In this special edition of Money Talks, Matthew Nolan keeps with the import theme and reveals his top tips for local fashion importers.
Finding a competitive and reliable supplier is only the beginning to importing success – you’ll also need to build and maintain strong relationships, pay for stock, and investigate transport options and customs brokers. But there are a number of tried and tested tactics you can employ to better your overseas buying experience.
Choose who you deal with
Before choosing a supplier, research their background, products, services, delivery history and clients, as well as investigating any subcontractors they might use. Compare these details with your importing objectives and business processes to see how they match up.
Communicating with your suppliers
The success of your business – from selecting the right lines to meeting sales demands – is reliant on your stock arriving on time to the right order specifications. Open communication is therefore vital to any relationship, so be honest and clear about your business’s expectations and purchasing policies. A written contract can ensure you’re not sprung by hidden costs while outlining other issues, such as freight scheduling or dealing with delivery delays.
Money talks
Suppliers will often add incentives or discounts for upfront payments – which can save your business significant amounts. The quandary with upfront payments is that you’ll tie up your cash flow in stock that is still awaiting delivery in order to receive a discount – and it could be several months before you recoup your capital. The good news for fashion businesses is that funding options such as factoring are available that help you buy upfront, without tying up your cash flow.
Transporting and customs
Some suppliers will organise the administrative and logistical aspects of your stock import (including clearing the goods through customs), but naturally this comes at a cost. While sourcing freight options can be time-consuming and expensive, it can make sense to outsource certain elements of it to experts such as customs agents. Financing can also be sourced to cover this aspect of your stock purchase, again freeing up valuable working capital, which can be used for other business-building purposes.
Be prepared
Even if your supplier has a great reputation, things can, and probably will, go wrong at some point. You need to be prepared for most eventualities, and a contingency plan is essential. There are a range of issues to prepare for: some of the most common include a delay in shipment or the wrong order arriving, which can be an issue if you have a sale looming.
Matthew Nolan appears courtesy of PPB Advisory, a strategic and advisory practice.
Personal perspective
Grace and Paris is relatively new to the import game, having commenced just last year. agent Dianne Clarke gives assia benmedjdoub an insight into the process for new players.
When was Grace and Paris established and how many retailers does it service in Australia?
We began importing Daniel Hechter Lingerie Paris in mid-2009; from July 1 we launched Grace and Paris. Currently we service 23 boutique retailers across Australia.
How many collections does Grace and Paris import into Australia each year?
We are the sole distributor of Daniel Hechter Lingerie Paris. We import two collections per year: spring/summer lingerie, nightwear and swimwear; and autumn/winter lingerie and nightwear. Winter 11 is arriving in January 2011; each season we have seen rapid growth in units sold.
What do you see as the key benefit of importing stock as opposed to sourcing locally?
Why wouldn’t we want to bring French designer lingerie into Australia? On a global scale we have only touched the surface on what is available to consumers here – designer brands are big business and we can offer a luxury product to retailers at a similar wholesale cost to local products. Daniel Hector Lingerie is sold in over 30 countries and stocked in the most prestigious department stores, including Galleries Lafayette in Paris and Mitsukoshi in Ginza, Tokyo. ‘French made’ is also a huge selling point for retailers.
What are some important considerations fashion businesses need to remember when importing stock?
A close working relationship with the manufacturer is a must. We have constant communication via phone and email. Know your sizing conversions and check that the product is quality controlled. Know that the manufacturer can fulfill any order.
Are there any special considerations when it comes to finances and cash flow?
COD is the best way to operate – avoid being a creditor. Offer terms to good customers. Get on board with retailers that are passionate about selling the product; at the end of the day if they sell more they will order more. In terms of importing, the retail climate in lingerie has been tough, however it is beginning to gain pace, with better than ever exchange rates on French imports. Our bras have been wholesaling well between $41.80 and $44.95. For summer 11, we will be offering a wholesale price from $33.80 to $40.
What are some common mistakes local businesses can make when importing from overseas?
Jumping in without doing the research on a product you are looking to import and pricing it right for our market. Not working with experienced freight forwarders who have a relationship and long history with the country you are trading with.
Any advice for dealing with retail clients?
Be marketing savvy. Invest in a quality website – there’s no point having a business if you can’t be found. Offer any help you can to your customers (retailers) – POS, high-res images, copy for advertising. Give sales support – the more your customer knows about the product the better equipped and excited they will be to sell it. Find a product that is different to anything in our market, which offers a point of difference to the retailer. If a product is exclusive and there is a market for it, you will succeed.