How Good Ideas and Obsession For Performance Grow Brands with Anthony Nappa, Oz Hair & Beauty

Michelle Lomas: Hey there, hustlers. Welcome back to another season of Flex Your Hustle. We've been busy over the last few months curating some amazing guests with stellar hustler stories, and we can't wait to share them with you in the coming weeks. There's gonna be something in there for everyone to take away and be inspired by.

Michelle Lomas: But now, onto our next guest on the show. I'm excited to introduce you to today's guest, Anthony Nappa, the CEO and founder of Oz Hair and Beauty.

Michelle Lomas: Anthony's easily one of the biggest hustlers that we've had on the show, and I mean that in the best possible way. Anthony started Oz Hair and Beauty at the tender age of just 19 years old and has grown it over the years to become the multimillion-dollar business it is today.

Michelle Lomas: With over a hundred employees, a booming online e-com presence, and a plan for further expansion into brick-and-mortar stores over the next few months. How did he take a family-run business, see the opportunity and grow it into the hugely successful omnichannel retail business It is today? Stick around to find out.

Michelle Lomas: Anthony, thank you for joining us today. Welcome to the show.

Anthony Nappa: No worries. Thanks for having me.

Michelle Lomas: So for all the listeners out there, why don't you give a bit of an intro to yourself and a little intro to Oz Hair and Beauty?

Michelle Lomas: Yeah, my name's Anthony Nappa, CEO of Oz Hair and Beauty. We are an online and soon-to-be omnichannel, multi-brand, hair and beauty retailer.

Michelle Lomas: Awesome. Soon to be omnichannel.

Anthony Nappa: Yeah, so soon to be omni. You know, historically we've been mainly online retailer. We do have one shop, but you can't have one shop and call yourself an omnichannel retailer. So we've got three launching by June this year, which will take us to four. And yeah, if they go well, then it's on for young and old.

Michelle Lomas: So you've got one of those really unique stories, launched a business when you were a fresh pup, 19 years old.

Anthony Nappa: Yeah.

Michelle Lomas: Tell us what happened. How did it all get started?

Anthony Nappa: You know, the plan was, you know, do a business degree, work part-time, and just do it undergraduate, um, postgraduate work and build yourself up like that.

Michelle Lomas: Mm-hmm.

Anthony Nappa: I was working as a laborer and he went away to Italy to organise some family affairs, as he said.

Michelle Lomas: Yep.

Anthony Nappa: And so I had no work.

Michelle Lomas: Mm-hmm.

Anthony Nappa: So my dad had like a warehouse, you know, my parents are hairdressers,

Michelle Lomas: And quite successful, right?

Anthony Nappa: Yeah. Yeah. So for 30 years, 35 years now they've been in business. So back then they had, you know, four hairdressing salons.

Michelle Lomas: Yep.

Anthony Nappa: Where they'd, you know, they sold retail as well, but they did, you know, hairdressing services. And while I was at uni as, as like a part-time job or like a hobby, really, not a part-time job, a hobby, I'd sell their products at, you know, at the back of his warehouse, you know, I'd put it on eBay as they sold.

Anthony Nappa: I'd go and pick up the products and buy.

Michelle Lomas: So you're basically doing it all yourself. I love it as a hobby too. Seems like a pretty big job for a hobby.

Anthony Nappa: Yeah. My dad tried to go online. There was like a little crappy site on the side.

Michelle Lomas: And what year are we talking about?

Anthony Nappa: 2012. February 1st.

Michelle Lomas: 2012. Yeah. So e-com was definitely on the up.

Michelle Lomas: eBay was a pretty strange-looking, difficult site to navigate and we didn't have, I guess, the groundswell of Shopify and the light to make things easier. Right?

Anthony Nappa: Nah. So that came five years later.

Michelle Lomas: Mm-hmm.

Anthony Nappa: Which changed everything for us. So they had a, you know, crappy site and, you know, not being a web guy at all, not knowing e-commerce at all, like I just naturally gravitated towards eBay.

Michelle Lomas: Mm.

Anthony Nappa: And just working that out and the titles that you've put free shipping, but put this price a little bit higher or maybe, you know, put the price cheaper, but charge shipping, just working that out and how to do different thumbnails because end of the day we're selling similar things to other people.

Michelle Lomas: Yes.

Anthony Nappa: The same product, but just find ways to differentiate yourself. So, we were doing that and you know, from doing it from full-time uni 10 months later, hired my first employee. Yeah. Who was a friend at uni with me a couple of days a week to help me, you know, pack some orders. Pretty much from there, it started growing, you know.

Anthony Nappa: Then I leased half of the warehouse out because I was taking up a lot of room. And then, you know, then I was, you know, being in quite a pain and clearing out his shops. And so I had to create my own accounts and then took over the full warehouse. This was probably in like two, or three years. My second youngest brother, he was helping, you know, on school holidays and then when he finished school, he would come to work more and he had a real like operational mindsets, like organising the warehouse, so it'd be efficient and you know, picking stuff and packing stuff like I wasn't really like that. I was just chasing my tail. I was growth, growth, growth. So as the business got quite big, we had probably like four or five, maybe six employees. And you know, he decided to come in with me in the business.

Michelle Lomas: Right.

Anthony Nappa: From there. Just, that's when it grew. It was at around the time, probably four years in, it was a good time because we started making a bit of a name of ourselves in the industry. Mm-hmm. And suppliers were getting, they were, they didn't wanna be on, cause these are premium brands, right, and like they don't really wanna be on eBay.

Anthony Nappa: So it was about that time when that was, those conversations were starting. I met with someone who has quite a successful business getting some advice and pretty much said, are you building Oz Hair and Beauty or are you building, you know, eBay? So those four years were trying the websites, but I was just pretty much not really experienced with them. It wasn't working that much. Yeah. So he put me in touch with a digital agency, you know, it was three grand a month and I'm like, oh!

Michelle Lomas: That's huge for a startup. You're like, what? I've already paid employees and rent and now I've gotta pay this agency.

Anthony Nappa: Well, I was pretty naive because I was paying eBay a lot more than three grand a month, right? But like three grand a month for, you know, SEO. What the hell's SEO?

Michelle Lomas: It's such a mental thing.

Anthony Nappa: You know, Google Adwords, I can do that myself. I'm doing that myself.

Michelle Lomas: Yeah. But then they start doing the work and you are like, oh wow, this is why you pay an agency.

Anthony Nappa: Hundred percent.

Anthony Nappa: And like, you know, that will digital agency, but like shout out to them quasi studios, they told us to get on Shopify. That's when Shopify was starting to make its name for itself. And it was mainly for businesses like ours at the time. Now it's obviously enterprise businesses, but back then no one really big was on Shopify.

Anthony Nappa: So it was great for us and we set up Google Shopping and we were quite competitive on price back then. And we had, you know, all the, the great brands due to, you know, my father's 30 years in the industry having relationships. So put like, four grand a month in Google. That worked really well. Got like 15 ROAS and then we just kept doing eight grand, 15 grand.

Anthony Nappa: At one point we're spending $350,000 a month on Google. Um, not getting 15 ROAS. I wish. That's how it started growing with digital marketing. Then we'd start doing email campaigns and back then eBay was 90% of our sales and now we don't even do eBay anymore.

Anthony Nappa: That's pretty much, you know, our e-commerce, you know, from eBay to our own ozhairandbeauty.com domain transition.

Michelle Lomas: And how's the business doing today?

Anthony Nappa: Yeah, the business is going good, um, 18 months ago we took some investment.

Michelle Lomas: I saw that. Congratulations.

Anthony Nappa: Yeah, it's from some good retail, traditional retail expertise to help us get into the omnichannel world. We actually moved into a bigger warehouse just before Covid, we were a bit nervous 1500 square metres. Previously we were 300 square metres, but we were bursting from the seams of that, and Covid happened and it was perfect. So that helped us.

Michelle Lomas: Yeah. Let's talk about Covid because it seems like you were doing great. And then Covid happened and you were doing really great where a lot of other businesses failed. Like how did you pivot during that time? I mean, obviously being an online retailer, you had an advantage over everybody else. But you know, what was that period like for you and, and how did you pivot?

Anthony Nappa: Little bit bittersweet because we took over the QVB store probably a couple of months before.

Michelle Lomas: Huge store.

Anthony Nappa: Yeah. Look at the time actually was half the size, so we took it over and took over the shop next door, luckily, you know, their lease was expiring. They didn't want to renew. So we took that over, did a renovation, and then, you know, Covid happened.

Anthony Nappa: But with the online retail, it really like, cause we were set up, had the infrastructure already there. We've been doing it for 10 years. It really just helped us. I know, I think we grew. From 20 million to like 40 million in a year. And a lot of businesses didn't have that growth.

Michelle Lomas: Well, you were prepared. I remember that period when most of the brands scrambled. We had a lot of clients who were like, we just don't know what to do. And the realisation that Sydney, at the time, Australia at the time was extremely slow to the e-com game. Overseas e-com is much more prevalent and important in people's everyday lives.

Michelle Lomas: And here because the infrastructure isn't necessarily there or a lot of retailers don't really promote it, it's, it wasn't as big as the time. And I just saw so many brands that had so many conversations with that realisation that, I waited too long, I didn't get ahead of it. And now this thing has hit us in the face and we have to pivot super quickly.

Michelle Lomas: And so it's almost like brands like you who had been doing it for so long and you guys have hacked the system the whole way. Like you, you made the rule book before the rule book was there, so it was almost like you're like, okay, we're, we're primed for this. We're ready to go. We know what we're doing.

Anthony Nappa: It's a good point because when I tried to go, so going like retail and, and online retail, It's, you know, we call it Omni. But it really is different disciplines. We took over our parents store in the QVB. I ran that project with my brother and you know, it didn't really go well. Fast forward two years later when we did the renovation again and we hired ahead of retail who was from General Pants, Lovisa experience.

Anthony Nappa: Having that experience, when we did it again, it was just chalk and cheese. So I feel like a lot of businesses, you know, in Covid that were traditional retailers, and then wanted to go to online. If you don't have that expertise that it's, it is a different language.

Michelle Lomas: It's, yeah, it's hard. Hard.

Anthony Nappa: It's hard. It's a different, it's hard. It's a different discipline, UX, conversion rate. You know, that was like a different language to me. So like going from retail to online retail hearing all these, you know, SEO for example, if you're a traditional retailer, you didn't know what SEO is.

Michelle Lomas: Or the, or the power of it.

Michelle Lomas: There's something interesting and I, and I wonder if it's maybe why you and your brother have been so successful at this, is you have a, uh, a certain mindset and a muscle memory, um, particularly starting off as a online e-comm. And I, I loved what you said before about eBay, how you were like testing the messaging, free shipping, doing this, what are the thumbnails?

Michelle Lomas: That kind of stuff. That's what online e-comm is all about. This like obsessiveness about all the messaging. How can I continually improve, optimise, you know, headlines, copy, imagery, that kind of stuff. And I feel like if you've worked in, you know, sort of a brick and mortar, there's more of a time to think about this stuff, to obsess over the little details, to, to wait and test and see.

Michelle Lomas: Whereas online you don't have time. You have to get sales better than it was yesterday and better than the week before. And so you are constantly thinking about every single element.

Anthony Nappa: Yeah. You know what that's described so perfectly. Um, you know, bricks and mortar, the shop closes at 6pm.

Michelle Lomas: Yep.

Anthony Nappa: And then opens again at 9am, like online 24/7.

Anthony Nappa: But with online retail, there is so much bases to cover.

Michelle Lomas: Yes.

Anthony Nappa: UX, email, paid search, SEO, affiliate marketing, so many different facets. Then there's the backend stuff. So you're right. Like you can never really sit down and really truly be satisfied.

Michelle Lomas: No, that's a 24/7 job. I bet when you're on holiday you're still like, change this headline or like-

Anthony Nappa: I've, I've learned, I've learned like, so the Shopify app, you know, it refreshes your sales.

Michelle Lomas: Yeah.

Anthony Nappa: And I had a real, we laugh about it, but it was a real mental health thing. Like, and you know, my dad used to see me like keep checking it and it was like, a dopamine hit. Yeah. And my mood was based on how good the sales would be.

Anthony Nappa: And I used to do some stupid things, like if I didn't get an order within, I don't know, five minutes.

Michelle Lomas: You freak out.

Anthony Nappa: I'd go place an order on the website. Check if the cart was broken and that look, that it's a, it's a more, more a curse than a blessing. But there was times where, like where was an order and then our Google ads, our credit cards expired.

Michelle Lomas: Yeah.

Anthony Nappa: So Google wasn't working. So there, there are good things from it. But overall mental health, like I deleted that app.

Michelle Lomas: There's probably every founder listening to this, nodding their head and going that they've done the same thing.

Anthony Nappa: When I hear another founder say that, I just wanna hug him, like, yes.

Michelle Lomas: We're in this together.

Anthony Nappa: We're in this together. Yeah.

Michelle Lomas: I did read in one of the articles that you had the website crash for a couple of weeks. Is that the most horrific story that's happened to you?

Anthony Nappa: Yeah, that was trying to change it. I tried to do some code and I Googled it and just like-

Michelle Lomas: Crashed the website

Anthony Nappa: Crashed then.

Michelle Lomas: Oh, how terrifying.

Anthony Nappa: Spent like, I don't know, like 2000 bucks to fix it. And back then, you know, that was, that was when I was starting too, yeah, that was probably all profit. So that's why like, you know what, let's do eBay,

Anthony Nappa: You know, eBay-

Michelle Lomas: That's when it all started. That's when the decision to do it happened.

Anthony Nappa: Yeah.

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Michelle Lomas: So let's talk a little bit about some of those tactics that you use.

Anthony Nappa: Yeah.

Michelle Lomas: To drive success, because I'm really interested in your story, mainly because you are one of those founders that we have on the show that didn't come from marketing.

Michelle Lomas: You didn't have this big background. Okay. You did a degree in business, but that doesn't necessarily give you the tools to be able to step right into a successful, you know, online retail business or to grow it. So you hustled your way, right? You figured it out as you went. And I, when you launched at that time, there wasn't a rule book.

Michelle Lomas: You were one of the early, you know, guys getting in there and really kind of, you know, building it from the ground up. So what are the things that you've learned and, you know, maybe, um, we can talk about, you know, you've mentioned it a couple of times in our previous chats about customer centricity. What is it about that?

Anthony Nappa: One of the tactics I figured out was cause I used to manage, you know, the Facebook ads myself.

Michelle Lomas: How'd that go for you?

Anthony Nappa: At the start, obviously it was, wasn't the best. Yeah. But it actually worked out all right. And, you know, I, was it myself working it out, or was it, you know, talking to the heaps of people?

Anthony Nappa: And I guess, I'm trying to think who told me. Cause I think there was actually a sales rep for GHD at the time, you know, telling me little tactics.

Michelle Lomas: I love the industry is so supportive of each other.

Anthony Nappa: Yeah. Yeah.

Michelle Lomas: If you're a founder, every other founder wants to help you. No, it's, there's none of this competitiveness that I think people would assume.

Anthony Nappa: No, a hundred percent. And it's good because you help, you get help. Mm. I feel like it comes in.

Michelle Lomas: That's right. You, you have to pay it forward.

Anthony Nappa: One thing I really wish I gravitated towards more. Cause now I'm really like, it's clicked to me and you are gonna say, oh, you know, a bit late. SEO-

Michelle Lomas: Takes time. Not that you are late to the party, but it takes time.

Anthony Nappa: It takes time.

Michelle Lomas: Yeah.

Anthony Nappa: And now that I've realised the, the formula of what to do, like, oh, we are always doing it. So we never, not did it, but I just outsourced it and trusted. I never really delved into it and figured it out, but now I've figured out like how to make it work. And it's like now it's, that's one thing I'm really obsessed with.

Michelle Lomas: And you should be, it's, well, it's fundamental. Yeah. It's like every other channel. You, you have to do CPC, you have to buy into Google, et cetera. SEO is a must have. Yeah. And a consideration that has to continue to happen. And I've seen in so many clients make the mistake of not putting the emphasis on it because they're not putting the big dollars into it like they are with CPC, for instance.

Michelle Lomas: And so, but the impact of that, if you pay someone regularly, it's a small team. They're pretty quiet most of the time. They just go away and they plug and they do what they do. But within a year, the impact of that is gonna be so extreme. You can start to turn off your paid because your organic search is working so well for you.

Anthony Nappa: Depends what company you work for. Like even for us a bit, you know, getting a board and stuff. I started like getting into the shoes of like, you know, gotta hit numbers and now I've just pulled that back and said, we're not hitting sales numbers for the sake of it. Yeah, let's take cause that's very easy to hit like a sales number, drop your prize.

Anthony Nappa: Put money in Google. You know, you're not gonna be profitable. Mm-hmm. So we've taken that approach and it's like five, 10 year approach.

Michelle Lomas: Interesting.

Anthony Nappa: Don't worry about the number now let's, sorry about the number in the future. We've had a lot of SEO gains without management team being fully immersed in it.

Anthony Nappa: So now that's the next exciting thing that on top of doing a lot of brand stuff, which we can talk about, that's the next step. You know, having SEO, our stores, doing a lot of brand stuff, hopefully in like, you know, two to three to three to four years. It all pays off at once, which is what the timeline is, and then we can really drive profitable customer acquisitions.

Anthony Nappa: We are profitable now, but more profitable.

Michelle Lomas: It's very brave of you, uh, as an online retailer to, to take, I guess to pull back on the gas pedal in terms of like low funnel. And to think about that top or mid funnel and how do we drive that, you know, lifetime value of a customer. Yeah, it's, it's something, especially in a market like we are today heading into a recession, you know, there's a bit of nervousness about what's gonna happen and are people gonna pull back their spending, et cetera.

Michelle Lomas: That you've gone No, let's, let's continue to think long term. Stop thinking about short term and let's think about our strategies for the future.

Anthony Nappa: I, it's the benefit of not being a public company.

Anthony Nappa: Yeah. I, we still have like shareholders as well, but they're pretty on board, which is good, you know?

Michelle Lomas: Yeah.

Anthony Nappa: They back us. I think you have to be always long term though, like, Even back then we were long term, right? But were we really, if we're just doing Google. But back then we probably thought Google was gonna be the way and wasn't gonna get-

Michelle Lomas: You can't rely on it anymore.

Anthony Nappa: You can't rely on it. No.

Michelle Lomas: I've heard so many, um, VC fund owners who talk about that one thing. We're looking for companies to invest in, that don't rely on paid media to drive their business forward and to scale their business. And so it's really the way that you've gotta be thinking about if you know you're heading into the future, how do I drive this business forward without having to rely on paid media?

Anthony Nappa: Yeah, it's a bit of a drug though, starting to wean off it.

Michelle Lomas: Wean off it. It literally is like a drug.

Anthony Nappa: It is. It's wean off. Like we're feeling a bit of withdrawal for now.

Michelle Lomas: Nervousness. Um, yeah. Anxiety.

Anthony Nappa: Yeah. Like I've just trained my brain not to get dopamine from sales. Right. Like, you know, and profit takes a couple weeks before you get, see what the profit is, so.

Anthony Nappa: Mm-hmm. That's what it's really like, I think. Yeah. Just training. Don't look at the profit, don't look at the sales, look at the, the bottom line. Look at how the sales are coming in. Cuz you know, we want to go omni as well. And you're paying big rent. Cause rent, Google is like rent. It's a rent in a more.

Michelle Lomas: Hundred percent.

Anthony Nappa: It's a traffic driver.

Michelle Lomas: Yep. Once you're in there, you can't, it's very hard, like you said, to pull it back.

Anthony Nappa: Yeah, yeah. So you don't wanna have two big traffic driver costs. Look, I've spoken to a lot of people in industries and I'm definitely the only one doing this. I think a lot of people are, you know, weaning off that paid media drug.

Michelle Lomas: Yeah. We spoke to another online retailer last year, Elliot Midalia from Boody, and same thing, they had just really focused on lower funnel for so long and they did their first brand campaign last year and they went hard.

Anthony Nappa: Yeah.

Michelle Lomas: You know, they got, uh, Jane Goodall as the face who's huge and you know, really went hard on a big marketing campaign and that really paid off for them.

Michelle Lomas: And it was the same conversation I think we're having now, which is the realisation that people and consumers also want a bit more, right? They're loyal to brands and if you are constantly focused on lower funnel and price point and relying on the brands that you sell, how do they come to you as a retailer when they're ready to buy haircare?

Michelle Lomas: Or are they looking for, as you say, Keratase and they're gonna look for the lowest price point? So there's that balance, right?

Anthony Nappa: Yeah, I agree. And cause we are a multi-brand retailer, it's never gonna be people type Keratase. We wanna make sure we're up there. So we'll always have a component to paid media and that'll always be there.

Anthony Nappa: Our goal is, I need a hair product. Go to Oz Hair, not I need a hair product, type

Anthony Nappa: in-

Michelle Lomas: I want Moroccan oil and not-

Anthony Nappa: Yeah.

Michelle Lomas: Yeah, exactly. Yeah.

Anthony Nappa: The stores are gonna help that for us because stores are a great way for branding. Um, you know, a lot of our competitors who won't name them, but we know we're bigger than them online.

Anthony Nappa: But as a company, they're massive. Cause they've had like over a hundred stores their brand awareness, um, a little bigger than ours cause they've been around longer and they've got a hundred stores. Yeah. Walking past the store and seeing that brand.

Michelle Lomas: Subliminally sticks in your head.

Anthony Nappa: Exactly. Yeah.

Michelle Lomas: So one area that we haven't talked about is affiliate marketing.

Anthony Nappa: Yeah.

Michelle Lomas: Um, tell me a little bit about what you're doing, uh, in that space and how it's working for you.

Anthony Nappa: Yeah, it was really good. Um, so one of those things about, you know, when it works, double down on it.

Michelle Lomas: Yes.

Anthony Nappa: This is something, you know, one of those things as well. Ah, didn't wish I realized this. You know, two years ago.

Michelle Lomas: You told me this story about how you did your first, um, influencer campaign, how much did you pay for it?

Anthony Nappa: Okay. So, yeah.

Michelle Lomas: Alright, here we go.

Anthony Nappa: Yeah. This is one thing. Yeah. This didn't work. Right. So seven years ago, but probably was seven years ago.

Michelle Lomas: Yeah.

Anthony Nappa: Cost about seven grand. I won't name the influencer, but it was one that would've more male followers than...

Michelle Lomas: Maybe some fake followers.

Anthony Nappa: Fake followers, male followers than female followers.

Anthony Nappa: Not very influential in the hair and beauty space.

Michelle Lomas: Yep.

Anthony Nappa: You know, we gave her some free products and it was some Mother's Day campaign. Mm-hmm. I was bitter off getting seven grand in front and off a balcony. Cause at least some of that. Seven grand hopefully would've just flown back in from the wind. You know, I would've got some money back.

Michelle Lomas: Oh Lord.

Anthony Nappa: Seeing between heaps of other ads.

Michelle Lomas: Yes.

Anthony Nappa: Wrong audience, no testing.

Michelle Lomas: Yep.

Anthony Nappa: So that didn't work.

Michelle Lomas: Terrible. I think some of the influencers that they still do to this day, but like they just take a photo holding a product and go, I love this product and it's like, if I scroll a week ago, you were using a different shampoo and you said exactly the same thing.

Anthony Nappa: So some controversy of Kim Kardashian, something that was meat and she's vegan, I think.

Michelle Lomas: Ah, yes. I think that was a, I mean, there's so many classic cases of that. Yeah. I think the Khloe Kardashian one where she had a cupboard full of cleaning products and I was like, girl, there's no way you clean your house.

Michelle Lomas: Like, ugh, get off it.

Anthony Nappa: No, a hundred percent, no way. That's so well that's an example of like, going on lower funnel, not top of funnel in terms of like you're just focused on the sale straightaway. Not on the long term, but I guess when they're that big they'll always get stuff.

Michelle Lomas: Awareness. It get drives awareness, but so basically it didn't work for you?

Anthony Nappa: Didn't work for me, no.

Michelle Lomas: So what'd you do because it's working now.

Anthony Nappa: Look, it's hard to measure, you know, our brand, look, our brand has grown. So we've moved from 28 to 44% of brand awareness, which is pretty good. On top of influencers though, we've done heaps of other stuff.

Michelle Lomas: Yes.

Anthony Nappa: It's hard to know if it's worked heaps, but it's something that we're still doing.

Anthony Nappa: I think it's part of a whole brand, you know, subconscious Chinese water torture, Oz Hair and Beauty, constantly in people's face.

Michelle Lomas: Chinese water torture. We'll just call it something more positive like, positive impact of influence or something?

Anthony Nappa: Yeah. Positive. Yeah, positive impact of, yeah. Okay. I'll call it that.

Michelle Lomas: Um, and so yeah, affiliate obviously is, is so much more than influencer marketing and I think most people kind of gravitate to influencer marketing first. So what else are you doing in that space?

Anthony Nappa: We've partnered up with Commission Factory and they got ShopBack, cashrewards, they manage that for us because great.

Anthony Nappa: We aren't able, I don't have the time to manage all those different affiliates and you know, we got recommended to them by a standing CMO. And one of those things where, you know, you put money in, you see good ROAS, you know.

Michelle Lomas: You just keep putting it in.

Anthony Nappa: Keep, keep putting it in. Yeah. And it's working. And now we're, what we're doing now is we're trying to really, instead of doing like an overall approach, which is per brand, we're segmenting certain offers per brand. Certain brands provide more margin, so.

Michelle Lomas: Excellent.

Anthony Nappa: Yeah.

Michelle Lomas: That's really good. Yeah. Um, as a retailer, that's really interesting that you are able to segment that and so gonna continue on in that aspect, obviously working well for you.

Anthony Nappa: Yeah. Yeah. That's, that's one thing we're doing. Yeah. We're not, we're not, that works well, you know, obviously some are better than others.

Michelle Lomas: Yep.

Anthony Nappa: It is still a form of paid marketing.

Michelle Lomas: Interesting. Some others would argue that it's, uh, cost of goods sold.

Anthony Nappa: Cost of, okay. Yeah, that's a good point. Because you only pay and once you've sold, sold the product.

Anthony Nappa: So yeah, that is a, it is a good, yeah, that's a good point. That's a good way to look at it.

Michelle Lomas: Yeah. Um, it's definitely a channel I would say that needs to be activated.

Anthony Nappa: Yeah, yeah.

Michelle Lomas: Definitely with the marketing lens. But

Anthony Nappa: Yeah, that's, that's actually, I've never looked at it like that. Yeah, it could be put, but you know, we're trying to improve our margin here on the book, so we're not gonna put it under that, under that thing.

Anthony Nappa: But yeah, no, that's, that's correct. That is a good way to look at it. Cause you only, unlike Google, you only pay once you've got the sale. Yeah. So it's a good tip there.

Michelle Lomas: Yeah, there you go. Have a think about the, you know, how you balance those books tomorrow. So let's talk about kind of that shift that you are now taking towards more of that long-term strategy in the brand.

Michelle Lomas: And obviously becoming a omnichannel brand is really important to you. What else are you doing to kind of drive that repeat customer?

Anthony Nappa: I read a great book, How Brands Grow.

Michelle Lomas: We'll leave a link to it in the show notes.

Anthony Nappa: I wish I read it. Oh, I wish I read it, two, three, you know, like SEO thing. I said like, I wish I'd read it two, three years ago.

Michelle Lomas: Yeah.

Anthony Nappa: Because what the science says in this book, cause he doesn't have any opinion, he just presents the science.

Michelle Lomas: Yep.

Anthony Nappa: The best way to grow retention is to grow your market share. You look at all the companies in all different industries, the higher the brand market penetration, the higher their repeat purchase rate is.

Anthony Nappa: Loyalty programs, you know, we need it. We have it there, we, we did it, we launched it.

Michelle Lomas: And table stakes now though, are loyalty program. Don't you think?

Anthony Nappa: It rewards your loyal customers anyway.

Michelle Lomas: Yeah, but you have to.

Anthony Nappa: I've looked at all, all competitors, um, not just competitors, but like, you know, public companies that you have access to and chats and you know, I've got a great standing CMO.

Anthony Nappa: You know, loyalty programs don't really increase overall retention. It just increases the overall, increases the loyal customers that are loyal anyway, which is a good thing too.

Michelle Lomas: Well, average basket size and things like that is always a good thing. Yeah. If you are, if you're moving the needle even at a small percentage.

Michelle Lomas: But yeah, I agree. There's definitely some research to suggest that it's not necessarily only part of the decision making. You have a loyalty program, that's great, but is that gonna convert people? Not necessarily.

Anthony Nappa: Well, for us, and from the data that I've looked at, it doesn't really convert the one buyer or the two buyers.

Anthony Nappa: People are like buyers, like, you know, I'm sure you purchased something for a, from a, a business. And you did not purchase it again because of any marketing campaign, they didn't do, they probably did all these campaigns. We just weren't ready to purchase it for another 13 months. And if you're doing active customers on a 12 month basis, you are technically a churn customer.

Anthony Nappa: But not for any reason. It's just how we buy. So I think a lot of people are just like category buyers. So our goal is to, for retention, we wanna try subscription, but what we wanna do is we want to increase our brand.

Anthony Nappa: So we've looked at the data and says people with the highest penetration, the highest brand awareness, have higher retention rates. So let's increase our brand and let's get more of these light category buyers. Yep. As science says in other industries, you know, your retention will naturally get better.

Michelle Lomas: Increase with the footfall. Right?

Anthony Nappa: Increase with the footfall. Yep. Yeah. Also, omnichannel retailers, people with bricks and mortars have, you know that people that shop on both are more loyal data says so we're gonna try and do that look by end of this year, we only have four, so it's not like anything massive.

Michelle Lomas: You're starting off in some big centers with some big foot traffic.

Anthony Nappa: Yeah. So yeah, we want to really increase our brand and you know, we've got a purple color. A lot of competitors are all black and white. Mm-hmm. We wanna own this purple colour. We want people to think subconsciously like Priceline.

Michelle Lomas: Priceline's pink.

Anthony Nappa: And we wanna own purple. Yeah. And like we're already strict. We own the store. Like we wanna make sure that colour purple is the same color on our website. So QVB, didn't we stuff that up?

Michelle Lomas: Time, time for a reno.

Anthony Nappa: But we're being strict on that. Yeah. That colour purple and yeah, we wanna really own that, that colour and just, you know, we're all still in the same stuff, but let's try and sell it in a different language.

Michelle Lomas: Yeah.

Anthony Nappa: Different branding.

Michelle Lomas: Yeah.

Anthony Nappa: And trying to do it in a different way.

Michelle Lomas: Smart. And I think the, the way that you're sort of heading into the strategy very slowly-

Anthony Nappa: Yeah.

Michelle Lomas: Is also smart because there is kind of this shift from a consumer perspective. Covid definitely changed the way that we are purchasing products.

Anthony Nappa: Yeah.

Michelle Lomas: Um, and maybe some of the products which hair care for, some people might sit in that category of, it's a, it's, it's a kind of like a lower investment purchase, right? I'm, unless I'm switching hair brands, I'm usually loyal to one brand. I've had the same shampoo for 10 years and maybe switch it up every now and then, but I know what I want.

Anthony Nappa: Yeah.

Michelle Lomas: And so, you know, that online retail aspect is just way easier for me as a consumer. You stepping into brick and mortar when a lot of brick and mortar is stepping away from it, heading more online. It's just a really interesting space in flux, and so I think that strategy to go slow but hit some pretty big centers while you're doing it, be very selective, um, in some pretty interesting, um, and high spend markets and see how it goes is like the smart approach.

Anthony Nappa: Yeah, no, I, I agree. And, you know, we're testing these four, if these four work and quite nerve-wracking. But if it does work, which not, you know, pretty confident it will. But if it, if it, once we get a, an idea of a couple months that it works, then it's on for young and old.

Anthony Nappa: Yeah. They're gonna really-

Michelle Lomas: You guys seem to be pretty chill about, um, if things don't go right from what I hear.

Michelle Lomas: A bit annoyed at the time, but you know, you live and learn and you keep going. So

Anthony Nappa: Yeah, we like, we got great team, great brand. There's no real reason why it won't. It won't work.

Michelle Lomas: Well then it will.

Anthony Nappa: Yeah, it will. Yeah.

Michelle Lomas: It's gonna work. It's gonna be amazing.

Anthony Nappa: Let's next year, yeah, we'll talk about this year.

Michelle Lomas: We'll be here next year talking about the other 40 stores that you're launching next year.

Anthony Nappa: Fingers crossed. Yeah.

Michelle Lomas: Alright, well I've got one last question for you. What do you think is gonna happen in the future when it comes to retail?

Anthony Nappa: Obviously 2023 is gonna be a bit tough for, um, online, but I think it's just, you know, just a bit of a bit of a valley.

Michelle Lomas: A valley's a pretty big dip.

Anthony Nappa: Valley's a dip. So it's a bit of a valley. Yeah.

Michelle Lomas: Or maybe a plateau. I'd like to say plateau. I think we've been on a pretty big steep growth curve. Right. And so maybe we're just gonna chill out a little bit for a little while.

Anthony Nappa: A hundred percent. So like you said, we always look long term.

Anthony Nappa: So if we look 10 years now, so over a 20 period, this will be a little blip into what's to come. I still do think online is definitely gonna keep growing, but it's gonna be the omni and you look at the results from the half years, you know, the public company's results, the ones with both have done really well, the ones with just online haven't done that well.

Anthony Nappa: So I think it's important the future is both. You can't be completely custom centric if you're not available to the customer whenever they wanna shop. However, so true. However they wanna shop. Yeah.

Michelle Lomas: So true. A little bit of a burning question, you know, Amazon picking up speed in this market. Prime Next Day Delivery, you think you'll head back into, uh, working with, uh, another online retailer?

Anthony Nappa: Um, we do in New Zealand.

Michelle Lomas: Yeah.

Anthony Nappa: You're trying to build that market up. I can't never say never. Mm. But definitely on the next two, three years.

Michelle Lomas: Maybe we'll be sitting here next year and you're like, yeah, we're getting into it.

Anthony Nappa: Well, I'm sure there's big American multi channel, multi-brand retailers doing that, so we'll see. Yeah.

Michelle Lomas: Anthony, thank you so much for joining the podcast. Really great story. Very excited for the future of Oz Hair and Beauty. We're gonna have all of the details in the show notes of the books that you mentioned, and also you know, when the stores are launching and where to go and visit them. Thank you again.

Michelle Lomas: Good luck. And all the best for the future.

Anthony Nappa: No worries. Thank you so much. It's been great.

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Michelle Lomas: We have another exciting episode coming up. Here's a sneak peek.

Michelle Lomas: What do you think is the future of cash back or credit back?

Alex Short: The future is definitely more instant. There's so much friction that exists with this 60 to 90 day delay for customers, so solving the problem for the customers is reducing that friction and even coming to the point where we no longer need a click.

Alex Short: I think how good would it be to just go on it and link your card and then shop anywhere knowing that you're gonna get these rewards.

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Michelle Lomas: I'm Michelle Lomas. Keep hustling and bye for now.