Freshlabels founders: We are looking for investors with good karma

Jakub Veselský and Jan Bouška are friends who have fashion in common. They pride themselves on selling authentic and, above all, sustainable clothing and accessories via their Freshlabels shop. Due to the covid-19 pandemic, they unfortunately had to make cuts and let some people go, but they say that in the end it resulted in the streamlining of their business. They are planning to expand to Western European countries – they started with Germany and want to conquer other markets thanks to funding they have received via the Crowdberry investment platform.

Where did you get the idea from to create Freshlabels?

Jakub Veselský: We have been friends for years. We started meeting up through various sports, in the mountains, then we ended up studying at the same university. We were also both interested in design, architecture, culture and fashion. But we both agreed that we had a problem finding things that we liked in the Czech Republic. We realised a lot of people probably had the same problem, so we decided to bring in items that have added value, quality and a story behind them.

How would you characterise the products you offer?

Jan Bouška: Back when we founded Freshlabels, fast fashion chains and skateboard shops, which we partially grew up on, were arriving in Central Europe. We were looking for a creative alternative. We cared about quality and, over time, that was joined by sustainability, which customers have gradually become more and more interested in, as well. In the last six to eight years, it has become an important criterion for purchasing. At the same time, these brands have been appearing more at trade fairs. These days sustainability is a theme for absolutely every brand or segment.

I have always wanted to ask this in an interview, but what are you wearing at this moment?

Jan Bouška: I’m wearing a t-shirt from Colorful Standard and jeans from the German brand MUD Jeans, which does a lot of recycling and upcycling their products, and making them from organic cotton. 

Jakub Veselský: I have a Thinking MU t-shirt, which is a Spanish brand that produces sustainable clothing, and pants from the Swedish company Knowledge Cotton. That’s a company which has long worked on the principles of sustainability. And I also have Swiss ON Footwear shoes, which I really like.

Is size of company important for you when choosing brands? 

Jakub Veselský: We try not to be narrow-minded. That means giving everyone the chance to convince us whether being involved is worth it or not.

According to what criteria do people buy clothing items nowadays? 

Jakub Veselský: Sweatpants, for example, enjoyed a huge boom here last year (laughs).

Do you see educating customers as your responsibility?

Jakub Veselský: We try to perform a service for the customer, because we know that not everybody has the time to read articles about various trends in the area of ecology every day. The way we see it, we would like to get these things to people in a condensed form so that they don’t have to concern themselves with anything else.

Jan Bouška: Together with experts, we have developed our own questionnaire that we send out to the brands to obtain more detailed information, the assessment of which is then formally signed off by the companies. The result is displayed in an easy-to-read form on our website. If the brand is sustainable, then we give it a “sustainable tag”. Thus, the customer can look at what each brand does for sustainability and in what areas it is active.

What percentage of the brands in your portfolio can be considered sustainable?

Jan Bouška: In the 2021 spring/summer season, we purchased 60% of the goods from brands that fulfil our criteria of sustainability. For autumn/winter 2021, we set the goal of increasing this share to 75%.

How did you get through the coronavirus pandemic?

Jakub Veselský: I tried not to worry too much about that and occupied myself with things other than the pandemic. That has been difficult, of course, because it is affecting all aspects of our lives.

Jan Bouška: I think I went through all the phases of emotions. At the beginning it actually kicked me into gear, but that only lasted for a very short time.

And how did the pandemic influence Freshlabels?

Jakub Veselský: The onset caught us at the time of our greatest development. The second half of 2019 was the best in our history and we were preparing to take the next step. But the pandemic came and instead of rapidly growing, we had to think up various scenarios and prepare for all eventualities. We took a variety of measures – for example, we had to close the warehouse, we stopped receiving goods, we cut expenses to the minimum, we had to lower wages and lay some people off. It was all very depressing. At the same time, however, we could finally spend more time on the processes – something we had been planning to do for a long time, so that was beneficial. With regard to the circumstances, the second half of 2020 turned out great. We had quite good turnover, we didn’t slack off and it bore fruit. Once the stores opened at the beginning of May, the situation started to improve. We reached three-quarters of the plan that we had for the month in the first week. So, it is working great and online sales have also picked up. People are starting to want to dress up again. They are glad that they can finally go out. They want to have a new backpack, new shoes…

How did turnover change in 2019 and 2020?

Jakub Veselský: In 2019, we had turnover of 150 million crowns (5.89 million euros). That was tripled during the four previous years, so it means we enjoyed rapid growth. But then we saw turnover of about 122 million crowns (4.79 million euros) in 2020. Most of the decrease was from the closed brick-and-mortar shops. We have three shops, two in Prague and one in Berlin – they’re located in areas that are attractive for tourists, so we also missed these visitors.

How does it feel to have a shop in Berlin?

Jakub Veselský: At first it was awfully exciting. We were going into something we didn’t know, but we were convinced it would work. But it wasn’t all fun and games. We also had a weekend where Jan and I had to grab a bucket of pink paint, get in the van and go to paint the polystyrene ceiling in the middle of the shop. The company that was doing it for us couldn’t come that weekend, so we had to paint it ourselves. That was the initial euphoria. Today, the question should be what is it like to have a shop in Berlin that has been closed since the middle of December and that we are subsidising.

How many employees did you have to let go?

Jakub Veselský: Roughly a third. Now, however, I also see it as an opportunity to manage some processes more efficiently.

How did the pandemic change your strategy in comparison with the end of 2019?

Jan Bouška: During the pandemic, we looked very carefully at all the products we sold and if they fulfilled all our criteria and fit with our concept. And we also tried to unify Freshlabels’ communication and the message it conveyed.

Jakub Veselský: Instead of letting up on the strategy, we doubled down,. But a lot has changed throughout the sector. We didn’t know from week to week if we would be able to open our shops or not. Goods are ordered half a year in advance and nobody knew what would happen. These are the consequences that affect us today and will continue to affect us for several years to come. The entire business has been hit hard. We have a plan prepared for four years, thanks to which we want to use the great potential that we see first and foremost in Western Europe. In order to fulfil it, we want to expand our product range, continue to streamline the processes and analyses, and to improve personalisation. We need finances for all that, which we are currently looking for through investments.

You are planning to get an investment in the amount of 1.5 million euros for expansion on the German market. How is that looking?

Jakub Veselský: Positive. At this moment we have about half. With such a sum, we are able to start fulfilling the plan perfectly that we have developed. Our goal is also about growth, which should be three to four times current turnover over the next three to four years. We want to primarily concentrate on Germany, where we have been active since the middle of 2019. Since then, the Czech and English versions of our e-shop have been joined by an English version on a .com domain and later also by a German version. Our primary focus for the future is thus Germany. And when we reach a certain point there, we will start to work on other markets that are starting to look interesting to us now, since we are naturally growing in these places without any great effort. 

What percentage of your turnover does the German market comprise?

Jakub Veselský: About a quarter to a third. The Czech Republic makes up about half, and the rest is divided between Slovakia and other European markets, with Slovakia being stronger.

Why did you decide to expand to the west?

Jan Bouška: After launching the .com domain and delivery to the European Union, we followed a natural development path that confirmed our expectations – that being demand in Western Europe will be bigger than demand in Eastern Europe. From the outset, Germany and Great Britain were the strongest markets. With regard to the size of the market and the number of contacts that we had in Germany, we decided to focus on it first of all. This decision was also supported by the growing affinity of German society to green themes.

Jakub Veselský: We come from Teplice, where we also work in part. Our warehouse and company are roughly 15 minutes from the German border – thus it is an advantage we have “Czech expenses and German services”. About a month ago, we signed a new contract with Germany’s DHL, so we are able to deliver goods throughout Germany the next day. We have the prices and speed of a German e-shop, but Czech company expenses.

You are looking for growth investment on the Crowdberry platform. Why?

Jakub Veselský: Thanks to Crowdberry, we are not getting only one investor, but a group of people that have already had to achieve something in their lives and have experience. And the idea that when making important decisions you can turn for advice not only to two, but for example to 30 people who have the same interests that you do, seems great to me.

Do you have an idea about who your investors should be or, on the contrary, are there entities that you do not want behind you?

Jan Bouška: I would like for the people who invest in us to have experience and be willing to share it. Two heads are better than one. And with regard to who we would not like, that is hard to say. Of course, we will be glad if we will all be on the same boat, ideologically speaking. To put it simply, we are looking for investors with good karma.

Jakub Veselský: We would be glad if our investors were looking to get more out of their investment than just money. That they can appreciate what we are doing, also with regard to others, and try to help us as much as they can. And, of course, we will be happier to have 50 investors that will help us than to have 10 really rich ones who are only sending us money.

Why should someone become your investor?

Jan Bouška: In my opinion, our investor should be someone who thinks that the sale of fashionwear should move in the right direction so that an alternative not only to fast fashion and chains, but also to conglomerates like Amazon and similar giants, can develop. Then there really could be a strong, progressive, independent vendor of stylish and sustainable fashion, and that a Central European project could become a project for all of Europe.

Jakub Veselský: We want to sell wonderful products in an innovative way and with regard to the environment around us. If someone finds that they like that idea and would like to help us, they have an opportunity.

This text was created in cooperation with Denník N.