How This Direct to Consumer Brand Disrupted the Handcrafted Footwear Industry April 1, 2020 bizadmin Made in Italy and with handcrafted leather shoes seem to be a synonymous pair. Consumers covet this segment of footwear and accept its steeper price tag—the result of an industry layered with distributors, agents, resellers, and retailers. In walks, Velasca, a Milanese startup born in 2013, set out to disrupt the industry by connecting consumers directly to shoemakers. The concept for Velasca sprouted from a casual conversation between co-founders Enrico Casati and Jacopo Sebastio in the back of a taxi. It has since grown into a direct-to-consumer company selling hundreds of thousands of shoes in over 30 countries. We were keen to learn more about Velasca’s story, so during a trip to Milan in late 2019, I visited the company’s headquarters to speak with Enrico about how the brand first stepped foot into the industry and where it’s headed from here. You can listen to Velasca’s story on this special episode of Shopify Masters: [abc] Tailoring a business idea to solve a personal need Velasca’s office, a converted sugar factory that counts Armani and Fendi as neighbors, is located in a veritable sweet spot in Milan’s Tortona neighborhood—the fashion and design heart of the city, and a district that’s the epitome of “Made in Italy.” Enrico and I sat down in the company’s buzzing space to discuss how the brand is simultaneously disrupting and fitting into the fashion industry. Co-founders Enrico Castai (left) and Jacopo Sebastio (right) in the Tortona district of Milan, where Velasca is headquartered. Velasca In 2012, Enrico was working as a banker in Singapore. “I had this personal need for buying a pair of shoes for my job—a simple pair of loafers,” he says. “I was 25 at the time and was earning enough to live well in Singapore, but I didn’t want to overspend.” Enrico’s brother was visiting him at the time, along with a friend—Jacopo. Enrico and Jacopo started discussing the gap between designer and fast-fashion shoes, and a creative spark was ignited. They quickly brainstormed ways they might be able to bring handcrafted leather footwear to the everyday consumer. By cutting out layers of distribution, Velasca was able to deliver the same product as the big shoe players for a fraction of the price, like this pair of double monk straps. Velasca Their idea was simple on the surface—build their brand online. “We wanted to connect these craftsmen in Italy that are good at making the products with people that love Italian design and quality around the world.” Like their headquarters, their business model found a sweet spot. “We bet our company on being direct-to-consumer, which brings about a competitive advantage in terms of pricing,” Enrico says. “You make the same products from the same factories using the same materials as the famous brands. But you’re able to sell them at half the price of comparable products.” [abc] Finding an opportunity during an economic downturn In 2012, Italy was suffering an economic collapse— while many founders understandably believe a recession is not the time to start a business, Enrico and Jacopo saw it as an opportunity. Production companies lose money when they don’t produce. The local shoemakers’ lack of business during this downturn helped convince them to take a chance on Velasco. “It’s out of these economic crises and times of depression that there are more opportunities than there would be in times of economic boom,” Enrico says. So Enrico and Jacopo visited the mountainous region of Marche, where families of shoemakers stretch back generations. Working through different dialects, they were able to convince the makers to take on much smaller orders of a couple of hundred pairs, compared to the usual fashion houses orders of hundreds of thousands. “Size is not the only thing that matters—trust also is important,” says Enrico. The Velasca team built this trust by following through on their promise to pay shoemakers within 30 days of delivery. Enrico stresses that, from the very beginning, Velasca has always treated its relationship with shoemakers as a partnership, as opposed to a strictly transactional exchange with a supplier. The role of sleek, yet approachable storytelling With production relationships now established, Velsca shifted gears and focused on a “media as marketing” approach to reach new customers. “The first three years were just focused on marketing and sales,” Enrico says. “Once we established a good relationship with the makers, we didn’t get too involved in the production side, because we trusted them and their expertise.” Enrico says, “We focused on storytelling, making sure that the consumer understood that this was not just a discount website,” Enrico says. The direct-to-consumer model was still relatively new to Europe at the time, and the Velasca team had to pave the way, similar to the pivotal role Bonobos and Warby Parker played on the other side of the Atlantic. Visuals that perfectly balance editorial and everyday moments are a key component of how Velasca shared its stories. Velasca “We made sure that through video, photos, and interviews, the concept of Italian craft machine came through,” Enrico says. Ludovico Bertè, one of Velasca’s first employees and the company’s creative director today, played an instrumental role in capturing images that commanded attention and aided customers through the purchase journey. By being digitally native, Velasca was able to rely on smaller budgets and market through social media, email, SEO, and Google Ads. “We found our channel on Facebook, and then later on Instagram, because it’s picture-based, it’s emotions coming through a digital channel,” says Enrico. [abc] Velasca also elevated its marketing efforts by publishing a magazine called A Million Steps, which showcases the Italian way of life through interviews and stories on pop culture, sports, food, and more. There’s no mention of Velasca’s shoes or promotions to be found—it’s a separate editorial effort meant to accompany fans’ journey through life. Whether you’re putting a classic negroni recipe to good use or getting to know how the Mona Lisa gained popularity when reading A Million Steps, “you will feel like it’s a different entity,” Enrico says. “But Velasca and A Million Steps are different sides of the same coin.” The journey from online to offline with retail expansion While the direct-to-consumer model played an essential role in Velasca’s early success, the team knew there were channels they needed to explore to further scale their business. “We realized over time that we were not tapping into the full potential of the brand by being online only,” says Enrico. “We started seeing a lot of people emailing us and saying, ‘I love your products, but I don’t buy shoes online. Can I stop by your office and try them on, touch the leather, see the quality, and then order online?’” By listening to customers’ feedback, Velasca decided to start its in-person sales through pop-ups. Velasca Experimentation is embedded in Velasca’s culture. So it started by hitting the streets in ape cars and setting up temporary pop-ups next to bars during aperitivo (happy hour). This on-the-ground hustle is something Enrico remembers fondly. “Six months before this, I was in a suit and a tie every day, working on Excel and PowerPoint,” he says. “Six months later, I’m showing my products with our brand, with the name that I chose, to potential customers. It was a lot of fun.” Temporary pop-ups proved successful, and, in 2014, Velasca opened a temporary retail location. “I remember the rent for that place, for a month, was €3,500, which sounds small now, but it wasn’t at the time,” Enrico says. The team was cautious and created projections that outlined best- and worst-case financial scenarios. To their surprise, their investment in the retail storefront was made back in just two days—over opening weekend. From temporary pop-ups to over ten stores, Velasca now has a retail presence in Italy, France, and England. Velasca After opening its first permanent storefront in Milan in 2015, Velasca began scaling its physical presence with a new location in Rome the following year. In 2017, after 18 months of honing its retail strategy and execution, the company established seven new stores across Europe. Each expansion continues to result in significant sales growth—from London to Paris to Rome, Velasca consistently sees up to a six-fold increase in sales in respective cities whenever a new store opens. [abc] Steps for Velasca’s future Velasca’s team has grown, too, from just Enrico and Jacopo to over 35 people who look after the day-to-day operations. Velasca’s production supports ten families of shoemakers in Marche, along with five people who look after shipping and fulfillment. Their success has not gone unnoticed by investors: the team raised €4.5 million in their third round of funding in late 2019, bringing their total amount raised to over €8 million. Some of the team members of Velasca, who help to bring handcrafted shoes from the cobblers benches of Marche to customers all around the world. Velasca Swift year-over-year growth has brought about a whirlwind of changes for the business, but Enrico and the team remain dedicated to the simple things that keep them connected to customers. “Some daily activities that I make time for are responding to customers’ emails, and I’ll go to the store at least once a week and spend time there,” Enrico says. This unwavering commitment to customers is Velasca’s heartbeat, and Enrico believes the reason for the company’s success today—and for the years to come. It’s a time of ever-changing circumstances when all businesses are trying to adapt, pivot, and find new ways to grow. This conversation with Velasca’s founder took place in December 2019, and, much like everything else it does, the company’s response and way of connecting to its community during this challenging time are made beautifully. You can check out some of its initiatives on its Instagram feed. About the author Shuang Esther Shan Shuang is a storyteller at Shopify, fascinated by how change is created through commerce. When she’s not obsessively researching or glued to hearing the stories of merchants, she’s discovering new places—with a camera in hand. [abc]
