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 $1000 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, 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,” Stacie said. The high demand for designer clothing — and Stacie’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 Sefton’s daughters’ names, along with F for factory and O for outlet.
Stacie 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 on products,” Stacie 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. And I didn’t do a lot of traveling back then, so we were able to get connected to a couple of different resources through this book.”
Stacie started getting products shipped to their home, stored them in the basement, and shipped them out. Jon kept his full-time position with his employer. 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 of it. Every time we’d order, we’d double the amount of product that we ordered,” Stacie said. “Did we feel that it was going to grow to be as big as we are today? Absolutely not.”
Within a few months, they hired their first employee, Jon’s younger brother, to do shipping, logistics, packaging, and help Stacie build the catalog by taking the photographs. They put the clothing on a mannequin in the Sefton’s four-season porch because the lighting was so great. Then they’d take the product back downstairs to store in plastic tubs from Wal-Mart.
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, obviously,” Stacie 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 75-80 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 quit his job. “We made that decision and everybody thought we were crazy, but we trusted our gut and we were determined,” Stacie said. “Right away we saw 100 percent growth year after year. We continued to grow even through recession. It was pretty immediate that we’d made the right decision.”
Focusing on building relationships through honesty and integrity helped them make the deals they needed to grow their business from a startup in their basement to its size today. After residing in a series of increasingly larger commercial warehouses, BHFO resides in a 240,000 square foot facility in Cedar Rapids. The company employs more than 125 people. It all happened in the short span of 15 years.
“One of the toughest challenges with growing our business was developing relationships with brands,” Stacie 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.”
Stacie says it’s been important to simply relate well with people and make sure to follow through with what she says she’ll do. Persistence has also 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,” Stacie 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 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.”
Mistakes have been another important growth ingredient for BHFO, although at the time they made the mistakes, they didn’t see the value. “Now, looking back, we see reasons behind each of them and it’s what enabled us to grow. We look at those as blessings and it helps later because of what you learn from those mistakes,” Stacie said
One thing she’d do differently is turn the camera around to take behind-the-scenes photos. Stacie explained, “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.”