With backgrounds in engineering, finance and eCommerce, the REDFITS founders began by buying products on a relatively small scale and retailing them through Amazon Marketplace. They’ve now moved from selling third-party products to building their own brands.
“2016 was all about the initial building and structure of the company, 2017 was growth, and 2018 has been developing the business even further,” explains CFO Motty Vogel. “From a standing start, we’ve achieved significant growth. Our focus now is on becoming an established and trusted brand, known for good-quality products.”
The company’s product choices and refinements are based on the instant data that Amazon customer feedback can give.
“Take a generic item, such as a baby bib. We can look at these products on Amazon and see what customers like and don’t like, and what features they value,” says COO Uri Levenson. “We can then build a better product using our manufacturing connections in China to get good value and quality.”
We can look at these products on Amazon and see what customers like and don’t like, and then build a better product using our manufacturing connections in China to get good value and quality.
In fact, the team sees Amazon as a testbed for design and packaging.
“It’s a very effective way to prove a concept,” adds Uri. “Customers may be disappointed or delighted, and you get that feedback immediately. It means we can refine products. The historical data also shows us which products continue to sell well.”
Given that the REDFITS model relies on being able to source and sell internationally, how are they responding to the uncertainties of Brexit and increased US protectionism?
“We’re actually not overly concerned about Brexit,” says CEO Osh Reston. “We sell our products in the US, Canada and now Australia, and we pay duties. After Brexit, markets would certainly be affected, but Amazon has created a safe marketplace. We believe we can continue to sell, taking any new duties into account, and the market will adjust to an increase in price. We have built some flexibility into our margins as well.”
Uri says it will be interesting to see how the logistics side of their operations has to adapt in light of Brexit. Currently, they use the Amazon fulfilment network to sell and distribute in mainland Europe.
“There will be implications for tax and for cross-border agreements, but we also have the option to base our product distribution in another country, should the UK be removed from the pan-European network. Amazon is, of course, based on fast and simple distribution, so we’re confident that they’re preparing for potential disruptions.”
The team is flexible, and confident they can move quickly with the market to grasp new opportunities and to maintain their focus on quality and building a strong brand.
Even with the major currency fall after the referendum, we had locked in a forward contract rate to protect ourselves and mitigate the impact.
“Currency fluctuation, product movement and the cost of importing are our biggest risks,” says Motty “We’ve certainly been affected by the US’s trade war with China. It hit us a lot harder than expected. We had to look again at our prices, but that was true for our competitors as well.”
“In terms of currency fluctuations, I heard an interesting talk about how the market has already priced-in the Brexit effect, such that a big drop in currency is unlikely now. Even with the major fall after the referendum, we had locked in a forward contract rate to protect ourselves and mitigate the impact.”
Whatever 2019 brings, the team are determined that their focus will remain on growing the business. And they have four mantras that they’ll take with into next year and beyond.
1 Enhance your quality and your brand
The company’s aims for 2019 are simple – to establish a strong brand that has an edge over competitors. By being recognised for quality and reliability, the team is confident the business will continue to grow.
2 Hedge not just your currency but your operations
30% of its sales are in the UK, but REDFITS also sell in the EU mainland, Canada, US, Australia and soon, Japan. They also plan to broaden their eCommerce channels and introduce one of their product lines to the high street, spreading their risk and reducing their reliance on any one market or channel.
3 Pull in outside support
The company works closely with their HSBC relationship manager to find ways of reducing currency and financial risks. They also recognise that as the business grows, they’ll need to add to their own skills and bring in specialists. Design and branding expertise is now top of their wishlist.
4 Respect your partners
Choosing partners and building a good rapport with them has been crucial for REDFITS. The team spends a lot of time with their Chinese partners, believing that there needs to be a friendship and connection that goes beyond purely a business relationship.
“We’ve come a long way, very quickly, but there’s a lot of new ground to cover, and a lot to learn,” says Osh. We want to stay humble and keep focused on building and improving the business.”