DesignLocks

What did it do?

DesignLocks was an online shop selling design-led products, launched in Turkey in August 2012. It offered its users different, original designs every day. Its team was made up of former employees of Rocket Internet, which decided to pull out of Turkey that same month.

Why did it shut down?

According to a round-up by Habertürk, DesignLocks was shut down in 2013 because it failed to reach the expected sales figures. In an assessment published in November 2013 and later quoted by Turkishtime in 2016, co-founder Engin Gökdiken said the metrics had been good, but the biggest mistake had been trying to operate in a market that was not mature at all. According to Gökdiken, the audience interested in design was very limited. The second weakness was a lack of buying power: purchases made in small volumes did not leave enough margin for the company to survive.

The story

August 2012 was a turbulent month for Turkish e-commerce. The German company builder Rocket Internet had decided to close its Turkish operation; according to Webrazzi, the Turkish tech news site, most of its roughly 400 employees were expected to lose their jobs. That same month, a small team made up of some of those employees embarked on a new venture: DesignLocks.

As reported by Turkishtime, DesignLocks was a site set up to sell distinctive, design-led products. Every day it offered its users a new selection of original designs. Its co-founders included Engin Gökdiken. The model resembled flash-sale sites built on a daily selection, but its focus was on design products rather than big brands.

The site did not last long, however. According to a list of closed e-commerce sites compiled by Habertürk in 2017, DesignLocks was shut down in 2013 because it failed to reach the expected sales figures. According to an e-commerce round-up published in November 2013, the site had opened in August 2012 and closed in February 2013. Co-founder Engin Gökdiken explained the reasons for the closure in the same round-up; his words were also quoted in Turkishtime in 2016. "Our metrics were pretty good," said Gökdiken, but in his view the biggest mistake was trying to do business in a market that was not mature at all in Turkey; people interested in design were a very limited audience.

Gökdiken pointed to a second weakness as well: a lack of buying power. In a narrow category such as design products, bargaining power with suppliers could only be won through volume. Purchases made in small volumes did not leave enough margin for the company to grow. In his view, e-commerce was really retail, and without a strong buying operation it was impossible to keep a growing organism alive on thin margins.

DesignLocks' story shows that the right product selection and an experienced team may not be enough to overcome the limits created by a small market and weak bargaining power.

Lessons for founders

• Before entering a niche category, measure whether that niche is big enough to sustain a company.
• E-commerce is really retail; without buying power, there is no margin.
• Good metrics alone do not add up to a sustainable business if the market is small.

Sources

1. 50 failed start-ups and 50 lessons from their mistakes (30-50) (Turkishtime, 2016-05-23)
2. Turkish e-commerce sites that closed before Markafoni! Why did online shopping sites shut down? (Habertürk, 2017-06-02)
3. Rocket Internet is closing its Turkish operation! [Breaking News] (Webrazzi, 2012-08-17)
4. Entrepreneurs' Failures in E-Commerce (isfikirleri-girisimcilik.com, 2013-11-10)

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