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Posts from the ‘Early Days’ Category

Sep 29

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You’re FIRED.

As you all well know, we’ve had some interesting difficulties with stockists and suppliers deciding that legal contracts are more like “guidelines”. Sure, anyone who’s been even briefly exposed to a media outlet in the last 12 months will know that retail is pretty dire right now… but does that excuse completely immoral and illegal behaviour? We’re not talking third world starvation and theft to feed families after all. It’s a basic case of – as my dad puts it – ‘I’m going to prop up my business with your money’.

Bank bashing is a national sport in Australia, but folks… THIS IS WHAT BANKS ARE FOR.

Right now our debt collector and lawyers are about to issue a warrant for seizure of goods for someone that owes us thousands. Another accounts person told me this week to “take a chill pill” when I followed up on an invoice that was more than 3 months overdue. People who deny ever having taken delivery of stock are ignoring us in public places.

Really, people? Really? In my previous life the attitudes I’ve encountered recently would have been grounds for formal warnings and ultimately termination of employment.

I don’t want to be someone people dread talking to. I don’t want to be the bad cop. But honestly, what am I supposed to do? Is there an answer here? Or is this a type of judgement day where the good and worthy are being sorted from the rubbish?

Sam

Aug 1

Jack + Bill

On Saturday I headed to 1000 Pound Bend in Melbourne for the Jack + Bill casting call. Jack + Bill is a pop-up PR agency run by industry heavyweights Porter Novelli. (For those who aren’t in the know, Porter Novelli is a serious end of town agency… their clients are businesses like Visa and Opera Australia). The casting call was a panel interview process to win 3 months representation from Jack + Bill.

Anyway – it was a great experience. I was nervous as heck, but that’s cool. It’d be more worrying if I wasn’t. They asked super smart questions and ran the day as a slick operation. My corporate shadow was extremely happy – the volume of fashion events that are run like a mobile kids petting zoo is pretty concerning.

Below are a couple of shots of me being interviewed by lovely Porter Novelli consultant Carol Laws.

I’ll get the results and find out if I was one of the successful applicants in the next two weeks. Keep your fingers crossed!

May 30

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Payment Terms

Since our blog post about non-paying stockists (and a special thanks to Ragtrader for republishing it – we were so thrilled to read all the varied responses), we’ve been talking a lot here at Bento HQ about payment terms. In most cases when you’re dealing with goods, payment terms are pretty straightforward – you want something, you buy it. In fashion, this just isn’t the case.

It isn’t the purpose of this blog to get into a long-winded monologue on the financial culture of the fashion industry in Australia (at least not today). What we want to share is the fiscal reality of a new clothing label and the options as far as payment terms go.

When Bento started in April 2010, the first dollars were shelled out to get things going. At first they were minimal – business registration, patternmaking, etc. Then they got more serious – sampling, photography, fixing the patterns that weren’t right, models, lookbooks, trade shows and so forth. Within six months, we’d outlaid tens of thousands of dollars and production had commenced on the first collection. By the end of the year, we’d also sampled our second collection and photographed that too (goodbye another five-figure sum).

In February 2011 our first collection – Autumn/Winter 2011 was delivered to stores. Some of our stockists chose to make this collection available for preorder and with our support presold more than 50 units at full price, before the items were even available in store.

We have two types of stockists. The vast majority are full-paying (that is, they choose their stock and pay for it and decide how to sell it) and consignment (they only pay for goods retrospectively once the stock sells).

In the first season our full paying stockists were supposed to pay their first instalment on delivery of the collection in February 2011. Several have not. (Even those that presold all those pieces.) The consignment stockist pays us at the beginning of each month for the goods sold the previous month.

Right now, we are producing stock for our second collection (Spring/Summer 2011 – 2012), sampling for our third collection (Autumn/Winter 2012) and chasing payments on our first collection (Autumn/Winter 2011).

The biggest issue with this model is that we have to pay for production and sampling well in advance (9 – 12 months) of getting paid ourselves. Financially, this is obviously quite a burden for a new business.

The options available as far as payment terms go can be roughly split into three categories:

1. Self-funded production. This is what retailers like Scanlan & Theodore do – pay for what they want to make. The advantage that retailers have is that they start getting paid the day the item goes on the shelves, and their profit is approximately 75% of the price on the swingtag. From a wholesale perspective in payment terms this means the label takes the orders from retailers, produces the stock and then seek payment at some stage after production has finished. This means that the full cost of production is worn by the label and as such the risk – if the retailer changes their mind or goes out of business, they have unallocated stock for which they need to find placement, and they’ve outlaid money for the goods.

2. Partially-funded production. This means that the cost of production is at least partially funded by the retailer the goods are being made for. Most wholesale labels make to order, so this means that the retailer pays a deposit up front to cover immediate production costs and then make further payments at agreed intervals. For example – 40% of the order upfront, 30% before delivery, 30% within 30 days of delivery. This means that the retailer and the wholesaler share the risk – the label hasn’t yet made any money (actually, they’ve made a loss – the production costs have been covered, but not the development costs or the mark up).

3. Fully-funded production. We can’t actually imagine an instance in which this would occur (unless the retailer seriously wanted the label), but in this version of events the retailer pays the full amount of their order upfront – both the cost of production AND the mark up. Realistically though, this means the retailer wears all the risk. If the label goes out of business they’re going to struggle to get their money back, and they’ll be short stock for the season.

It’s no big secret that fashion is an incredibly competitive industry. With this in mind, labels are willing to take ever greater risks – that is, fund production of items with absolutely no downpayment. With substantially fewer retailers than labels and a culture of hyper-secrecy, retailers can get away with being extremely lazy with their payments. Conversely, with far fewer suppliers than labels, suppliers can be excruciatingly strict with their payment terms. As a result, the label ends up acting as the bank for the industry.

Without doubt, if a retailer really wants a label they’ll pay the required deposit, or negotiate terms they can afford. If the retailer however feels they’re taking a bit of a risk on the label or they’re somewhat on the fence about their order, why make a deposit when there are ten other hungry labels who don’t want a deposit just itching to take an order?

Naturally, no one wants to be in a ‘good times’ business relationship – a relationship in which there is no flexibility to account for the tough periods. Likewise, every good business should want to work with their best customers to ensure a mutually beneficial relationship. As we enter our third season we now have relationships with suppliers where they are willing to give us a few weeks breathing space to make payment – but of course this is something agreed to upfront. Moreover, we’ve earned that flexibility by paying very promptly in the past.

What is very clear is that this model isn’t sustainable. If the global financial crisis has taught us one thing, it should be that no business is immune to collapse.

Put simply, fashion labels need to toughen the heck up and start operating more like businesses and less like hobbies.

May 17

The Cost Isn’t Just About Dollars…

… or Euro, or Yen, or Renminbi, or Pounds…

I’m sure it won’t surprise any of you to know we’re having trouble with non-paying stockists.

It’s just who I am that I inherently trust people. I believe they’ll do the right thing. I believe that if they place an order and agree to our payment terms, that they’ll pay… and that they’ll make it a priority to pay on time. I also work very hard at building meaningful relationships with our stockists, suppliers and manufacturers.

With this in mind, it absolutely crushes me when we get messed around. I AM this business. I gave up my job to pursue this dream. I’ve had sleepless nights, shed tears, worked crazy hours and made HUGE sacrifices to do this. When someone tries to take advantage of Bento – and by association me – I take it personally.

Originally, I thought it was because I was a new addition to the industry. That people felt they could treat Bento like dirt because we weren’t big enough or important enough to have an adverse impact on them.

This morning however, I happened across this post by Isaac Likes, talking about how a fairly significant talent agency in New Zealand has been fined for not paying talent for jobs they’ve been booked for. (The true irony is that the fine was $10,000 for failing to pay just $258).

This afternoon, I was with one of my manufacturers and we got talking about finances. She mentioned in passing that tomorrow is the VCAT hearing for one of her clients who is a VERY substantial Australian label (trust me, you’ve heard of them). They still haven’t paid her for two seasons ago… nor have they paid their denim manufacturer (whom we also share). Obviously they still have stores open, so they’ve got someone else making their stuff.

Although this won’t surprise many of you, it seems to be a revelation to some – WE ALL NEED EACH OTHER. My stockists actually need me as much as I need them. Ditto our suppliers and manufacturers. Now if such ‘important’ players in the industry can go around messing businesses about, is it any wonder everyone is so distrusting of new folks?

Anyway, that’s not really my point. My point is that, the fashion industry is a small and close-knit place. And anywhere that is small and close-knit is typically gossipy. My manufacturer isn’t shy about telling people who isn’t paying. From now on, I’m going to be asking for trade references, so I hope other people aren’t going to be shy either. (Although sadly the industry seems to be too scared to say anything negative about anyone.)

The bottom line is that the actual $ figure isn’t the only cost associated with not paying someone. Your reputation can easily get damaged and you’ll end up with a bunch of people unwilling to do business with you. Moreover, those involved are likely to remember your actions and you never know where they might end up. (Side note: I had the deep pleasure of removing an agency from consideration on a multi-million dollar project during my bank days due to them completely, consistently and continually failing to deliver on a project I’d managed in a role with a previous organisation that was worth substantially less). To paraphrase an old saying – doing the same thing over and over and expecting a different result is a key sign of insanity. If these businesses can’t manage their finances well enough to pay their bills… well, something needs to change. Because that $ figure on the bottom of the bill won’t be the only thing that they end up paying.

I’ll finish this with one last thought: for those businesses who think it’s OK to mess around with talented, honest businesses like my manufacturer mentioned above… just remember: if they go under because folks like you don’t pay, they won’t have anything left to lose by telling the world and each and every one of their contacts about your poor behaviour. And an angry person with nothing to lose is not someone you want to have upset. Haven’t you SEEN those horror movies?!

Apr 27

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I’d Like To Know…

I know many other designers read this blog; they’ve mentioned it to me on a number of occasions at industry events and whatnot. So, if you’re in a sharing mood, here’s some stuff I’d like to know…

1. How the heck do you store patterns? Is there some sort of crazy filing system I’m supposed to implement? At any rate, they take up a LOT of space and by the time they’ve been graded into six possible sizes they take up even more space. Then there’s the slight variations you make to the patterns for another season, so two extremely similar patterns need to be stored and labelled in such a way they don’t get mixed up.

2. Fit models. Seriously, they’ve been nothing but disasters for me. I dropped two styles from Spring/Summer 11-12 and had to rework several others because I hadn’t tried the toiles on myself. Perhaps it’s just because I’m not formally trained in fashion so I don’t really know what I’m doing, but whilst it felt easier at the time to fit on someone else, it was more difficult down the track. Am I doing something wrong or am I not alone here?

3. Non-paying accounts. What do you do? Some of our ‘best’ and most supportive stockists just don’t pay their invoices. I didn’t start a bank here, I’m not offering them lines of credit. I expect timely payment. But how do you get it without ruining the relationship?

4. Whilst I’m on the subject of stockists… I’ve talked before about the fine line between having enough stockists to keep going but at the same time having the ‘right’ stockists on your books. What do you do when you get interest / an order from an unattractive source?

5. Lookbooks… they all seem to look rather samey. Have you ever tried not following the formula? How did that go? Whilst I’m on the subject, do you necessarily get better results using more expensive components and people? ie. Is a $1,000 a day model substantially worse than a $3,000 a day model? Or photographer? Or stylist, etc.?

Sure, I could work it all out myself, but why try to reinvent the wheel if there’s already a perfectly well trialled solution?

Apr 26

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This Is How We Roll

Guess what? The business of fashion is rather different in Asia to Australia. Hardly surprising, I know. That said, I’m not sure I was prepared for the system being completely turned on it’s head.

In Australia it seems to generally be the case that boutique buyers do not particularly like dealing with sales agents. I see where they’re coming from – adding another layer between the designer and the consumer probably isn’t the best idea. Moreover, agents working on commission can be pushy and demanding.

Conversely of course, it’s also more convenient for everyone – one sales agent representing multiple complimentary labels means fewer buying / showing appointments.

Since arriving in Singapore last week, we’ve seen approximately a dozen boutiques. Quite unexpectedly every single person we’ve seen has asked who we’re represented by. And the answer – we represent ourselves – doesn’t seem to be the answer they want.

I see two possibilities here… one, how many Australia designers do they get just showing up in Asia? You’d have to imagine they’re all repped by someone. Two, perhaps they prefer dealing with an agent – on their turf, in a language they’re more familiar with?

At any rate, what seems to be abundantly clear is that we’re not getting anywhere fast in Asia without that agent.

Anyone know a good sales agent over here?

Apr 20

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Does It Make A Difference If We Make A Difference?

Want to hear something really rather miserable? If not… perhaps skip this post.

When I worked for a bank (and I’ve never said which one, but it was one of the big four in Australia), the company did a lot for charitable causes (and still does). They paid for each and every one of their 40,000 odd staff members to take leave to do volunteer work during business hours a few times a year. They gave eye-wateringly large amounts to good causes. Black Saturday bushfires? They were there to provide call centre support for the Red Cross and Emergency Services. It was actually really nice to be part of.

That’s not the miserable part. The miserable part is that they did research and realised that NO ONE CARED. It made absolutely no difference to how people felt about the bank and made them no more (and if anything less) likely to open an account. Now many of you will be thinking ‘well, they’re a bank… surely with no benefit to themselves, they stopped doing all those good things’. And you’d be wrong. Instead they used the money they would have used on advertising their good deeds, and just ploughed it back into those very charitable activities no one gave a hoot about.

The part that always gets me is that the public just don’t care. How sad is that?

As many of you will know, Bento is made entirely within 10km of our studio. Design, patternmaking, fabric sourcing and manufacture is all done here. Even those little swing tags that hang off the clothes in the shop are printed here… From a carbon-footprint perspective, there aren’t many labels out there which are going to have a geographically tighter supply chain (and even now, I think there’s a lot more we could do, and we’re working on it).

Then we went the extra mile and hunted down manufacturers that are union-certified so that we can sleep soundly knowing our seamstresses and so forth are paid fair wages in a safe working environment.

I’m going to be honest with you. It’d be about a squillion times easier to just get stuff produced offshore, never see the workplace, not ask what staff are being paid, haggle over costs and so forth. But I fundamentally want to see the industry change, and I’m committed to being part of that change.

Despite what many think, this is NOT a problem that only exists overseas where “the cost of living is less”. ActNow outlines the magnitude of the issue locally, revealing that:

In Australia, there are 300,000 people making clothes for our major retailers [and] designers [...] who work for between $2 and $3 an hour. “

Recently, many large Australian labels were called out on the use of this sort of labour. It was all over the Herald Sun and other major publications. But can you name them? Have you heard of any labels going under due to poor manufacturing conditions? Yeah, me either.

As of yesterday, we started a small (very unscientific) test. After a quick survey on our Facebook page (you can still participate – www.facebook.com/thisisbento), we distributed to some of our stockists swing tags bearing the Australian Made logo.

The extreme majority of responses on Facebook indicated that the label being made locally made it more interesting. Yes, we already have ‘made in Melbourne, Australia’ written on our tags, but will this technically vintage retro-cool logo make any difference to sales?

All evidence to the contrary says no, but I’m personally hopeful.

Apr 12

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A Rather Curious Thing

Our first season cost a LOT of money to develop. Like brand new mid-range car sort of money. This was for a few reasons… first, we ran into a few teething problems which cost money to fix. Secondly, I made some mistakes (and mistakes are seldom free). I also got a bit carried away with sampling.

Specifically, I sampled every single colour of every single style and in some cases, I doubled up.

Second season, in an attempt to not go quite so crazy on the financial front, I thought hey… surely I don’t need to sample in EVERY colour. I mean, people know what colour cream is and what colour black is. As long as they have the fabrics to look at and at least one colour of the style is made up in the fabric, I won’t need every colour.

Well, I think I may have been wrong. So far, not one single person has ordered a style in a colour that wasn’t sampled.

So what’s the deal? It’s the job of these people to have vision. They are buying for a whole store (or several stores!), up to six months in advance. They have to be able to predict what will be popular and what will sell.

In the case of regular consumers, it’s generally accepted that items will sell far better if the customer can see the product they’re getting in the colour they want… but could this be true for store buyers as well? I would tend to argue that perhaps the colours in which I sampled just happen to be the most popular, if it weren’t for the fact that the colours we didn’t sample in are typically the most popular – black and cream/white.

With this in mind, the question remains – is it worth the cost to sample in every single colour, or better to try and pick what will be most popular?

Mar 31

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What Would You Do?

The fashion industry is a very curious place to be. Everyone has heard – and probably used – the expression ‘small world’ at some point, but I’m not sure you really appreciate just how small the world can be until you’re in such a specific industry.

The rather tricky part about the fashion industry (particularly in Australia) is that not only does everyone know everyone, but as Heidi Klum puts it, ‘one day you’re in and the next you are out’. Logic then (to me, anyway) would say it’s a very good idea to always behave with the utmost professionalism and kindness to anyone and everyone you meet. After all, tomorrow they may be very powerful, very influential and very much a person you need to know.

So what then are you supposed to do with people who behave childishly, immaturely and unprofessionally?

The temptation when you run your own show is to let them have it. Tell them they’re tools. Refuse to ever to business with them again. Generally go to town on their asses. The problem with this strategy however is that this person may very well be tomorrow’s next big thing. And do you really want someone in that sort of position feeling unfavourably about you?

Equally, you don’t want to become a pushover. But an assertive person can easily get a reputation as an asshole if only one side of the story is relayed to a third party.

So what would you do? Treat ‘em mean, keep ‘em keen? Keep your own little black book of folks you’ll never deal with again? Or attempt to air kiss your way to success?

Mar 22

Fight The Good Fight

For those of you who weren’t paying attention, we’re currently selling our second season (Two’s Company) for Spring/Summer 11-12. By selling of course, I mean selling to stores – not to end customers.

Some of you will remember how completely awful selling last season was. I was largely ignored by people I approached and strung along by those who didn’t. So, I’ve been pretty thrilled with the response received this season. That said, the response hasn’t been the positive one I was hoping for.

Let me explain. Stores I’ve approached this season have been really lovely. Primarily, they’ve been responsive which is huge in its own right. They’ve also been extremely complimentary about the label. However, in most cases they’ve been turning me down. Why? Because retail is apparently diabolical at the moment. Even the most established stores with prestigious labels are struggling.

Indeed, stores I’d admired and shopped in over the years are now closing. A store I approached last season (but didn’t end up stocking with because we’re now stocked literally across the road from them) is closing. They’ve been open less than a year.

I really believe in what Bento is about. I have a vision and I will take whatever measures necessary to see it through to fruition. That said, it’s clear this won’t be an easy journey. If I can succeed in this environment though, imagine how robust Bento will be in good times.

I believe this is an equation that goes both ways though. My stockists will tell you I do a lot to ensure the success of my label and their store(s). I expect them to do the same though. This means positioning the product appropriately, being informed about the labels and pieces they stock and providing unequaled service.

Sure, some people are shopping less. So why make it easy for them to not shop at your store or buy your label? Remember: people are still buying after all.

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