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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.

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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.

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The State of Global Fashion 2017 – Uncertain, Changing and Challenging

Looking back at 2016 — one of the toughest years on record for global fashion. As fashion executives around the world reported in the first BoF-McKinsey Global Fashion Survey, 2016 can be summarised in three words: uncertain, changing, and challenging.

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HOW TO DECIDE THE RIGHT SHIPPING METHOD FOR THE GARMENTS YOU IMPORT

As anyone who is in the business of importing garments for retail sale will tell you, one of their most crucial supply chain considerations is how to ensure that their merchandise remains in the very best condition. Consistency from origin to destination is critical, while not losing sight of the all-important speed to market.

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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?

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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

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Supply & Demand – Influences that shape your supply chain solution

Supply & Demand:  In the Supply 101 section of the latest issue of RagTrader Jeff Kershaw and Joe Carbone advise on the importance of understanding both the drivers and impacters of supply chain decision making in the pursuit of a bespoke and efficient solution that achieves both business and brand goals while at the same time meeting customer needs.

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Offshore warehousing, 3PL, sorting & labeling – direct into store

As we gear up for peak season in the freight forwarding and logistics business it seemed timely to revive a blog post from earlier in the year.

The traditional supply chain method of overseas supplier packaged and delivered product is evolving. The pace of change is rapid and importers need to adapt or suffer competitive pressures through loss of sales and local sorting and distribution costs.

Historically, Australian importers have maintained local distribution facilities, either in-house or 3PL, in order to deliver product domestically. In today’s environment this can be an expensive solution when compared to some of the options available off-shore.

There is an increasing trend of transferring labour intensive activities, such as Pick and Pack, to low cost countries closer to the supply source. For example, Magellan Logistics provides a Pick and Pack solution in Hong Kong and Shanghai, that shorten the supply chain and provides significant cost savings to our customers. All orders are processed at a SKU level and packed for ultimate store delivery. The goods are then shipped directly to the customers designated outlet or warehouse. This enables Magellan’s customer to eliminate double handling and freight cost duplication, as well as reducing the physical cost of distribution.

If your company is considering using an off-shore distribution solution you should research and examine the options and find out what is most feasible for you.

Magellan Logistics can assist you with this with expert advice and consultancy.

If you would like to discuss this further please contact our team on 1300 651 888 or info@maglog.com.au

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Duty Rate Reduction to 5% for Australian Garment Imports from Jan 1st 2015.

5-percentPositive news for Australian garment importers as legislation passes to reduce duty rate for goods shipments into Australia from January 1, 2015.

The result is a reduction in the general rate of customs duty applicable to a range of garments, homewares and other madeup textile articles, to 5% from January 1, 2015.

For local fashion importers, the news presents a tangible, practical way to reduce expenses and increase profits – a shot in the arm for the fashion retail industry.

 Plan end-of-year shipments & capitalise – ask Magellan Logistics

A little forward planning can be a profitable thing.

If your garment shipment arrives towards the end of December, 2014, you’ll slide in ahead of the potential savings. But ask our experienced team at Magellan Logistics to help and you can arrange to have your fashion freight shipment held for a few extra days so your business can benefit from the duty reduction on (and after) January 1, 2015. You will need, of course, to factor in demurrage and storage fees…BUT, with our Magellan Logistics’ staff on hand to help you crunch the numbers, together we’ll find the most cost-effective way to handle your garment imports.

It’s important to understand that, in your quest to reduce duty costs, you will not be alone. To ensure your business stays ahead of your competition, it will pay to plan for the potential backlog caused by other fashion importers who want to take advantage of post-January 1 deliveries.

Talk to Magellan Logistics today.

We’re here to help you find the garment freight solution that will help your business ship cost effectively.

Call 1300 351 888 or email info@maglog.com.au to further discuss the upcoming duty rate reduction.

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