Oliver Logan, a denim apparel brand that manufacturer DDApparel launched less than two years ago, is building an online following with its focus on sustainable and ethical practices. “We use about a third of the water that other jean companies use” in manufacturing, CEO Oliver Timsit says.
But even with increasing interest among consumers in sustainable products, he says the brand faces challenges in signing on new retailers, who may balk at taking on the risk of not being able to sell a new brand quickly enough to cover their costs. “Retailers like our product, but they don’t know how well it will sell until they have it on the floor,” he says.
Boosting conversions and average order value
Timsit has searched for incentives to get more online and bricks-and-mortar merchants on board. He found one that has not only converted and retained more buyers, but has also increased by 30% his wholesale average order value to about $2,500.
“As we’re trying to grow our wholesale business, we recognize the challenges of being a new brand and need to find creative ways to incentivize customers to work with us,” says Timsit, who is also the founder of DDApparel, a designer, manufacturer, wholesaler and retailer of the Oliver Logan brand and other niche labels.
DDApparel deployed an online financing service more than five months ago from Fundbox, which uses artificial intelligence technology and connections with multiple databases to instantly score the credit risk of a buyer. If approved, the buyer can choose among options to pay an invoice within 30, 60 or 90 days. Buyers can also request even longer terms.
Among the advantages to buyers is avoiding what can be restrictive credit amounts provided by factoring companies; buyers can also pay over multiple months without having to incur credit card interest rates. In effect, Timsit says, DDApparel is providing buyers more time to sell its merchandise before having to pay for it. Buyers purchasing on extended terms typically try to sell about half of their purchased inventory before completing payment, he adds.
Balancing fees with order volume
The advantages to DDApparel is that it receives payment at the time of purchase and pays fees to Fundbox that, for Net-30 terms, are about a percentage point less than the typical credit card fee of about 3% of transaction value, Timsit says. For Net-60 terms, the Fundbox fees are closer to the credit card rate, and for Net-90, they may be slightly higher, he says. But purchases made with Net-60 or Net-90 terms are likely to generate larger orders, which mitigates the effect of higher Fundbox fees, he adds.
DDApparel sells the Oliver Logan brand direct to consumers at OliverLogan.com, a channel that helps to gather information on market demand that it shares with its wholesale customers and prospects. For now, it sells to wholesale customers such as American Rag through independent sales reps and provides customers the option to log into Fundbox to request payment terms.
DDApparel is updating OliverLogan.com on the Shopify ecommerce platform and plans to launch a wholesale portal on the site next month.
The apparel company has integrated Fundbox with its QuickBooks accounting software for updating its financial records. Timsit notes that it also plans to integrate it with its wholesale ecommerce portal, providing customers access on the site to Fundbox’s services, as well as its Aims360 enterprise resource planning software to update inventory and other records.
Timsit says he expects more wholesale customers to opt for the Fundbox services once they get more accustomed to them. “It’s taking a little bit of hand-holding to walk them over the bridge from credit cards and factoring over to Fundbox,” he says, adding: “The customers using it have been very happy.”
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