Buying the Zavvi name has put e-tailer The Hut on the map. Founder and boss Matthew Moulding tells Lisa Berwin why he is focused on growth
When the rights to entertainment retailer Zavvi’s name and database were acquired last week, buyer The Hut’s name was not that widely recognised.
But the e-tailer’s youthful founder and chief executive Matthew Moulding is beginning to make a big impact in the online space and has bold ambitions to aggressively expand his business to become the “next Amazon”.
Moulding’s background is primarily financial. He made his business mark when working for Phones 4U owner Caudwell Group, where he rose to become a divisional finance director. But by the time Caudwell was sold in 2007, Moulding had already taken tentative steps towards creating his own venture, having bought domain name The Hut for £3,000 in 2003.
Following Caudwell’s sale he gave his full attention to The Hut, which not only sells products through its own site but partners with operations such as Asda Direct and DSGi, which use its platform on their sites. Most recently The Hut has started providing a platform and product for WHSmith’s online entertainment offer.
Moulding plans to expand The Hut’s product categories from 13 to 30 quickly, so it can give its customers and retail partners a wide-ranging offer, and he intends to continue making acquisitions.
“We will launch beauty next and then mobile phones, mainly pre-pay. We are looking at gardens and pets at the moment,” he says. Such categories, he hopes, will add value to direct customers and retail partners.
He is confident that The Hut will continue on a steep growth curve, with sales expected to treble from £25m last year to £75m this year. “The potential for us is huge as there is so much growth here,” says Moulding.
While most businesses will expand online, be they e-tail specialists or not, Moulding will not be content to advance at the same speed as the market. “We do not just want to capitalise on the growth of the market that will naturally happen – we want to widen our net,” he says.
One area he sees as a big opportunity is international expansion. “We have the structure in place to do multi-language and multi-currency,” says Moulding.
He believes that there is no reason why The Hut cannot close in on the dominance of online giants such as Amazon and Shop Direct. “We are looking at the Amazon model and seeing that can work for us,” he says.
The Hut’s original e-tail category was entertainment and Moulding believes the collapse of Woolworths and Zavvi puts HMV in a very strong position on the high street where he thinks there will continue to be a place for entertainment. He also says there is market share left to fight for between HMV and online players such as The Hut, Amazon and Play.com.
Moulding thinks that the real shift in entertainment retail will be when media such as films and books follow CDs to increasingly become downloadable products.
But his focus is not exclusively online. Moulding says that a bricks-and-mortar proposition to widen The Hut’s brand awareness could be just 12 months away. The stores he envisages are staffless units in shopping centres where there is just a touch screen and a Chip and PIN machine displaying the offer and processing payment.
Moulding aims to leverage Zavvi’s 1 million-strong database to tap into committed entertainment consumers and build up the business, which at one time generated£20m of sales online. “Social media is very important to develop a brand,” says Moulding. “We put the press release when we bought Zavvi on Twitter and are now getting feedback from people on what they want it to be. Social media is phenomenal in terms of traffic. It is core to business online.”
From a£3,000 investment to£75m turnover, the growth of The Hut has been rapid and Moulding’s acquisition of Zavvi has put him firmly in the public eye.
Some retail observers are sceptical about whether Zavvi will work online. However, there is market share to be won – not only from the collapse of high street names but in the ever-growing online space.
Despite big ambitions, Moulding remains a realist. He says: “Everyone thinks they will be dotcom millionaires, but it is a harsh learning curve.”