Bump your revenues up by $60 million in a single year? And do so when your business is only three years old? Meet the entrepreneur who is on track to do exactly that.
It’s been a meteoric rise for ABA Labels and its founder Paul Elsibai. The Australian fashion business, which operates women’s fashion brands including Chancery, Willa, Calli and BWLDR, was only established at the end of 2016 with five employees.
But as we near the end of 2019, the business is on track to achieve $90 million — trebling last year’s $30 million result — and now employs 82 people.
Perhaps more impressive still is that ABA Labels has bootstrapped its own success, with no external investment.
My Business sat down with Mr Elsibai to find out exactly how his business has achieved such phenomenal growth, his core focus on sustainability — in every sense of the word — and what lessons other business owners could take from this incredible story of scale and expansion.
This is a really interesting and really fast growth story. You launched late 2016 with five staff, and you’re now 80-something staff?
Yeah, I think at last week’s count was 82. We had to count it for our Christmas party in a few weeks! That’s the current count. Who knows where it’ll be next week, but 82 today.
How did the business really come about?
ABA Labels came about as an offshoot of another business that I’m involved in, called Stitch Apparel. Stitch Apparel has been going for a few years longer, and it specialised in private label development for other brands.
As part of its journey, we started to realise that there might be a different way of doing things, and bring a brand or two or whatever it might be to market. We dreamed up the idea of, “We have all the infrastructure to do the work; are we good enough to do a brand, a label? Let’s try.”
We kicked that off with the one brand, late 2016. From there, it was always the idea that if it works, we would grow and see where it would take us — 82 staff and eight labels later, ABA exists.
Surely, the new business, ABA Labels, has far outpaced the original, given its rapid growth?
Yeah, it is. That was always the idea. Very much we kept and still do [operate] Stitch Apparel, but only for a select number of clients, which we’ve had a longstanding relationship with. We maintain that relationship and provide the very best service we can for them.
The idea was always to say ABA, this is where the heart is, this is where we believe we can bring the best result for the team, for stakeholders and maybe try to pioneer a few things within the industry. It’s definitely a larger part now.
Did you have any fears that ABA would basically cannibalise the existing business?
Not really fears, because what we did before we kicked it off is, we identified the areas which we felt weren’t being provided for or serviced in that respect.
Our labels do something different to what’s in the marketplace. It was more about saying, “There are gaps. Are we equipped to fill it?” We felt we were and we thought, “Let’s try.”
We built in some proof [of concept] points into that, and as we would get to the proof points, we’d step back and say, “Yep, this looks like it might work” or “Let’s try something else.” That’s the way the journey goes.
We weren’t looking to replace or cannibalise those brands that we were working with. We were comfortable that they still exist. They’re still going really strong actually and so are we.
How did you fund ABA Labels in those early stages? Was it drawing from revenue from the established business?
Yes. We’ve never been asked that question! We’ve always been self-funded and we’ve never taken on investment, and we’re very particular to not take on debt as well.
We’ve carefully managed business cash flow and made sure we were really sensible, if that’s the right word, and have really focused all available resources, energies and whatnot into growing the business at the rate that the business could grow. We absolutely didn’t take on investment or debt.
Have you had any periods where you have struggled with cash flow and been tempted to seek investment or funding?
There are obviously challenges when a business grows fast. We’ve had to fully fit out two fulfilment centres in the space of a year and a half.
We’ve had to expand and move office locations.
We just try to be really measured about how we do things. We don’t chase growth for the sake of growth. We underpin all our growth with profitability. If it’s not profitable, we don’t do it. Managing cash flow again, yes, it takes effort, but we try to be really measured about that.
Are you selling just in Australia or overseas too?
In July of this year, we started our first international distribution pathway. We signed as a brand partner with Zalora, which is Southeast Asia’s largest online fashion portal. International began July of this year and it’s going really well for us actually, we’re really happy with it.
It’s had almost 100 per cent growth month on month, albeit from a low base because it’s new.
You had around $30 million in sales in 2018 and you’re on track to treble that in calendar 2019. How are you really achieving that?
There’s a few things. Listen to your customers and listen to your partners. Whether that’s supply partners or distribution partners, really listen to what they need, what makes sense for them, and marry that back with what makes sense for us. If you listen and really use the information that you’re gathering from everyone, you can feed that back into the business and the business can respond and have that growth.
In our supply chain, the factories in China, we take a position within that factory and we say, “Look, the business wants to do this. How do we get to doing really low volumes?” In terms of first runs, “How do we get fast repeats? How do we do that and also have a good positive outcome for the workers within the factory?” We get them really engaged in our journey.
Now, of course, they’ve got a vested interest in that, because the more we grow, the more they grow. We listen to what they need, they hear what we need and we work together.
We do the same thing for our brand partners as well, who are also selling our product and we say, “What do you need? What are your customers telling you that might be different from what we’re hearing from customers? What do you need as a business? Do you need us to produce faster? Do you need us to do different types of repeats? What other things can we do within the brands and what we’re doing, that will make your business better?”
It’s like symbiosis really.
A lot of businesses would say that they follow the same principle. That must only be part of the equation. So, how are you pushing such aggressive growth?
I think we haven’t actually necessarily pushed to grow aggressively. We’ve just been really fortunate that that’s actually been what the growth is.
The one thing we did do, though, is we made a point of not necessarily focusing too much on marketing: we didn’t want to put a spin on this.
Instead what we wanted to do was to give our customers the very, very best value we could, every time they bought one of our garments.
What underpinned our business was this, we said, “What’s available in the market? What does it cost? And what does a customer get when they buy something from somewhere?”
We said, “Can we give the customer better value for those prices?” We thought we could. “And can we do it in a more responsible, sustainable way?” We thought we could.
When a customer buys one of our dresses that might cost $100 and she gets it and she takes it out and puts it on, she feels like it’s the equivalent from another brand that costs $200, and then she comes back and becomes a repeat customer and she tells four of her friends and they become repeat customers.
We’ve been completely honest with our customers by giving them the very best value at the very best price we can. We let the product speak for itself and then we let the business speak for itself in terms of all the attributes around the business, our ethos, where we stand, what we stand for. That’s really just, again, a cycle that feeds back into itself.
Social media must play quite a heavy role in achieving this, does it?
It has. We, of course, have to have a social media team. Again, what we do there is, we try to keep the message on social media as honest as possible. We don’t go for overly glamourised images... we keep the message real.
We’ve also, from the beginning, been what we like to call an “inclusive business” and have “inclusive brands”. Our size assortments are wide, we go from a size six up to a size, in some respects, a size 24, which is really unusual for fashion brands, but we do it.
I think that message goes through social media: we’re just a real place; it’s good product; it’s priced correctly and honestly.
It sounds like your basic principle is about making it relatable; relatable to the customer so that they can really engage with it in an authentic way.
Absolutely. We tried to make it reliable, but we’ve also made it accessible. We’ve made sure that our products sit in price ranges that are accessible to the majority of people.
We didn’t come into the market saying, “We want it to be the cheapest.” We didn’t come into the market saying, “We’re going to be expensive.”
We came in and said, “We think we can do fashion differently. We think we can do it with all these socially responsible principles... but we also want to make sure the most amount of people have access to that.”
What are the plans for the future?
The plan is to try and maintain momentum. Fundamentally, that’s got to be the plan.
People say, “How are you going to keep trebling growth?” Well, I’m not sure if we can do that: we’re going to try, we’ll see.
The next immediate phase is our proof point: can we bring more labels to market over the next year and prove that the business model and the scalability aspect of it works?
Secondly is to have a real focus on global distribution. We’re working on a few things now, and we’re hoping to be in Europe next year, and other parts of the world, I guess.
For us it’s twofold: proving we can be scalable with more brands on a more regular basis, and proving that the brands can have success globally.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.