Tommy Kelly on Why Brexit is an Opportunity for eShopWorld

Tommy Kelly of eShopworld.Picture By David Conachy 22/3/2017

Samantha McCaughren from the independent meets e-commerce retailer Tommy Kelly, an entrepreneur who can’t wait to embrace Brexit

For many Irish businesses, the prospect of Brexit is a source of fear and uncertainty, but for Tommy Kelly the UK’s departure from the EU presents a new opportunity. His company, the Dublin-based eShopWorld, is all about making it easy for retailers to sell across borders. “Brexit creates another market for us so the UK just pops up as another region,” he says. “It is clearly going to have challenges for different aspects of business but for us it creates opportunity and the UK is a significant e-commerce market, so we’re watching it closely.”

Last week the company announced the creation of 250 jobs, which will bring the workforce to 400 in a few short years.

Online shopping between countries and regions is a rapidly growing business and although Kelly demurs from naming clients, customers of eShopWorld are known to include brand giants such as Victoria’s Secret and Nike.

“We don’t really discuss our customers but all I would say to you is if you look at the top lingerie, sports apparel, footwear brands in the world, we would represent most of the top three in those spaces.”

Set up in 2010, eShopWorld is growing at speed – with ambitions to grow turnover to €1bn by 2020. That might seem like a stretch for a company which had a turnover of just €148,000 in 2011. But the company, which has topped Deloitte’s list of Ireland’s fastest-growing companies, saw turnover pass €210m in 2016.

Sitting in trendy, bright new offices in the same building which houses Ryanair in Swords, Co Dublin, Kelly (57) says the inter-country retail market is just opening up.

“We’re seeing significant double-digit growth to all of our key markets,” says Kelly. “Australia is a massive market, Russia is a massive market, the US is a massive market, as is Canada. We’re seeing growth of up to 50pc and 60pc,” he says.

In addition to its hiring plans, the company will invest €25m over the next three years in people, software development and R&D.

The new offices are not far from where Kelly grew up. Born into a farming family he went to agricultural college after school but soon became involved in the haulage business. “I got into industry when the economy was in a bad place,” he says. “Similar to the last recession, there was limited or no capital available. But in the late ’80s and early ’90s, there was opportunity to be had if you were prepared to work for it. So we grew quite a significant business out of Ireland.”

Starting off in a Portakabin with a heavy reliance on paper, Kelly and his co-founders grew the company into a significant logistics business, Twoway Forwarding.

Technology was one of the reasons which the company succeeded. “We adopted technology early and in the early ’90s were spending 20pc of our cost base on technology.”

It was a competitive business but Twoway marked itself out by being a specialist UK-Ireland overnight service.

“We had only had a small number of key competitors at the time,” he says. “Then we grew into the whole global air freight business and into a lot of the key supply business for a lot of the large multinationals in the country at that time so it was quite significant. We probably in the end had over a million square feet of warehousing and around 300-plus employees at the time.”

Among its trading partners was a Dubai-based company called Aramex, which had come off the Nasdaq and refloated in Dubai.

The company was predominantly focused in the Middle East but was seeking global expansion and bought out Twoway in 2006.

“We were probably the strongest and largest independent European operator so there was a natural affiliation,” says Kelly. “It was a good marriage.”

Kelly stayed on with the company until 2012. “It was a great experience, seeing the disciplines and the demands of running a plc and working within a plc,” he says. By the time Kelly left, Twoway’s turnover had grown to over €100m.

During that period, however, he had become aware of a problem facing many retailers across the world. When an Irish shopper went to buy from a US company, for example, all would go well until the end of the process when excise duties and other expenses would be added on.

“Retailers were seeing the demand from international shoppers but they knew they were dealing with the demand badly,” says Kelly. “So typically, and probably a simple way to put this, people were seeing an awful lot of hits to their website and not enough conversion to buying compared to domestic traffic.

“In effect international e-commerce was in its infancy, so everybody who was shopping – particularly for very sought-after brands in the US – found the experience very, very challenging.

“The whole processes at that stage were geared towards business-to-business customers internationally. There was no real infrastructure or process in place that was conducive to business-to-consumer trade.

“As well as taxes, there were other cross-border problems. For example, in Europe only 40pc of people pay with credit cards and typically big brands would only have offered a credit card.”

Initially, six people were working on the project in a small office, but when Kelly joined full time in 2012, they began to ramp up the business. Kelly has a majority stake in the company, while the minority investor is Asendia, a joint venture between La Poste in France and Swisspost.

While getting a new business off the ground is challenging, Kelly had identified a niche.

“You’re selling a concept so clearly getting the first customer is always the most challenging,” he says. “But I think we were quite lucky in the sense that we knew the problem we were trying to solve. So we weren’t going with a product to the market where there wasn’t a demand.”

Indeed, the success of eShopWorld may actually be in part responsible for the growth of inter-country shopping, he believes. “I think by solving that problem, we’ve seen a significant increase in the cross-border traffic,” he says.

With international shopping becoming an increasingly smooth process, will global retailers look differently at their expansion into to shops around the world?

“I think it’s not going to affect their international expansion,” says Kelly. “But I think there will also be a trade-off of bricks and mortar stores versus online and the investment online. The great thing about online is that people can go to market with a less significant investment than if they were going with traditional retail outlets. And what we’re seeing today is that people are tending to take both options.”

The company has a number of operations internationally. “We have a sales infrastructure in the US and some operational infrastructure in the US. We have a sales office in Holland, we have a sales presence in the UK and we have some operations in Asia and we have a development in Newry and a development centre here in Dublin,” he says.

“We service China but we probably have bigger plans for China and India,” he adds.

“When we look at some of the markets like India and China, they’re massive economies, typically some of them are dominated by a small number of players and I think they are areas we want to look at closely.”

These ountries will present new challenges. “Clearly we’re going to be very careful looking at companies or products coming out of China,” says Kelly. “And for that reason I think it’s a real challenge today. But right now and for the foreseeable future we will be looking at the well-recognised household names that are going onto key regions. It is a massive market to be explored.”

Having set up two businesses during recessions, Kelly is a great believer in the Irish economy. “I think we are a very agile economy and I think a very resilient economy in the way we’ve come through different recessions, and we usually come out the other side in good shape.”

He would like to see more Irish companies branch out internationally. “I think Irish companies should take the leap of faith to step outside Ireland with their offerings and their customer base,” he says. “Because Irish people tend to run quality companies, in my view. I think not just in this business but several Irish businesses.”

He has also sold a business in the past but says he has no plans to exit eShopWorld any times soon. “This is quite a dynamic business,” says Kelly. “I think for the foreseeable future we’re not going to sell. It’s about growing the business. We’ve a very dynamic, good team of people. I think a lot of people invested into the business to grow it. We see this business as being a $1bn business by 2020.”

A good book I read recently is… Born to Run by Springsteen. It’s really about a man and his commitment

My favourite place is… Hong Kong. There’s a great buzz. I think it’s sort of East meets West and it’s a nice blend of both

The best piece of business advice I’ve been given is … Keep it simple. There’s uniqueness to all businesses, but if you keep it simple you cover an awful lot of the challenges

In my spare time… I like to cycle. I enjoy the outdoors