BHFO founders Stacie and Jon Sefton like to shop smart.
In the early 2000s, long before “e-commerce” and “online carts” joined our vernacular, the Seftons tried eBay for the first time.
Jon found the camera they’d seen locally — with a $1,000 price-tag — for only $600 online, and with many more accessories. The couple’s entrepreneurial instincts clicked on. Their first online purchase pushed them to learn more.
“We’re very driven and motivated,” said Stacie Sefton, chief executive officer of BHFO, a $45 million-a-year, fashion e-commerce outlet.
“We did a lot of research on how to sell online. We invested in a $400 book on how to build a million-dollar business on eBay. We started to move forward with testing our own ideas, buying and selling on eBay.”
One of their first decisions was what they’d sell. “We knew I would be running the business, at least in the beginning,” Sefton said. The high demand for designer clothing — and Sefton’s knowledge she’d be more passionate about clothing than tools or other items — led to their core business as an online fashion outlet. The name, BHFO, represents the first two initials of the Seftons’ daughters’ names, along with FO for factory outlet.
Sefton quickly learned how to obtain products to sell at a discount on eBay while still making a profit. “The book we purchased had some vendor contacts,” Sefton said. “So that book was a great resource. Unfortunately, in Cedar Rapids, Iowa, we don’t have a big distribution warehouse of excess designer brands. But we were able to get connected to a couple of different resources.”
Sefton started getting products shipped to their home, stored them in the basement, and shipped them out. Husband Jon kept his regular job. Growth came quickly. “After a few months, we began to feel we may be onto something. We’d wake up in the middle of the night and go check our auctions. People from all over the world were placing bids. We’d get a load in, and we’d sell out. Every time we’d order, we’d double the amount of product that we ordered,” Sefton said. “Did we feel that it was going to grow to be as big as we are today? Absolutely not.”
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Within a few months, they hired their first employee, Jon’s younger brother, to do shipping, logistics, packaging and to help build the catalog by taking photos. They put the clothing on a mannequin in the Seftons’ four-season porch because the lighting was so great. Then they’d take the product back downstairs to store in plastic tubs from Walmart.
In 2005, BHFO had reached a critical development stage. “In order to grow the business, we couldn’t continue to hire people to come work at our house,” Sefton said. “We had to make the decision to move out. But if we did that, we had to grow our business to a certain scale. And to do that, Jon would need to quit his job.”
At the time, Jon was working 75 to 80 hours a week at his other job. They needed him on the BHFO team 100 percent, focusing on business development, strategy and resolving technical issues. They walked through what-if scenarios. Jon ultimately did quit his job.
“We made that decision and everybody thought we were crazy, but we trusted our gut, and we were determined,” Sefton said.
“Right away, we saw 100 percent growth year after year. We continued to grow even through the recession. It was pretty evident that we’d made the right decision.”
After working out of a series of increasingly larger commercial warehouses, BHFO is now located in a 240,000-square-foot facility in southwest Cedar Rapids. The company employs more than 125 people.
Focusing on building business relationships helped the couple make the deals they needed to grow their business.
“One of the toughest challenges with growing our business was developing relationships with brands,” Sefton said. “Brands are pretty intimidated about selling their products to just anyone. They want to make sure they can keep the brand credible and protect their brand.”
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Sefton said it’s been important to simply relate well with people and to follow through — to do what you say you’ll do.
Persistence also has played an important role in BHFO’s development and growth. “On our first partnership with the lingerie company, I didn’t give up. We were told ‘no’ several times, and I just kept being persistent. Once we were able to do one shipment and to prove we were trustworthy, that’s what it took to get that relationship,” Sefton said.
“Five, ten, even a few years ago, brands did not want their products liquidated online or want any brand presence online for that matter. By building a credible business based on integrity and strong relationships, we now have brands that will contact us directly. It’s really changed a lot in the last couple of years because now the internet is growing so much, brands want to work with people who they trust. We’ve built that credibility, so that’s one of the reasons that we’ve been able to grow.”
Not everything has worked perfectly. Sefton admits mistakes have been made along the way. “We look at those mistakes as blessings, and it helps later because of what you learn from those mistakes,” she said.
The company continues to grow. Last November, BHFO acquired a Kentucky online shoe retailer called Street Moda. Building its online shoe business will include developing BHFO’s own private label. “We’re starting with shoes, and we’ll be moving into apparel in the future.”
Looking back, one thing Sefton would have done differently — turn the camera around more often to take behind-the-scenes photos.
“We didn’t take a lot of pictures of how we started. We never realized it would grow to be this big. That’s one thing I would tell someone … make sure you’re documenting your timeline along the way and taking photographs.”