Skip to Content

Blog Archives

Speed to Market: now more important than Cost

Fast food, fast internet, fast coffee … it seems everything needs to be delivered to us fast these days.  We’re moving into an age where everything is driven by speed, and the Rag trade is feeling the pressure to deliver ‘Fast Fashion’ more than ever. With tech-savvy Millennials and time-poor consumers searching for more convenient ways to get what they want, when they want it, Speed to Market (STM) has become so important that Cost has become a secondary consideration.

0 Continue Reading →

China’s Comeback: Destination Hong Kong

As fashion executives around the world reported in the first BoF- McKinsey Global Fashion Survey, the year 2016 can be summarised in three words: uncertain, changing, and challenging. But in spite of this, fashion remains one of the key value-creating industries for the world economy.

0 Continue Reading →

REMINDER – CHAFTA DUTY RATES REDUCED

As no doubt you know, 2016 was one of the toughest years for global fashion and retail.  From political and economic instability to ever more demanding consumers and new technologies, it’s no wonder sales growth slowed to between 2–3 percent at the end of the year and profit margins had all but stagnated. According to McKinsey, the outlook for 2017 looks better, but who doesn’t want to kick off the new year with some good news.

GOOD NEWS – ChAFTA DUTY RATES REDUCED

As of 1 January 2017, duty rates for most tariff categories covered under the ChAFTA agreement were reduced.

For simplicity, we have summarised the tariff classifications as follows:

chafta duty rates

If you would like to discuss the ChAFTA duty rates reduction with me further please get in touch on 1300 651 888 or via alex@maglog.com.au.

Magellan Logistics has been navigating global supply chains for Australian fashion, footwear, textiles and retail businesses for 20 years. We have your back on this and any other customs or freight-forwarding topic.

0 Continue Reading →

I Rent the Clothes on My Back: Fashion and the Sharing Economy

The new collaborative, sharing economy has given us everything from sharing rides, (Uber) to sharing houses, (AirBnB) and now according to Christine Hunsicker, it is time to look in our closets and share our wardrobe. Hunsicker is the CEO of five-year-old Gwinnie Bee clothing rental service. Hunsicker notes that the $2 trillion-dollar fashion industry is ripe for a technology disruption. The “sharing economy” as it has been labeled has disrupted every large business from taxi companies to hotels, and looks like sharing clothing is going to be next.

“A lot of people can’t afford the timeless brands new but they still appreciate the quality,” said Erin Wallace, director of marketing for Crossroads Trading and its sister store Fillmore & 5th, which has opened six boutiques since 2012.

Magellan Logistics Fashion Freight ForwarderOther brands making a success out of breaking the paradigm include Rent the Runway, Bag, Borrow or Steal and ThredUp.

Many of these new businesses are getting funding from traditional sources like individuals and private equity firms including Bain Capital Ventures but also from startup platforms such as Onevest.

Highland Capital Partners, which has more than $2 billion under management, has invested in a number of businesses including Rent the Runway and ThredUp, which focus on Millennials and the shared economy, said partner Dan Nova.   “Just about every major industry is likely to experience disruption (because of the sharing economy),” said Joe Atkinson of accounting and consulting firm PwC, whose April report that found that Millennials are among the most enthusiastic about sharing and account for almost 40 percent of those who have provided something.

Big Players Take Notice

Clothier Louis Vuitton, with revenue at €30 billion annually is not likely anytime soon to feel the effects of millennial consumers’ clothes sharing schemes. However, large retail outlets like Patagonia have taken notice. Recently the outerwear retailer has started the “Worn Wear Rack” program, enticing customers to trade in used clothing that is in good condition for later resale. More telling of what may come in the future is that venture capital financier Highland Capital Partners has invested millions in many of the new fashion sharing startups. One of their investments, Rent the Runway, rents high end designer clothing for a subscription fee. With Forbes magazine estimating that the sharing economy has surpassed $3.5 billion since 2013, the possibilities of a large slice of the haute couture pie could be missing from the big retailers’ bottom line soon.

Not Everybody is a Fan

With disruption of economic models comes backlash. Rioting Parisian cabbies last Summer were angry at the Uber invasion in France, and the government of Singapore confiscated flats that were shared with tourists because of regulatory conflicts. This is to be expected in industries who up till now have randomly set their own prices. Entrepreneurs know that their small piece of an extremely large pie can grow. Accountants Price Waterhouse and Coopers estimate total sharing economy revenues to grow to $ 335 billion by 2025, and PwC’s Joe Atkinson theorise that every major player in the retail industry today will be disrupted by the sharing economy.

Community Comes First

Though there is profit to be made, millennials in particular want to be a part of a bigger community. This is one of the reasons they look to connective technology more when purchasing personal items. Rachel Botsman, author of the book “What’s Mine Is Yours: The Rise of Collaborative Consumption believes that millennials look first at personal connection with any business or corporate entity. With the rise of technology that can cut out middle merchants like retailers and other gatekeepers, the empowerment of younger consumers comes with the feeling that they are part of a bigger peer group.

Environmentalism is also a major driver of this trend. “Instead of paying for something and getting rid of it with no value when you are done – swap and resale gives Millennials the ability to extend the value,” says Jamie Gutfreund, chief marketing officer for Deep Focus (youth trends market research firm. “It’s efficient and it’s green.”

Indeed, 59 percent of Crossroads shoppers said “being an environmentally friendly way to shop” was one of their favourite things about the store.

Investment Precedes Profits

With Uber and AirBnB now valued at over $10 billion one can only imagine what the next few years will bring into the sharing economy. Tens of millions of dollars in capital is being now raised for the sharing of clothing, housing and other staples, with firms lining up to get into the fledgling industry. With the right kind of management, sharing pre-worn clothing can be the next big boom in this new, collaborative environment.

And, as we have seen time and time again, trends that take hold off-shore are soon replicated in Australia – what will it mean for our much loved traditional fashion retail brands?

____________________

Magellan Logistics is a locally owned, Melbourne based freight forwarding and logistics company with offices in Sydney and Auckland and a specialization in freight forwarding and 3rd party logistics for the textiles and fashion sector.  Contact 1300 651 888 or visit www.magellanlogistics.com.au for more information on how we can assist you.

 

Resources:
https://en.wikipedia.org/wiki/Louis_Vuitton
http://www.cbsnews.com/news/sharing-economy-gwynnie-bee-everyday-plus-size-clothing-rental/
http://www.forbes.com/sites/yunitaong/2014/06/23/southeast-asias-sharing-economy-start-ups-may-produce-the-next-airbnb-or-uber/#313a89cd30aa
http://www.collaborativefinance.org/sharing-economy/
http://www.businessinsider.com/r-millennial-nowners-follow-uber-with-new-fashion-trading-model–2015-5
http://www.harpersbazaar.com/fashion/trends/news/a11040/sharing-economy-fashion-apps/
http://www.businessoffashion.com/articles/news-analysis/millennials-follow-uber-with-new-fashion-trading-model

0 Continue Reading →

Free Trade Agreements Help Australian Exporters

free-trade-agreement-magellan-logistics

When it comes to global trade opportunities for Australian exporters, free trade agreements (FTAs) play an important role. For any locally based business wishing to expand their international reach, they are a way of linking otherwise unconnected economies and establishing new markets for reciprocal exchange of goods and services, as well as investments.

Those in the business of international shipping from here in Australia have previously enjoyed seven different FTAs with countries across the globe, including New Zealand, Singapore, Thailand, US, Chile, the Association of South East Asian Nations (ASEAN) (with New Zealand) and Malaysia.

In addition to allowing trades of goods and services, FTAs also typically encompass a range of other trading potential, such as the exchange of intellectual property rights, government procurement and also competition policy.

All exporters in any industry that freights goods internationally can benefit from FTAs.  The fashion, textiles & footwear freight industry for example, under these established FTAs, make up around 26% of Australia’s total trade – a substantial figure and one that is now set to grow further. The addition of FTAs for Japan and Korea will be of interest to Australian garment manufacturers and local fashion exporters.

Japan and Korea Add New Export Market Opportunities

In April 2014, those in the Australian export business were pleased that Australia signed an FTA with Korea.

In other positive news for the local retail industry, in July 2014, Australia also signed an Economic Partnership Agreement (EPA) with Japan. An EPA is an economic arrangement – often described as a premium variation of a general free trade agreement – that opens up free movement of goods, services and investment between countries. It’s good news for anyone in the business of fashion freight shipments, whether as an importer, or exporter of garments and other goods – but also a positive step for any local retailer or manufacturer keen to tap into a wider international audience.

Then, there are economic partnerships, which are sometimes described as high standard variants of free trade agreements.

Using the fashion industry again for a quick snapshot, at the moment, Korea accounts for around 5% of Australia’s total trade, with Japan accounting for around 11%. With the increasing number of FTAs currently in negotiation to help Australian exporters access new markets and expand trade in existing markets, this is expected to increase.

If you’re an existing Magellan Logistics client, currently enjoying the export and import opportunities for your business, we’d encourage you to actively review your current marketing plans and shipment strategies to analyse whether these latest  FTAs will be of benefit for your business.

To find out how your business can benefit from these new Free Trade Agreements, speak to our trusted freight specialist team here at Magellan Logistics, for more information on 1300 651 888.

0 Continue Reading →