About our company
Making the world smell great
In the very begining...
Back in 2014, two entrepreneur friends, Simon and Grant, launched a website to sell generic perfumes. Generic perfumes were in their infancy in South Africa and generally frowned upon.
Pricing their perfume at R300 for a 50ml bottle, they sold the princely amount of 3 (2 of which went to Grant’s brother as a family favour). In a panic, they dropped their price to R80 and immediately sold 1000 in the following month.
And so it began
This was the moment of understanding… no matter how good generic perfumes were, price was always going to play a big role in their success. Fortunately, perfume is really cheap to make so low prices are possible – if they weren’t greedy, put the customer first and didn’t follow the pricing trends established by the perfume monopolies, R99 per bottle was achievable.
We grew, and grew
Over the following years, the company grew and expanded into retail stores and kiosks – ticking over nicely. They quickly had to move out of Simon’s garage as his house was fully overrun with stock, packaging, shrink wrap machines and a dozen staff members. The first move to a shared warehouse above a sweet shop and then the company moved into their current warehouse – a 500m2 warehouse in Meadowbrook Business Estate in Randburg.
The staff compliment had also grown to about 50 people. Outsourced services were being brought inhouse building a culture of skilled and passionate people. We all want to see the company flourish and benefit our customers.
Lockdown. Customers lost jobs. Shopping centers closed their doors. A global economic disaster, right on their doorstep. Panic stations again – but good entrepreneurs never let a crisis go to waste.
Again, the guiding philosophy of being modest in markups and giving value to our customers, guided them to the next phase in their business.
Dropping the price launched the company, perhaps dropping the price further will save it too…
R50 pop-up promotions
Because it costs about R30 to make a bottle of perfume, they took the gamble of pricing their 30ml bottles at R50 and went to market with a 2 week promotion in a shopping center. By renting a display court and putting the perfumes into dump bins, we could reach people who wouldn’t normally even consider using perfume.
To everyone’s surprise, they saw a big increase in sales. The company’s new direction was blooming.
This brought problems
R50 pop-up promotions were wonderful but they were not sustainable. We had 3 problems to overcome:
1 – Tenants in shopping centers were strong-arming shopping center management and we were forced to move and even banned.
2 – We were limited to Gauteng. The cost of moving massive amounts of stock to Durban or Cape Town was prohibitive.
3 – Our suppliers could not keep up with our increased demand. Our bottles changed monthly because we just had to take what we could get. In May 2021, we had purchased EVERY pump in the country.
The stock solution
We had to control the manufacturing as much as possible to reduce our production costs so we could continue selling at R50, and guarantee consistent bottle supply.
Our solution: Plastic bottles. They bring many benefits:
- Cheaper to produce
- They are locally manufactured
- We don’t wait months for Chinese imports
- Practically indestructable
- Stand out with a unique brand image
- Allow colour coding between Men and Ladies
The reach solution
We had to move to selling online as our focus. No one can block us online. No one can throw us out. We are completely separated from the shops, competitors, monopolies and anyone else who might pull strings to prevent us from reaching our customers.
One hurdle here was the reliability of door-to-door couriers. Parcels being delivered when no-one is home and addresses that just can’t be found creates an administrative and costly problem as orders are returned undelivered. Pargo’s collection points offering solves this.
Maintaining our low prices
In our drive to get production as low as possible, we also had to look at our production costs. Like many businesses, we experience the 80/20 issue. 80% of our sales come from 20% of our perfumes. It was costing us a small fortune to mix, label, stock and distribute perfumes that weren’t selling. This adds to our overheads and drives our prices up.
An added benefit to this is we could negotiate high volume discounts with our oil suppliers, bringing our production costs down even further. By remembering our core value of not being greedy, we could still get room for further discounting for bulk buyers.