Eddie Latham and PJ Scott
We’ve had the attitude of not giving anyone a hard time for making mistakes
Eddie Latham and PJ Scott’s hobby, Velocity Commerce, quickly got out of hand when they turned £120,000 in their first December. They both took early redundancy from their day jobs to focus on their business. Eight years later, they turned over £40m per year.
How it started
Retrieving a treasured scarf that had been left in a pub was the start of an eight-years-and-counting business partnership for Eddie Latham and PJ Scott. PJ had initially had his doubts about the Liverpool-supporting Eddie, but recovering the scarf convinced him he was a good guy in spite of his taste in football teams.
The pair had met while working for online retailer Play.com. PJ was a retailer buyer, with a history at groups such as Harrods. Eddie understood small businesses and selling online. Play.com at that point was growing fast, with £500m in turnover and proving itself a credible rival to Amazon. However, the pair started having doubts when the group was taken over by Rakuten and the business moved in a new direction.
While they were still at Play.com PJ and Eddie had started a small business, Velocity Commerce; “just a hobby” says PJ. They bought some unused stock from a supplier and sold it through the major ecommerce sites such as Ebay and Amazon, putting in £1,500 upfront. It helped them see what the competition were doing and gave them a good insight into selling online. “Eddie would wake up at 6am to do the post and I’d do the booking before I went to bed.”
However, the ‘hobby’ quickly got out of hand. They turned over £120,000 in their first December. It started to become incompatible with their day jobs and both took early redundancy to focus on the business after 18 months.
How it’s going
Working on the business full time paid off – turnover doubled rapidly. PJ adds: “It also meant we could look at new ways to grow. Initially, we were only buying clearance stock – whatever line was listed, we bought all the stock left to take it to zero. That meant there was no competition, but it also meant that when it went to zero, they had to look for another deal. It was profitable, but it was hand to mouth.”
The pair started to look for UK suppliers where they could get continuity of supply, moving into refurbished stock for groups such as Pure Radio. PJ says: “We could take all the stock and sell aggressively on price because we’re the only people who had that refurbished stock. Every month, we had continuity of supply.”
They also headed out to China and sourced three own-brand ranges. The business quickly moved from hand to mouth to something on which they could build a business. When they left Play.com they turned over £60,000. This quickly went to 120,000, then £3m. Eight years later, they turned over £40m+ per year.
The business is now split between the own brand range, which is now 60% of sales, and managing other brands such as Lego, Sony and Britta (35% of turnover). The third part of the business – and the one they’re most excited about – is an Amazon agency. PJ says: “We do all the clever stuff in terms of helping someone build an own brand range or selling product online, but we never touch the stock. We make sure it’s beautifully listed, do the advertising and advise on how to build a range from scratch using search data.”
Eight years in, what did they get right and wrong? The pair believes having own-brand products was vitally important: “The online marketplaces are built to drive the price down and increase competition. If you can only sell on price, before you know it, no-one’s making any money. We structured it like that from day one and that has served us well.”
On the flip side, they were perhaps not quick enough to bring in new people. In the first few years, they had a lean business model and were reluctant to recruit because it seemed like a cost, but eventually they realised they needed to break away from that mindset to grow. “Recruitment is not a cost, it’s an investment. Even though we were growing quickly, we could have grown profits faster if we’d spent more on staff earlier. As recently as two years ago, I was still doing the book-keeping,” says PJ.
However, the pair are sanguine about any errors along the way: “We’ve had the attitude of not giving anyone a hard time for making mistakes. Instead we’ve tried to learn from what we’re doing and be agile.”
That extends to staff members. PJ says: “We sit with everyone else. Everyone’s opinion is valid. If someone has an idea, we’ll say give us the data and we’ll do a trial. The market moves so quickly. Amazon moves every couple of months. Some of our best employees are sub-25 because they don’t have pre-conceived ideas.” If anything, PJ believes far too much credence is given to longevity – senior management don’t necessarily have all the answers.
The pandemic has brought its own set of challenges: as with many ecommerce businesses, Velocity has seen incredible demand, but it’s been hard to get stock where it needs to be. The group now sells across the UK, Europe and US and when the first lockdown hit, it proved very difficult to get stock into Germany. Nevertheless, the UK business held firm, particularly Lego.
Overall, the year broke all previous records, but it was peaks and troughs. More importantly, they say, was ensuring people felt loved and supported and, where they recruited new people, that they had the tools for their new roles.
Looking to the future, PJ and Eddie are trying to give each area of the business its own identity this year, recognising that warehouse staff have different needs to someone in HR: “Everyone is part of the same family, but we want to treat them differently depending on their wants and needs.” This is all part of moving from a smaller business to a larger business, building a ‘machine’ that can operate independently.
Outreach is also important to them. With its #BackedByVelocity initiative, the group sponsors local grass-roots sports teams and community causes. They work with various local charities, as well as supporting children in Africa.
PJ says: “I’d love to see us get to £100m turnover and I think that’s achievable within the next two years. It’s about doing it properly. We invest heavily in HR, all of our staff feel loved and the outreach programmes are really important to us. We're not in the business of just cutting corners and trying to increase sales.”
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