The financial confidence one business needed to try a new direction

A switch in communications led to an unexpected rise in online sales for Afrocenchix, forcing the company to make some brave decisions about which sales model to prioritise.

Afro hair brand Afrocenchix was on target to have its products stocked in 200 new stores this year. But the coronavirus crisis meant many retailers stopped listing new products.

Owners Rachael Twumasi-Corson and Joycelyn Mate have built a strong and loyal community around the brand. They decided to set up a “community spotlight” sharing other businesses’ stories in their newsletters.

“It was a completely unintentional consequence, but it led to more people buying our products,” said Rachael. “We found that when we sent out our newsletters bigging up other businesses in our community they led to more sales than our old newsletters.”

Weigh up the profitability of different retail channels

The stock they thought would last three months ran out in four weeks and the business had to bring back the two staff put on furlough to help meet demand. The next stage was to look at the business plan. 

“We had a big growth strategy which was aiming for ten times overall growth. We missed out on the retail part of that in the past quarter, but we did much better online. 

“We sold far fewer bottles of product than expected but we made more profit from it because the margins are better online,” Rachael said.

The business duo always intended for Afrocenchix to be a direct-to-consumer brand because it would allow them to have more control over the customer experience. However, the certainty of retail contracts had been hard to resist and taken them further down the retail route.

“If you’ve got a 100 per cent guaranteed retail contract it’s very difficult to turn that down. When that certainty was taken from us due to coronavirus it put us in a different place. We were no longer looking at a sure thing with retail versus a probable thing with online. We were looking at two probable things and they had very different margins.”

Making decisions based on research and data

The pandemic changed Afrocenchix’s sales model in the short-term, but could it translate into a longer-term plan? It’s a topic that Rachael and Joycelyn are continuing to explore. 

With most of their competitors using retail as the main route to consumers, it goes against the grain for their type of business – but they see this as a great opportunity.

Behind the scenes, a lot of research has taken place. There’s been historical research to better understand the long-term impacts of a pandemic, assessments of the company’s KPIs and SWOT analyses.

“You have to look at all the options, even the ones that sound ridiculous, like winding down the company and returning investor funds,” said Rachael. 

“Ultimately, we have to make sure that we can support the health and wellbeing of our team and our community while ensuring that we maintain a positive cash flow.”

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