Planes, Trains and Automobiles: a Decade of HobbyKing

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By Published On: March 21, 20190 Comments

HobbyKing's growth has been enormous since it launched in 2008. But retailers can learn much from the many bumps in the road it encountered along the way.

Back in 2008, HobbyKing was an eBay store. Fast-forward today and the pureplay online retailer has around 300 employees, offices in Sydney, Perth, Hong Kong, Netherlands, New York, Philippines and London as well as distribution centres in Australia, USA, UK, mainland Europe, Hong Kong and China.

Hobby King operates in the toys and (unsurprisingly) hobbies vertical, specialising in remote-controlled toys. Its rapid expansion came as a result of a boom in new technologies that were adopted in the space. “The main drivers of growth were powerful electric motors and powerful batteries,” says Toby Osmond, CEO of HobbyKing. “These same technologies are what Tesla (and now the rest of the automotive industry) has used to develop electric vehicles.”

The popularity of drones also helped propel the company forward. “We were already a strong player in the RC (remote control) market and drones used a lot of the same components as our RC cars and planes,” Osmond tells us. “Our drone business continues to evolve with the advent of Drone Racing. Our teams have won the Drone Racing World Championships three times consecutively.” Pretty impressive considering the World Championships have only been held three times!

But this expansion (and winning streak) wasn’t without hurdles. The company experimented with a franchise model and in 2012 had over 60 franchises globally. “Our franchise and cross-channel approach didn’t work. Our Every Day Low Pricing mode (EDLP) didn’t allow brick and mortar shops to compete on a level playing field,” Osmond explains.

The company still has a thriving wholesale business which supplies products to physical stores in regions that it can’t easily ship to.

It also attempted to mix up its product offering, from simple RC model planes and cars to electric bicycles, drones and airsoft products (BB guns). “Currently we are returning to our original strengths of RC model planes,” Osmond tells us.

With this pureplay focus, the company has also had to ensure that its online experience keeps up with the changing landscape. “We’ve recently re-platformed from our custom .asp website to Magento. We chose to re-platform as we didn’t have a dedicated mobile site, our website wasn’t responsive, and our website was slow. As a result, our SEO suffered, and our organic search traffic declined,” explains Osmond.

Again, this didn’t go exactly as planned. “The replatform did not go smoothly for a variety of reasons,” Osmond tells us. “We’ve spent the past year attempting to iron out the bugs in our current website. We believe that we’re only now coming to a space where customers are enjoying the experience.”

Consumer experience is a huge focus for Hobby King, informing everything from their mobile site to fulfilment. “We have six distribution centres spread across Australia, USA, UK, mainland Europe, Hong Kong and China. Each centre offers a minimum of two different courier options (at least one that offers great bang for buck and one that offers excellent speed of delivery),” Osmond says. “At the Checkout our customers can chose the method that suits them best. We attempt to dispatch all products within 24 hours.” Last year it achieved this 24 for 98 percent of orders.

Logistics continues to be a space that the company is always working to improve, find efficiencies and crunch numbers to offer interesting an innovative ways to reduce check out friction. “In 2017 we implemented free shipping if customers met certain purchase criteria. This was very well received and resulted in much improved conversion rates,” says Osmond. “The program was so popular that we extended it from being a trial to a permanent offering.”

This focus on the customer goes beyond delivery as well. “When our company was founded the focus was on growth with customer service being a distant second,” Osmond says. “In 2008 there was very little competition so aftersales just wasn’t an imperative. This has changed significantly since and we’ve worked hard to improve in this area.”

HobbyKing now has Live Chat as well as a Ticketing system. “The bottleneck for us hasn’t been the technology, it has been the technical nature of our products. We’ve experimented with various customer service offices all over the world but eventually ‘bit the bullet’ and set up a dedicated remote control customer service centre in New York,” says Osmond. “It is staffed my modellers with hundreds of years of modelling experience between them. In doing so HobbyKing has turned what was a weakness into a real strength within our vertical.

The global nature of the business means that it also needs to incorporate payments into its UX strategy. “For the first 8 years we offered only PayPal and Credit Card to settle payments. Eventually we realised that not every market loves those options so we experimented with GiroPay in Germany, Boletto Bancario in South America, Sofort, Boku and more,” says Osmond. “By expanding our offerings we dramatically increased our conversion rates and lowered transaction fees.”

What’s next for HobbyKing? “We’ve got a bunch of great new products to implement into our site plus we’re about to finish off the implementation of a three year ERP project,” Osmond tells us. “It’s exciting to see these finally come to fruition and exciting to realise the benefits that they’ll bring to our business.”

Given what HobbyKing has learnt over the last decade, what is its advice to other online retailers? “When you need to scale up and invest in your digital infrastructure, engage with a strong and reputable system integrator. Follow their lead, trust them and spend a lot of time scoping!”

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