From the Detroit Free Press:
Marty Babayov watched his older brother make money by buying things and selling them online for a profit. Then, at 13, he tried his hand at it, too.
“It looked cool,” Babayov said. “It sounded like a fun way to buy things used, make money selling them. I don’t recall exactly what I sold. Something here, something there. But, when I got to high school — I went to a boarding school in Pittsburgh — I needed some spending money, so I went to the mall and tried to find designer clothing and would buy it at clearance and sell it on eBay.”
He found ways to make increasingly more money, until, when he was still in college, he decided to turn it into a full-time business, the Suit Depot.
Now, at 23, the Southfield resident has a $2-million-a-year enterprise selling menswear online. He also has opened a store in Oak Park that he plans to expand to about 13,000 square feet, 2,000 of which is warehouse space. He employs a dozen people and expects to add two or three more.
He also is developing some proprietary software that will help automate his business. He hopes the software can be sold to other enterprises involved in e-commerce.
We talked to Babayov about his venture, and he offered advice to others:
Q: How did you go from $7,000 in sales to $2 million?
A: In the early time, I was buying returns — clothing that’s a little distressed that you have to clean up and make look good. The margins were excellent, but it was hard work. So, instead of working on the margins, I worked on the efficiency to allow it to scale. Back then, it was just a one-man operation, and I can’t expect employees to put in the same level of dedication to inspect each product at the same level. It really wasn’t a scaleable business. I did that for about a year and a half. It wasn’t working how I envisioned it, so we switched over to buying first-quality merchandise, merchandise that was overstocked, from stores closing down, and from overproduction. We set up a network of distribution warehouses, and whenever there was a canceled order, we’d buy it. We grew our buying network. The margins weren’t better, but it was easier.
Q: So you focused on volume?
A: Exactly. As soon as the merchandise came in, we took pictures and put it online.
Q: What next?
A: The next year, we were able to increase sales dramatically by focusing on all aspects that were repetitive and trying to automate them by different programs. We tried different software that allows you to put data into a feed and send it to all platforms. We saw a need to get all our data centralized to be organized. We couldn’t just be on eBay, we had to be everywhere. That was our focus over the next few years. We cut down on data entry. What used to take us 20 minutes to get online, it took us 2 minutes.
Q: What advice do you have for other entrepreneurs?
A: Stay focused. In the beginning I was constantly jumping on ideas. There were little side businesses I got caught up in. If you have something that works, go full force at it. People say you’re lucky you found a niche that works. I don’t think it’s suits that works. I think we could have done it with anything. It’s also about your competitive advantage. The first thing I decided to do when I got into clothing was I looked at the other sellers and saw what I could do differently. I saw Marshall’s and TJ Maxx, and I thought to myself, where can I get the product they’re getting. Then, I thought, how can I get this product organized online. We need to create a process to get this online to market it to the masses. When you have 200 items, 300 items, you can’t open a store. That’s the beauty of e-commerce, eBay. It allows the little guy to start somewhere.
Q: How do your parents feel about you graduating from school and starting a business?
A: My mom is Russian, and if you are familiar with Russian culture, they are very into education and college. It took her a few years to get used to it. But, she did. She still thinks I’d be better off going to college, wants me to continue going. We’ll see. Maybe I’ll take courses on the side, like business management. I agree it can be a help, but I don’t think it’s necessary. Some people are better just learning hands-on. I’ve failed. I’ve succeeded. I’ve learned many lessons in actual business I don’t think I would have had I gone to four years of college. My dad was more supportive. He’s from Uzbekistan. He’s much more pro-business.
Education: attended Ribbinical College of America in Morristown, N.J.; Yeshiva Ohr Elchonon in Los Angeles
Car: 2008 Volvo S80