Oscar de Vries spent years developing his natural shaving products business OSCAR Natural Skincare and getting a toehold in the Australian market. Then last year he cracked the export market almost by chance.
He’s used a form of financing called factoring to underpin the business.
What’s the story behind OSCAR Natural Skincare?
I had previously imported a shaving oil from the UK and was able to grow sales through airports, in Priceline and in Woolworths. But the packaging was too wide for supermarket shelves, and I couldn’t get the manufacturer to change it. I was also starting to get frustrated working on a brand I didn’t own and wanted to create my own.
First I launched an all-natural shaving oil with the lessons I had learned from the imported brand. Next I developed a shaving gel made out of natural ingredients.
I spent three years developing the product until I felt it was better than anything else on the market. Then I gave it to some friends to try who all said it was seriously good. You might think the product is great but until other people tell you it’s good you don’t know if you’re kidding yourself.
How have you addressed your major business challenges?
‘Natural’ is still relatively niche. Guys don’t understand the benefits of natural ingredients. Plus most will have bought a product like Gillette since they were 18 because their dads used it. So it’s tough changing people’s mindset.
My approach is to focus on the product’s two unique selling points – its natural ingredients and the special CFC-free, non-flammable bottles, all under a $10 price point.
How did you secure distribution through Woolworths?
Getting into Woolworths was relatively easy. In June last year I sent a sample to a Woolworths buyer, who described it as ‘a great product’. But it took until November to get it on shelves. Now it’s in 730 stores. I’m also due to make a presentation to Coles and Priceline.
You have used factoring to fund the business – how does this work?
I used factoring from day one. Without factoring stockists pay your invoice on 60 or 90 days. A factoring firm will advance you between 70 per cent and 85 per cent of the value of the invoice as soon as it’s issued so you can keep in sync with your cash flow. The more successful you are the more you need it because you need the funds to order stock.
It’s more expensive than an overdraft, but you’re not offering bricks and mortar security, nor do you give up equity at onerous terms, especially in the beginning. One crucial challenge with factoring is the concentration principle. Factoring companies limit your funding if one client makes up more than 50 per cent of debtors. No matter how strong your customer is they are worried about their exposure.
How did you start exporting?
Exporting actually happened by accident. I’m Dutch and before my mother recently passed away I had to go back three or four times a year. I thought if I’m spending this much time in Holland I should start generating business over there. So I started making appointments in early 2012 and secured a meeting with ETOS, a subsidiary of Ahold, the biggest supermarket chain in Holland. The Dutch are fascinated with Australia and the buyer liked our packaging. We produce two varieties of both shaving gel and shaving oil and they took all four. It’s generally tough in Australia getting in major retailers so it took me by surprise when it all happened so quickly in Holland. We’re now in 430 stores.
The lesson to me was that you can spend all your time planning and making forecasts when it’s better to get off your backside and take a punt. We’re not yet profitable there, so I can’t afford an extensive advertising campaign. Instead we’re going to use public relations to raise awareness and next month I’m going over to get the ball rolling to create some consumer awareness.
– Interviewed by Alexandra Cain
This story Administrator ready to work first appeared on Nanjing Night Net.