“We were pushing margins too hard. Other competitors had come in, so the suits were no longer novel. And we’d hired too many people, so our cost base had jumped,” said Fraser.
Gregor, once used to the multi-million marketing budgets of Procter & Gamble, had also managed to grow Morphsuits’s Facebook fans to 1.3m.
But that small empire suddenly fell under lock and key when Facebook changed its model to charging brands for interactions with fans.
Turnover halved to £6m before the company made a £1m loss.
“It was a perfect storm,” said Fraser. “We made 17 out of 35 people redundant. That was very painful, but we couldn’t keep losing £1m.”
The trio began to diversify away from solely manufacturing Morphsuits as they realised only so many people wanted to buy a tight-fitting Spandex outfit.
Inflatables were the first divergence from the Spandex world. The new category included a pick-me-up Grim Reaper and a piggyback Kim Jong-un.
Much like Morphsuits, no one had seen these costumes before and punters were once again stopped in their tracks.
A huge amount of money had also been spent on maintaining the website as sales volumes grew – particularly around Halloween when sales spiked. But in 2016, the decision was made to move to Amazon.
“We know one company in America that hires 200 people for the festive period, trains them, puts them up in hotels and gets them to spend two weeks picking and packing,” said Fraser.
Rather than selling stock to other companies to sell to partygoers, this move also meant Morphsuits could return to its retail roots.
“We took it to Amazon to sell directly to consumers, which meant we recaptured the retail margin. That led to far more cash per unit. This is, in essence, what saved the business,” said Fraser.
Morphsuits has sold a costume every three and a half seconds this October. Prices range between £15 and £50.
