SumoEnterprises Andrew Milligan: From Bags to Riches
The story of SumoLounge‘s founder, Andrew Milligan, is ironically one of discomfort. After spending his mid-20′s as a merchant marine, in his inexperience he attempted to buy beanbags wholesale from Europe and sell them to North American stores. After eight months of running on empty, a supplier in Europe refused to deal with his order, telling him "perhaps you should look into a more profitable business."
He had one in mind, it was just very, very hard to execute on. Bean bags are classically cheap products – and premium versions cost nearly as much as a new sofa, somewhat defeating the point of having one (Lovesac being a prime example.)
Some months later, Milligan decided to go into the direct-to-consumer model – creating his own bags and sell them on the web. By 2005, he was once again in dire straits – bounced checks, rent unpaid and desperate, a foam company reached out to him, liking the idea but seeing the obvious holes in his business. Sitting up from a small warehouse where he was spending the time fill said beanbags himself, Milligan agreed to let them manufacture the bags to his specifications, letting him focus on getting people to actually buy them.
Milligan muddled through a list of Alexa’s top 10,000 websites, finding the right people to contact and sending them beanbags. His quasi guerilla-marketing ploy worked – as reviews piled in, the business surfed towards profitability – Milligan moved to Panama, and watched as sales tripled month-to-month in 2006, finishing the year at 800% growth.
In 2007 he expanded to the UK and 2008 into the US, Australia and New Zealand, and now in 2011 have fourteen factories in seven countries. With 50% growth this year, the business has actually begun to succeed almost purely through Milligan’s own marketing efforts – one man and an email address creating a sustainable business in one of the most bizarre fields a man could enter.
Though the business’ tactics have been somewhat makeshift, the products themselves are surprisingly good – the Gigantor sac is a hulking, sofa-sized combination of foam that can encapsulate two people in a wall of softness, and one that I can recommend (as long as you’re using a laptop). At over $400, it’s an expense that many will shirk at, but Milligan has cut costs by selling strictly online and dealing with stockists directly. For example, a competing product costs over $700 – approaching the cost of an actual sofa.
All in all, Milligan is proud of his niche. Though he claims it’s a low-margin business, he’s found a way to make up for it with sheer volume and low overhead – the benefits of an online-only business. His next move is to try and create Sumo Apartments – essentially AirBNB for the long-stay corporate crowd.
Will it work? Who knows. But Andrew’s story proves that giving up may be an option – just not the right one.
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