November 15, 2019 Growing & Complex Businesses en_US Read how a hand-designed shoe for the founders' favorite baseball team has become custom-design footwear business spreading across college campuses. https://quickbooks.intuit.com/cas/dam/IMAGE/A8Lye75vd/STS_Footwear_featured_md.jpg https://quickbooks.intuit.com/r/growing-complex-businesses/how-sts-footwear-tracks-over-150-skus-in-13-different-markets/ How STS Footwear tracks over 150 SKUs in 13 different markets
Growing & Complex Businesses

How STS Footwear tracks over 150 SKUs in 13 different markets

By Loni Klara November 15, 2019
  • STS Footwear sells custom licensed footwear through its own patented manufacturing process to accommodate their unique, 360-degree designs.
  • Their profitable brand is planning to grow from 13 to 30 universities and beyond in 2020.
  • They use QuickBooks Online Advanced to customize and track royalty rates for their university partners and over 150 SKUs.

It all started with a pair of Cubs sneakers. In 2008, STS Footwear founder and CEO Jono Kupferberg was gearing up (literally) for a Cubs game at Wrigley Field in Chicago. To his surprise and dismay, he had every item of clothing branded with his favorite baseball team, except for his shoes.

“After an extensive Google search, I wasn’t able to find anything that was satisfying for what I wanted until I came across a posting by an artist in Chicago on his MySpace page,” Jono recalls. That artist was Isaiah Smith, STS Footwear’s co-founder and head designer. What Jono had come across was a hand-painted shoe design featuring the Cubs logo.

Cubs Shoe

The unique design caught his eye and inspired the company they’ve built today. “The impetus behind the company was that moment when I saw the shoes Isaiah had painted. I was so moved by them that I figured fans everywhere would want something like that for the team they loved,” says Jono.

For Isaiah, meeting Jono meant that he could finally give credence to the idea that he could scale his designs into a viable business. Though he’d been hand-painting shoes for 10 years and selling them as a side hustle when he met Jono, he was an artist first and foremost. The idea of running a business was foreign to him.

“I always thought that I could turn this into something bigger and mass produce it. But as an artist, I didn’t necessarily know how until I met my business partner,” Isaiah explains. Jono had a sales background and plenty of drive to run a business from the ground up. In short, it was a match made in heaven.

The challenges of designing licensed merchandise

Jono and Isaiah quickly realized leveling up from side hustle to mass production was going to be a lot more difficult due to sports apparel licensing, which they’d have to secure from individual teams.

Their first thought was to partner up with universities, but the process was trickier than expected. “The way that colleges work, you’re not allowed to even get one sample made until you’re licensed with them,” says Jono. “Which makes it very difficult for us to try and get the point across of what the product is when we don’t even have the design.”

In 2014, Jono decided to reach out to his alma mater, Miami University. Fortunately, the school’s licensing director at the time, Samantha Stevens, agreed to let them create some samples without a license. Now that they had these prototypes, they could meet with different schools and pitch their idea. A year later, they contacted all the schools in the Big 10 Conference, hoping to start off their business.

To their surprise, they had a big stroke of luck. “The licensing director of Michigan State was now Samantha Stevens from Miami of Ohio,” Jono explains. “So I immediately got an email back from her and she said, ‘Oh yeah, I know you guys. Of course, go ahead.’ And that was it.” This initial success with Michigan State led them to partner with 13 schools in total––all top schools for college athletics.

How to mass manufacture hand-painted prototypes

Once they got the appropriate licensing, manufacturing presented another big challenge. How could they scale their concept while not losing the original quality of the hand-painted pair? The initial attempts didn’t measure up to Isaiah’s original design.

“We were able to find blank sneakers and the companies were proposing things like adhesives, screen printing, even stickers of the logos and none of it was producing the quality, both from an aesthetic standpoint as well as the functionality of the shoe,” says Jono. Finally, after three years of experimenting with different methods and materials, they ended up creating their own, patented manufacturing process.

“[It’s] a utility patent where you can have the logo stretched across the whole shoe, kind of like a puzzle where the different panels of the shoe fit together,” Isaiah explains. “It gives a 360-degree effect of the logos around the whole shoe.” Jono adds, “The end product produces a shoe that is dedicated entirely to that university.”

This process was necessitated by the uniqueness of Isaiah’s designs. Rather than simply sticking a small logo onto the sneakers, they needed to display the school’s logo and colors across both shoes for the full effect, which means that the left and right shoes never have the exact same design. For this reason, nothing less than a precise manufacturing process would work.

Working with 150+ SKUs across 13 universities

In keeping with their unique design and manufacturing process, sales and accounting also come with special challenges for STS Footwear.

“Our product has a certain element of unpredictability as far as when it’s going to sell and how it’s going to sell. A lot of it is contingent upon the fan bases and how they react to certain events that the teams are doing,” Jono explains.

That is to say, each school operates within its own market with varying sales times and trends. With over 150 SKUs all taxed differently at different royalty rates, it’s crucial to know the numbers for each university and individual items associated with it. This isn’t just important for STS Footwear’s business operations; tracking inventory and sales for each school is a fundamental part of their relationship with the schools.

“In order to stay in good standing with them, we need to be able to report our royalties we owe them at the end of every month,” explains Jono. “Every university has a different royalty rate and every school sells at a different volume. QuickBooks Online Advanced helps us keep all of that organized.”

How QuickBooks helps STS Footwear juggle different markets

When they only had one university partner, Michigan State, Jono could do all their bookkeeping internally on Excel by taking their bank statements and manually entering the information on the spreadsheet. Now that their product line had grown to 150+ SKUs and 13 university clients, that process had become impossible.

“We knew there’d be too many pieces to balance. So we were looking for accounting software that could help us keep all of those pieces in place,” says Jono. His research led him to QuickBooks Online Advanced, which was able to “take all the different moving parts and help us create the accounting that [we] needed moving forward.”

The reason they chose QuickBooks was both short-term and long-term. “It seemed the most user-friendly, and for laymen that was the most attractive part,” Jono explains. They needed something they could pick up right away and QuickBooks offered the ease-of-use they were looking for. It also gave them room to expand further down the line. “Given the fact that we didn’t know what was going to come next with the business, QuickBooks was also attractive because I was confident in the ability to grow the business within that system.”

QuickBooks Online Advanced’s cloud-based capabilities were a lifesaver before STS Footwear had an office, as they could do their books on a laptop from anywhere. They were also able to use insights and reporting from QuickBooks to secure financing from investors. “We needed to be able to produce the financials so that they could get a better sense of what the business is and what it could be,” says Jono. “Everything from profit-loss statements, balance sheets and all the ins and outs of the bookkeeping that the investors needed to make a good decision about us, we were able to get with QuickBooks Online Advanced.”

How seamless software integration boosts e-commerce sales

One other major component of QuickBooks is its seamless integration with SPS Commerce, the sales platform used by Fanatics, the popular sports merchandise platform STS Footwear uses to generate 90% of total sales. Because STS Footwear offers its products on Fanatics at different discounted rates, it affects the royalty rates for the different schools. With each university agreement featuring a different royalty rate, it’s vital to keep track of every sale for accurate accounting and tax filing.

“When we’re going into tax season, we need to be able to take all the different sales from that previous year and account for all the different factors within each individual market,” says Jono. “QuickBooks Online Advanced has everything organized from month to month. We’re able to take all that information and have it readily available to put into the taxes we have to file.”

The sales data from SPS Commerce shows up directly on QuickBooks, enabling them to see their inventory count, sales, and tracking information at a glance. Jono gives an example of how they use this to their advantage to execute a sales strategy. “It makes it very easy for us to confidently do, let’s say, a Labor Day sale and have different rates for different schools. Maybe one team wins a big championship and we have a sale just specific to them.”

It’s mostly Jono who uses QuickBooks every day to take care of the business end. Once a month, their accountant logs in to reconcile all the numbers. The software doesn’t require any extra maintenance. For Isaiah, this arrangement leaves him a lot of room for creativity.

“[It helps me] as an artist to not worry too much about the business part of it, knowing that QuickBooks is taking over the other part.”

For Jono, on the business end, it keeps operations running. “We use QuickBooks Online Advanced to handle everything from the initial manufacturing process all the way through to the sale. We have every factor imaginable as far as how we turn our inventory into cash and QuickBooks helps us balance it in real-time.”

Next steps

Looking ahead, Jono and Isaiah plan to keep creating sports footwear for fans by branching out not only to other universities but also to professional sports and international clubs. “When we’re able to expand to Major League Baseball and create a Cubs shoe, then I’ll be satisfied with where we’re at,” Jono hints.

On the design front, Isaiah hopes to incorporate high-top designs as well as more details on the school colors and mascots. The full colors are an innate aspect of the company, whose name is a play on words meant to capture the passion fans have for their team. “Soul To Sole Footwear is the soul that you have for your team. S-O-U-L to S-O-L-E. I take that energy and passion and I put it on your sole, which is your shoe,” Isaiah describes.

As they branch out, they’re confident that QuickBooks will grow with them, playing a pivotal role in the company’s future. “What’s nice about QuickBooks Online Advanced is that it will allow us to continue to tweak each individual market. So we’re going to be able to grow in whatever direction we so choose,” says Jono.

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Loni is a freelance writer whose contributions have appeared on Atlas Obscura, Screen Rant, Culture Trip, Buffer, and Tech in Asia. She writes about tech, HR, marketing by day and is a screenwriter by night. Read more