17th April, 2020
Husband and wife team Michael and Paola Karamallis had to make the best of a bad situation when coronavirus wiped out the vast majority of their business’s projected revenue.
In February, Sydney fairy floss seller Fluffy Crunch had $250,000 in planned revenue for the next several weeks.
By March, that number turned to $0.
Royal Sydney Show? Gone. Vivid Sydney? Gone.
But co-founder Michael Karamallis had one trick up his sleeve. The company’s online sales infrastructure was in place, turning over a modest $2,000 a month. And with all those live events cancelled, it was time to kick the online revenue up a gear.
In March, the business did $30,000 in online sales.
“But the question is,” Michael wondered, “how long will it last?”
Businesses all across the country are struggling to see how they can pivot models in the midst of a crisis. Fluffy Crunch is still selling the same product, but it’s had to think carefully about marketing online when most of its business is done face-to-face.
Thankfully, Michael says they have the right product for their market.
“We help people reconnect with their childhood, with the nostalgia of having fun,” he told The Pulse.
A bit of confectionary in a troubled time never goes astray.
But this isn’t simple business. Scaling up an online operation has huge challenges.
“Because 20 percent of our business is online, we don’t have much packaging. I’ve had to order 2,000 boxes which is about $10,000,” said Michael. “It’s the hardest decision I’ve ever had to make.”
“Imagine we did this much every month. We wouldn’t have to do events — it’s got us thinking about the direction of our business.”
Michael and his wife, Paola, are taking a gamble. Will the online business continue doing well, or was it just a one-off? Investing resources seems like the best choice for now, but the pair are doing everything they can to make sure the sales are sustainable.
And to achieve that, the team at Fluffy Crunch are creating some innovative solutions.
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Over time, Fluffy Crunch has developed a solid network of business partners.
To help spread the word, the business has been sending promotional codes and other benefits to partners, and are heavily leaning into their existing customer base. Anything to bring back repeat business.
“We used to spend $1,000 a month on advertising, and we haven’t stopped that, but we also know we’re putting more into packaging.
“So we’re promoting through word of mouth, and using items like free delivery codes, 10-15 percent off codes — that sort of thing.”
Fluffy Crunch is finding success by tinkering with coupon discounts in order to stimulate referrals and repeat business.
“We have to market it like that during these times; our opening price point is $37 including delivery,” said Michael.
“We’ve got over 12 different flavours, first-time buyers will order the standard ones, we’ll give them a promo code and they’ll often be back for a second order in the next five-to-six days.”
Building a recognisable social presence is important during a typical business period, but Fluffy Crunch is going hard. Their tactic? Making the business seem personable.
Michael and Paola’s daughter is known through their social channels as ‘Lil Fluffy’. They’ve created a new product called the Lil Fluffy “I’m Bored” box, and have connected with other companies to include items in the box, like activity packs and other toys.
Michael’s quick to note: this is smart business practice during any time. Doing this during a crisis simply makes it all the more valuable.
“We’re just trying to stay top-of-mind.”
Michael and Paola are faced with a tough situation, and they want to keep costs as low as they can. So they’re asking themselves: what can they use that they already have?
Last year, the business sold advent calendar boxes. And they’re selling them again now — minus the holiday messaging.
“This year we had about 300 of the packages left, so we’ve called it the COVID-19 isolation box.
“The packaging just says: ‘25 days of Fluffy Crunch’.”
The business has done the same with some Valentine’s Day boxes as well.
“It’s something small,” said Michael, “but it helps.”
A lockdown isn’t something Michael would have chosen, but with that decision out of his hands, he’s taken the opportunity to catch up on some long overdue business hygiene.
“The email marketing, the CRM system, that’s something I’ve needed to work on for a while. But you usually just don’t have the time,” he said.
Now with that time on his hands, Michael says he wants the business in top shape when life goes back to normal. But he’s also hesitant to take his newfound success for granted — which means running lean and avoiding all unnecessary expenses as long as possible.
“The information we get changes so quickly,” he said, and there’s a lesson in that for all business owners: stay focused on what you can control, not what might happen in the future.
“We just set a target, and focus on that,” Michael said. “It might be something for the next 30 days, but we just focus on what we can do, how we can achieve that.”
“For other people it might be innovating and trying something different.
“I’d love to be a brewery that can make hand sanitiser, but I’m not that. So we just focus on what we can do.”
MYOB advises any business impacted by COVID-19 to consult with an accredited financial advisor, accountant or other qualified specialist. You can begin searching for an advisor here.