NZ exporters seize direct-to-consumer model

Fiasco owners Matt Waterhouse and Joe Bradford. Photo / Supplied

More Kiwi businesses adopt D2C to grow brand & business internationally.

In early 2020, Fiasco nearly went under.

The company designs and builds road cases – clever transit storage used for events touring – but when Covid-19 hit, the live touring and events industry all but disappeared and so did demand for Fiasco's equipment.

Joe Bradford, Fiasco co-owner and head of operations, says the situation was dire. "Over seven days we lost 90 per cent of our business."

Something drastic was needed. Within two weeks, the Cambridge-based company targeted a new gap in the market, launching Work From Home Desks. Fiasco's ergonomic birch plywood desks can be easily switched from seated to standing height and require no tools to assemble – they simply slot together.

Fiasco has been selling the desks in New Zealand and the US, which accounts for around 70 per cent of its sales, since March 2020.

The company's original road case manufacturing business was a B2B (business-to-business) model – but it switched to a D2C (direct-to-consumer) model with the new desks. It's an e-commerce strategy allowing manufacturers to sell directly from warehouse to the consumer, bypassing retailers and wholesalers. It meant Fiasco could make its products available immediately, marketing and connecting directly to its target audience.

Bradford says coming to grips with e-commerce and targeted digital marketing was a steep learning curve, but it worked. Business has never been better.

Paul Webster, a customer manager at Te Taurapa Tūhono New Zealand Trade and Enterprise (NZTE) works closely with New Zealand export businesses like Fiasco. In the past year especially, he's seen more and more businesses leverage digital solutions to connect to customers.

NZTE is the government agency charged with helping New Zealand businesses to grow internationally and Webster has worked for Google, Facebook and Instagram previously.

"There is consumer-driven growth in demand for products online and, while Covid-19 accelerated that, the demand is here to stay," he says. "There's never been a better time to build a brand online."

Some businesses like Fiasco go straight to an owned e-commerce platform; they sell products directly from their own website. Others starting out may use channels like Amazon, TMall and Instagram to reach international customers.

Webster says there are numerous advantages in a D2C e-commerce model. There are increasing pressures around costs and a D2C model means businesses can potentially increase their margins. They can either pass on savings to consumers or invest the gains back into their business growth through marketing and employing more people to support online operations. It also means the business can retain control of building its brand, enjoy cost-effective marketing reach and be highly targeted.

Longer term, it can capture customer data, have greater access to consumer insights and re-market to existing customers, says Webster. However, he cautions that it's critical to understand who your customers are and to have a clear export plan before scaling out D2C digital commerce.

"This is where NZTE can help," he says. "We work with businesses to build their capability by offering resources and tools, such as specific market insights and research reports and sharing other customers' success stories. We use our international networks and connect businesses to expert digital advisors, in-market contacts and peers who have been there and done that."

Bradford says working with NZTE helped Fiasco be more efficient as a company, which in turn saved them money: "They put us in touch with an industry expert and they helped us with a piece of market validation research that was pivotal for us. We are where we are today because of that."

Maggie Marilyn founder Maggie Hewitt. Photo / Supplied

Another New Zealand business embracing the D2C model is fashion label Maggie Marilyn. Founder Maggie Hewitt is known for her beautiful, sustainably produced clothing and her uncompromising commitment to a circular, regenerative, transparent and inclusive business.

Maggie Marilyn launched five years ago to huge fanfare. Almost immediately the label was picked up by huge wholesaler Net-a-Porter. It was featured in Vogue.com and won international awards.

It was an exciting time but Hewitt became increasingly frustrated by the lack of progress towards sustainability within the wholesale model. Feeling disconnected from her customers, to whom she wanted to speak directly, Hewitt decided to shift to a D2C model, selling through her website as well as her own retail stores.

In November, she opened her Auckland flagship store and has plans to open more in Australia and other offshore markets.

Maggie Marilyn's commercial manager Amelia Meadowcroft says the transition to the D2C model has gone well and NZTE's support has been invaluable: "Being a small business can be quite lonely. It's wonderful having NZTE – someone outside the business – to speak to and talk through issues."

NZTE put Hewitt in touch with another business that had transitioned from a wholesale to a D2C model. Meadowcroft says talking to someone who had been there already was incredibly useful. Also valuable was having access to industry experts, NZTE-run programmes and resources and information on NZTE's digital platform myNZTE, she says.

Become an NZTE customer today and we'll support you in growing your business. Go to takeontheworld.nz