program [a hybrid model, combining UPS using USPS] inside our CRE Loaded order management applications.”

Hosting

WearYourBeer originally used GoDaddy for site hosting due to its low cost.

“We thought they’d be reliable because they’re a huge company but we soon found GoDaddy wasn’t compatible with osCommerce and PHP, so it became very tricky.”

Laniado then used a little hosting business in Queens because he enjoyed the company owner, enjoyed helping a local company, and it was cheap.

“But, the servers started crashing and there were many issues, so we switched to Rackspace in 2008, which we have been ever since. They’re well known in the technology sector and were recommended by a friend.”

Roy Laniado

Employees

Laniado did everything himself from August 2004 until May 2006 when he opened an office and hired somebody to pick and pack boxes and handle stock.

A year later, the business moved into a new office with an attached warehouse and hired another worker to pick and pack orders. At this moment, Laniado started hiring freelance web developers to work on the site.

“As things got busier, among our inventory managers, started helping out with client support and, after doing a excellent job, started working customer support regularly, as well as contributing to graphic design. And in May, 2008, we hired another man to do picking and packaging. Both of these people have stayed with the company ever since.”

As business grew, WearYourBeer added another worker for fulfillment, so that by Christmas 2009 it had six people working in house.

Following the 2009 vacations, Laniado outsourced inventory management and fulfillment tasks into The Holcombe Group.

Search Engine Optimization

WearYourBeer hired an SEO agency in Chicago 2008 but had little success. It then hired a freelancer in late 2009, who worked on SEO for the following two decades.

Laniado’s in-house advertising director, who was a senior marketing strategist for an internet advertising and marketing company in New York and substituted the freelancer in the end of 2011, comprises SEO among his responsibilities. Now, Laniado states WearYourBeer has a return on investment of $0.90 in profit for every advertising dollar spent.

Laniado claims that WearYourBeer currently ranks number one for 207 key words, and is somewhere on page 1 of Google’s organic search results for countless more.

“We rank very well for extended tail and head conditions, from’beer t shirts’ to matters as specific as’Budweiser beer koozie’ or’beer bottle holder sweatshirt’.”

Shipping

Via its Pennsylvania distribution center, WearYourBeer employs a combination of USPS and UPS shipping choices.

“We strive to create our’Free shipping after $50 in the US!’ offer very, very visible. Many people stick with the flat rate shipping, but this often is updated to expedited transport around the holidays.”

Product Sourcing

WearYourBeer began with only one Canadian and two U.S.-based vendors, which Laniado found after searching online for wholesalers, and after attending such trade displays as the Las Vegas MAGIC Show and The Surf Expo in Orlando, Florida.

“Over time, as we started selling more, we’ve been able to purchase from new vendors, some of whom had a minimum spend that we couldn’t afford at first.”

WearYourBeer currently has 115 vendors and shares approximately 6,000 products.

“We do not have a real vetting procedure. But so long as they have good prices, products we desire, and they look trustworthy — we will research them we will work with smaller businesses.”

Inventory Management

For many decades, WearYourBeer’s stock management consisted of a notebook, an Excel spreadsheet, and a small number of boxes with product in an apartment.

Laniado then progressed to maintaining stock in an office, and in the warehouse connected to the next office.

“We have had challenges with being overstocked and needing to put things on clearance. We have been understocked in Christmas because we did not have appropriate buying reports in the past, so we could not estimate how much we should purchase.”

“We can react instantly if items sell out. Our reports inform us when we’re getting low on certain things. It is all about how fast the vendor can get us the product.”

Now, inventory management is managed by The Holcombe Group, which receives the product, and then organizes, stocks, and picks and packs it.

Accounting Software

Laniado initially used an Excel spreadsheet to keep track of revenues and expenses. In May 2006, he started using QuickBooks and has been using it ever since.

Social Media

Surprisingly for such a youth-oriented firm, WearYourBeer hasn’t found success with social media.

“We have discovered that Facebook competitions and giveaways bring just those who do nothing but enter into competitions and giveaways. So they are not really substantial potential clients or individuals genuinely interested in the brand, but rather just interested in getting as many free items they could from Facebook ads.”

All workers help contribute to Facebook, Twitter, and other social networking platforms, but WearYourBeer is focusing on other priorities.

“We’re trying to be active on our website, but sadly there’s not enough time at the moment for content creation. We do have some things on Pinterest, but our action there is largely of this Pinterest button on the product pages, and a WearYourBeer page on Pinterest which we’ve added some products to. We do not update nearly as much as we need to.”

Expense Control

Laniado watches the income statement everyday to ensure nothing is getting out of control.

“The only time costs have gotten out of control is when we’ve purchased more styles than we sold, but then again, that’s the challenge for any retailer. We would all like to have the ability to purchase only those things which will surely sell.”

Customer Service

Laniado replied customer telephone calls and emails until one of his employees, Lori, undertook it in 2007.

Customer service stayed in-house until we contracted The Holcombe Group at 2010, however Lori still does eBay customer support.”

Biggest Mistakes

Laniado cites two common errors to a lot of new businesses: trying to save money on hosting and waiting too long to hire workers.

“By attempting to use a cheap hosting solution, we lost lots of revenue because the servers kept crashing, which meant our website went down continually, preventing us from selling our product. We should have gone for the more pricey — but much better and more powerful — hosting alternative.”

“My other biggest mistake was trying to do everything myself to keep down costs. I might have advanced my company a lot quicker with more workers.”

Biggest Successes

Laniado has been thrilled with his company’s solid growth.

“One day in the first summer, we went from three orders a day to 20 orders per day. It’s been steady success from that point. But when we broke a million dollars in revenue this past year, that would have our biggest success up to now.”

Laniado has also been happy with his company’s reputation for great customer service, quality products and excellent prices.

“I am pretty sure that each and every place on the internet where our business was examined rates us as being 4 out of 5 stars. So we’re regarded as a very good company to work with.”