Tipsy Elves: The Shark Tank Apparel Success
Who could forget when the founders of Tipsy Elves – Evan Mendelsohn and Nicklaus Morton presented their ugly sweater business pitch to judges on ABC’s 2013 Shark Tank Holiday Special, complete with a Christmas tree and holiday sweater catwalk.
Although the audition was entertaining to say the least, the sweater company has gone above and beyond to prove themselves – closing out 2015 with millions in revenue in just 5 years.
Today, the San Diego startup sells their popular apparel line in over 200 countries with additional websites for the UK and Canada.
Although they still consider themselves the “official sponsors” of National Ugly Christmas Sweater Day on December 20th, they’ve also expanded their apparel products to pajamas, hats and other accessories for a variety of holidays and events.
We caught up with Mendelsohn, to talk about Tipsy Elves recent apparel expansion, and dive deeper into their advertising strategy across ecommerce platforms including Google Shopping.
Tipsy Elves Founded in 2011
“When we first started Tipsy Elves, we knew very little. I was working as a lawyer and Nick (the other co-founder) was working as a dentist. We were college friends and I had the crazy idea of starting the company, and Nick had the crazy idea of joining me.
“The only piece of “pre-existing” knowledge I brought to the start-up days of Tipsy Elves was my background in internet marketing.”
“I had a good base knowledge in SEO and some other internet marketing avenues, but we had to fill in all the other gaps like design, manufacturing, development, fulfillment, etc. We had a lot of hiccups in the beginning and there were several times we thought things wouldn’t work out.”
“At one point, one of our manufacturers botched half our products for the year, and we had to rush manufacture a replacement order with a different manufacturer.”
“Nick and I were both working full-time jobs as a dentist and lawyer when we started Tipsy Elves, so this put a lot of demands on our schedules as we worked day jobs and then worked on Tipsy Elves after hours on weeknights and weekends. Things grew quickly and we sold out of all our products in our first year of business.”
“In the second year, we were able to scale and have another strong year, and in 2013 we appeared on Season Five of ABC’s Shark Tank.”
Tipsy Elves Featured on ABC’s Shark Tank
The Tipsy Elves founders saw an advertisement for Shark Tank auditions.
“We realized the timing couldn’t have been better because we are avid fans of the show and had been talking about applying just a few weeks before.”
According to Mendelsohn, they had to go through the normal application process and prepare a short video.
Shark Tank receives at least 30,000 applications a year. Mendelsohn and Morton knew it was a bit of a long shot but luckily in early June they were accepted to be on the show.
Once they were given their film date, it was time to start preparing for the show. The pitch is a critical component of the show – a once in a lifetime opportunity to introduce yourself to the Sharks, tell them about your business, and propose an investment offer.
At the time, Mendelsohn and his team were especially interested in Shark investors including Mark Cuban (because of his internet experience and ability to expand the online presence of his companies), Daymond John (because of his retail and branding experience), and Robert Herjavec (because of his internet experience and presence in Canada.)
“We kept this in mind when tailoring our pitch. Our producers were great in guiding us through this process and helping us put together the perfect pitch for the show,” he said.
Another component that was essential to a successful pitch was a complete understanding of the company’s financials.
“It was the first time we used flash cards since college. While the pitch was the primary focus of our preparation, we knew we would be getting grilled by the sharks as soon as we finished our pitch, and we needed to be prepared to answer very detailed questions about our business.”
“While we knew our numbers well, there’s a big difference between knowing roughly what your revenues and profits are versus knowing exactly what your COGS, gross profit, net profit, conversion rate, and customer acquisition costs are. We had lots of stuff to memorize and little time to do it.”
During their pitch, Mendelsohn and Morton reveal they had over $800K in sales in 2012 with half of those sales coming in from Amazon, but they want to go into wholesale.
“Robert Herjavec liked the risk we took in quitting our jobs.”
At the time, Mendelsohn left a $175k per year job to focus on the business.
“He gave us an investment of $100,000 for 10% of the business. Robert has been an invaluable resource to our business, especially as we’ve expanded and had to make a lot of important strategic decisions.”
Tipsy Elves Expands Apparel Line
Herjavec and his marketing team were the guiding force that convinced Mendelsohn and Morton to transition Tipsy Elves from a very concentrated, seasonal product to a larger offering of apparel and accessories.
The founders worked directly with Herjavec to expand production.
Tipsy Elves expanded from 10 men’s holiday sweaters sold as unisex to include beanies, socks, jumpsuits, t-shirts, and official college sweaters. They also offer products beyond Christmas including the Fourth of July and Thanksgiving.
The goal was to give Tipsy Elves year-round exposure to their audience. In 2013, they accumulated about $3 million in sales and by the following year nearly doubled that amount.
Although Mendelsohn credits Shark Tank as one of the “best things to happen to Tipsy Elves” allowing them exposure to almost 10 million viewers – it is not the only contributing factor that continues to keep their business thriving today.
Tipsy Elves & Google Shopping Strategy
“We’ve seen a big switch in ecommerce in the last few years from people relying mostly on organic search results to spending more time browsing in the “Shopping” tab of Google. This was obviously Google’s goal and we’ve really seen it play out.”
“Google Shopping provides a much cleaner shopping experience, and often times the best companies (with the best images, prices, shipping policies, reliability) are the ones you find on Google Shopping.”
“Google Shopping is great because it allows us to showcase our products visually, while also including pertinent information about the products such as reviews, price, etc. We’ve had the fortune of being able to scale our business through big media exposure (i.e. Shark Tank and celebrity endorsements) and strong organic growth, but PPC has also been a part of our growth strategy.”
“We make fun products that are very visual in nature, and we’ve found visual channels like Google Shopping, Facebook, Pinterest and Instagram are some of our better performing channels.”
Today almost 90% of Tipsy Elves’ sales are from its website. They leverage a variety of advertising tactics on Google Shopping including call to actions, discounts and up-sells that attract and engage their audience year round.
One of these tactics they’ve seen success from is the use of a prominent tool in checkout. The tool gives shoppers and option to round up their order to the nearest dollar, and donate the excess amount to charity – where Tipsy Elves matches each donation.
It’s safe to say Herjavec’s investment paid off – regardless of what his fellow Shark investors had to say about the “hideous” Christmas sweater business. In just a few months he made his $100,000 investment back and is still profiting from the business today.
The Future of Tipsy Elves
“Our roles have really shifted as we’ve grown. In the first few years of business, I was more involved in the weeds of each area of our business – design, manufacturing, fulfillment, etc. We now have a team of about 25 employees so I’m able to spend less time in the weeds and more time interacting with the leads of each department and just generally over-seeing initiatives like growth strategies, product execution and expansion, etc.”
“I love it all, but it has been especially enjoyable in the last year putting more reliance on our amazing team and acting in more of a managerial capacity, while over-seeing our biggest initiatives.”
“We really see Tipsy Elves as being a huge company with a large online presence and perhaps some physical brick and mortar locations.”
“We’ve recently been expanding our product lines, and we now sell holiday sweaters, ski suits, St. Patrick’s Day shirts, patriotic clothing, summer gear like Hawaiian shirts and men’s swim trunks, and we are introducing a Halloween collection shortly.”
“We like to say we are the go to shop for any gathering, occasion, or event where you want to step your game up, wear something that gets you noticed, and makes you have a great time.”