You don’t just want to corner a small piece of the market- you want to take on the world! That’s why this piece from Jennifer McCloy is going to be so useful to you. Prior to founding her label Jennifer Kate, Jen studied Strategic Corporate Public Relations, Economics and Government Relations, and worked for many years as a Strategic Risk Consultant- Phew! Her career in fashion may seem far removed from her corporate background, but she attributes the success of the label to just that – an ability to marry an understanding and appreciation for consumer demand, with a real respect for the nobility of the craft.
Optimising your business for international sales
I remember the first time an international stockist ever approached us – it was a beautiful boutique in New York (still one of our favourite stockists) and it was our second season. We were still a very young label, and the lure of stocking in New York was something that was difficult to look at logically. The excitement was palpable – and any consideration for “the boring bits” such as payment options, the strength of the dollar or freight seemed a drag.
I have to admit, sadly those “boring bits” have now become what excites me – and the success of the label can absolutely be attributed to just that – an ability to enjoy the back-end of the business and see the opportunities that lie there to grow and sustain your business.
If you are running your own label, or really any small business for that matter, the terms “streamline” and “cash flow” have likely been bandied about a number of times in conversation. Often these types of buzzwords can make designers switch off – the creative side of our brains taking over and encouraging us to leave that stuff to the next guy. But the annoying thing about buzzwords and cliches is that they become buzzwords and cliches because they are used over and over – and they are used over and over because they are important.
If you are looking to take that step to grow your stockist base outside of Australia, there are several ways to streamline your business in order to free up cash flow – and allow us to do those amazing creative things we want to do.
When pricing your goods for international stockists, it is important to consider all the costs that go into getting that product to their door. Shipping fees and charges (per unit) need to be considered, as well as any agency commissions you might be paying. These costs can be very quick to erode your margins, so it is crucial to consider all costs on a per unit level – how much will it cost to produce, sell and ship each piece?
With the strength of the US Dollar at the moment, it is also important to charge all of your international stockists in their relevant currency (USD, GBP, Euros etc), rather than AUD.
If you are producing offshore, most suppliers will want to be paid in USD – so in order to avoid heavy conversion fees and international wire charges try to hold any income you receive in USD. The best way to do this is either using a Foreign Currency Account which allows international transfers – CommBiz is a fantastic platform, and many of the others are just as competitive – or ideally have your international stockists pay you via PayPal. This way, if your supplier allows payment through PayPal, you can pay them in USD and you don’t need to pay any conversion fees. The transfer fees are also much lower than any of the major banks, depending on the country of the recipient – it can be as low 0.5% in some instances.
If you are producing within Australia, then sending money via PayPal is free, but it is important to keep an eye on the movement of the dollar so that you can convert your balances at the right time.
This can be a make or break for many labels – and it is important to be pushy (but still friendly!) when it comes to negotiating payment terms with suppliers and stockists. There are a number of ways to reduce the risk of bad debt, so you just have to stand strong.
At the end of the day, if a stockist doesn’t pay you on time (or at all) there is no point doing business together. If they want your product and you are able to have an upfront and honest conversation with them, all terms should be clear (and in writing) from the outset.
Of course, the terms will depend on the size of the stockist and the larger ones will have their policies in place – you just need to aware of these and ensure you can manage your cash flow to meet their orders.
Shipping and Returns
Importing/exporting goods will always come with a bevvy of fees and charges – and many labels are paying far too much to move their shipments. It can be worth looking into options with a Third Party logistics/warehousing provider to avoid bringing your product into Australia and then shipping it out again. They can also provide you with a landed cost per unit for your shipments – which will help to inform your wholesale pricing.
It is also important to give yourself enough time to meet shipping deadlines, as there will often be delays. Moving shipments urgently will always cost more.
If the idea of acing international sales sounds like sweet music to your ears you’ll be glad to hear that Jen consults to businesses of all sizes. If you’d like to get in touch for more details email us!