Long time Beijing expats will be sad to hear that Counting Sheep, which evolved out of the once popular secondhand shop, NU2YU, has closed down.
First, a bit of history of how Counting Sheep came from NU2YU. Patterson says, “I started NU2YU Baby Shop with a friend in 2005, out of a need for expats in Beijing.” Before WeChat, expats needed a way to sell their stuff whether downsizing or leaving Beijing, and there were customers who wanted or needed quality brand names but couldn’t buy them in Beijing.
“The closest port was Hong Kong and not everyone wanted to fly to Hong Kong to buy a stroller or Babybjorn,” she laughed.
The business was modeled after a successful chain in North America called Once Upon A Child. “I believe that we were the first and only gently used baby stuff store in China. However, we weren’t allowed to sell used clothing, but everything else was fine. We did manage to sell used clothing, just didn’t advertise it.”
Patterson adds, “It was a labor of love, but it quickly caught on and with no competition or direct competitors, and it took off.”
Counting Sheep started out of customer demand. “A funny thing happened, customers began to order certain items that I couldn’t find locally, so I would start bringing in items from Hong Kong and then it sort of grew.”
The item that inspired it all was the Tripptrapp chair made by Stokke in Norway. Patterson’s friend in the airline business would bring one to three chairs every month. “I would buy them from him and then sell them to customers in Beijing who were dying for one of these chairs. It worked. I then was entertaining the Stokke rep from Hong Kong in Beijing and talking being a distributor. However, he wouldn’t let me sell new Tripptrapp or other Stokke items unless I opened a new boutique, since it couldn’t be sold to a second hand shop. So, Counting Sheep was born!”
NU2YU remained as the only secondhand shop for a time alongside of Counting Sheep, which had a handful of competitors. “This was until a very generous woman from Scotland opened a charity shop, plain and simple, no profit, but she would accept donations and send to orphans around the country. This pretty much killed my business model for NU2YU Baby Shop. So, I shut down NU2YU and just focused on Counting Sheep.”
Patterson pointed out that Counting Sheep had a good six years of business with Hsu and Hemsin. My partner Carline Van Tilburg, who came on in 2008, sold to them in the summer of 2010. Patterson reminisces, “I visited the flag ship store just before it opened in Nov 2012, in the big swanky shopping mall, Indigo, and I felt really proud at that time.”
“We decided to sell and not close because we had a loyal customer base, and we had put so much time into that we really wanted to find a buyer and not just close. When you close, you lose what you have built up, and we felt that someone, somewhere would want to buy it, and so our name and brand would continue.”
“We interviewed and were approached by several parties, even the competition, to buy us, and we decided that the best fit was [Hsu] and [Hemsin]. They had been customers of ours earlier, so it was the right time, right place, right fit.”
“[Hemsin] is a long time entrepreneur in China, and so she picked up Counting Sheep pretty much for the same reasons that I started it, which was to serve a certain community in Beijing (and herself as she was a new mom, as was Hsu),” she added.
Patterson doesn’t think Michelle or Hsu had mismanaged the business in any way, “But more that it possibly indicates a change of the Internet. We struggled a little bit with that just before selling, such as many Chinese customers would come to our store to ‘see’ the product, but then buy somewhere else on line. We were constantly changing our prices compared to Taobao.”
Hsu echoed this when we spoke with her about their reasons for closing.
“We knew that customers were coming in to try on the product in the store, but then would turn around and find a better price on Taobao. But we focused on what Taobao couldn’t offer, a mission to focus on the customer, a very Western approach to the business model,” Hsu said. “Our customers knew that if there was ever a problem, we would resolve it immediately.”
But over the years, even Taobao retailers have needed to differentiate and focus on customer service, as feedback is public and returns for no reason are allowed within seven days.
“We also decided to go through the official channels of procuring products and abiding by the price controls set by distributors,” Hsu added. “We thought about getting into online shops, but we just decided that wasn’t for us. Maybe that was a mistake, but it’s a different ballgame. It’s impersonal.”
Another factor of the boutique closing was the raise in rent and they typical mall contract cycle.
“Often you’ll find that stores that open with the mall, which often become really the cornerstone and the draw of a mall, they’ll close down when rent prices are raised. But then the atmosphere of the mall is totally changed,” Hsu noted.
“I imagine soon only food and beverage and service businesses will be able to survive in a mall with online shops so swiftly undercutting boutique and store prices.”
Hsu and Hemsin initially wanted to use Counting Sheep for much more than just a boutique. “We wanted to offer classes and services, but we were limited because of the cost of rental space. We were bootstrapping this on our own; we paid out of our own pockets. We were encouraged to look for investors and others approached us about franchising, but we really looked at this more as a hobby, and it’s hard to stay up to date about the most innovative baby product when your children are eight and nine years old.”
Hsu added, “I remember [Parker] and [Van Tilburg] saying the same when we were closing on the deal, that their children had grown, and they weren’t in the baby stage anymore.”
Though Hemsin will be staying in Beijing to focus on Boda (to our knowledge), Hsu will be moving back to the US next year, and has already finished taping her last episodes hosting the popular CCTV NEWS show, Crossover. “We’re looking forward to taking a break and exploring the next chapter in our lives. We will be relocating to a location where we can focus on family and an active lifestyle (and fresh air!) before taking on the next professional challenge.”