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LETS GET DOWN TO BUSINESS.

Question :
Hey there! We are retail / fashion. We are essentials (nappies) but have had major supply chain issues since January (Chinas lock down) , now (getting things into NZ) and in the future (No international carriers are showing up to put shipments on. This has really caused issues with growth due to limited sales and constantly being sold out. We would like some direction on investment, planning, funding and to mitigate (as much as possible) the stunted growth. Loss of sales is expected but for our enthusiasm we would love to keep up momentum as much as possible. Cheers guys. TUTI

Question submitted 09/04/20 @ 11:32am
Industry: Business Growth
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  • Thanks for the note. I remember reading about you in an article on Stuff some time ago. While my kids are closer to university than nappies love the product, the website, and the eco mission.

    Assuming your have scrubbed your business to eliminate all discretionary costs for me the things that I would think about are:

    1) I see that you have agreements with stores and sell online. Have you looked at % of sales by channel and determined which ones generate the highest volume and/or margins? If you know that would you push your limited inventory to the best channels to give you the best returns (assuming your wholesale contracts allow that)?

    2) I would look at this as an opportunity to rethink your sourcing model. I have a friend who started a kids business in the United States who has now had to rapidly shift her production out of China (pre-COVID during US/China trade disputes). I know its a big ask and a big undertaking but it may pay to start that journey but maybe you can find someone that can do a simpler version of your products and get you going sooner.

    3) If your brand is a draw for your wholesalers and you have social media and/or advertising still going on can you get funding from them for advertising their stores once we are out of Level 3/4 to your followers as a way to get some more money in?

    4) If a wholesaler is sitting on inventory that you could sell online versus in store then sell the inventory on line, ship from the wholesaler to the customer, and figure out how to split revenue and/or shipping costs? Or better yet – if you have been paid for the inventory already pass through the money except shipping to your wholesaler to help them.

    5) I looked through your website and you do have a lot sold out. A few ideas for consideration:

    If you truly do not know when you will get inventory in you may want to consider whether you simplify how you present your product offering to just what is in stock rather than losing sales if people cannot get exactly what they want. This can keep up momentum.

    If you do have an idea you can decide to let people backorder and be explicit about the date when they will know if the order can be fulfilled. This comes with a lot of logistics to stay on top of customer promises so think it through before doing it.

    If you don’t want to commit on backorders maybe change your ‘Sold Out’ buy button to ‘Let me know when this product is in’ (or something simpler than that but I think you get the idea)? You can then build a database of potential customers that you can market directly to or figure out a way for them to add themselves to social media so they know the minute you are back up and running more normally.

    6) NZTE has information on their website about import/export arrangements being made. If your supplier is coming back on line you may be able to take advantage of those resources which are air freight or find ways to piggyback on to partial ocean going shipments that may be coming in to the country already.

    Following on from the excellent advice from John Olsen, I would also recommend

    LOOK FOR NEW ZEALAND MANUFACTURERS TO FILL THE GAP
    • Many NZ manufacturers will have increasingly spare capacity and looking for local opportunities to keep their businesses running. New Zealander’s are by nature very adaptable, so whist these manufacturers may not have been open to producing an eco-nappy previously, some may now be.
    • This will also have the added benefit that you will secure up your supply chain, as it will be locally based.

    PUT YOUR CUSTOMERS NEEDS FIRST
    • If you cannot supply products to your customers, then I would strongly urge you to put your customers first and recommend some of your competitor’s products as alternative options.
    • People understand that these are not normal times and that things are out of your control.
    • If you give your customers alternative options, your customers will greatly appreciate and value that you have solved their problem.
    • So why you didn’t have the opportunity to generate revenue, you will have generated something of great value – goodwill.
    • And ultimately your customers will love you and your brand that little bit more as a result; with some sharing with their friends, family and coffee group about the great service they received from you.

    DEVELOP PREMIUM NZ MADE PRODUCT
    • This may be an opportunity to look at producing an eco-nappy with all ‘NZ sourced natural fibres and materials’.
    • Whilst this will not solve your immediate problem, it would set you up with a unique and high-value product that would command premium pricing, especially to upper-socio consumers in offshore markets such as in China and California (when these markets get back to some normality).
    • Lewis Road Creamery is an excellent example of this, where their butter from ‘grass fed New Zealand cows’ commands a significant premium price at Whole Foods stores in the USA.

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