Sometimes, companies prepare for years to make a strategic incursion into a foreign market. But in other cases, exports just, well, happen. Take the case of Mabel’s Labels, the Hamilton-based company founded in 2003 by four moms who figured they could invent a better mousetrap. After schlepping kids to daycare, kindergarten and after-school activities, they knew that parents are always being told to put their kids’ names on their clothes.
Co-founder Julie Ellis, who recalls how her daughter could lose socks on mid-winter play dates, said they figured they could create a nicer label than the traditional masking-tape-and-marker approach. They came up with some designs, set up a website with e-commerce features and just started.
One day during their first year, Canadian Living magazine did a small item on the company, which in 2014 ranked 222nd on the PROFIT 500. One reader saw the item, and told her cousin in the U.S., who in turn submitted a short piece on their labels to DailyCandy.com, a consumer products recommender site (it was closed earlier this year). The editors chose Mabel’s Labels as their “candy of the day.”
Then, as Ellis laughs, it was like one of those sitcoms where the characters are sitting around, waiting for something to happen, and suddenly there’s a deluge. On the day the item went up, orders, predominantly from the U.S., just started to pour in. “We did more orders that day than we had in several months,” she says. “We didn’t have a lot of systems to handle the volume.”
And so an exporter was born. A decade later, almost half of the company’s revenues—which are in the $5 million to 10 million range—come from outside Canada.
Early on, the Mabel’s team would send out hand-addressed parcels to U.S. addresses. But by the end of that first year, Ellis says, Mabel’s Labels realized they had a sustainable customer base south of the border. Indeed, U.S. orders would come across the transom in waves—a clump of orders, then a few days of down time, and then another clump, with word of the product spreading virally as new sets of parents saw the labels on the clothes of other children they encountered.
But as sales grew, the Mabel’s team realized it had to take a more structured approach to buttressing its export business. Early on, the company moved into social media and built online communities geared at moms and the problems they encounter with kids and work-life balance. Ellis points out that there was little need to gear the content towards American audiences. “We are talking about common subjects.”
In 2006, the company decided to seek outside advice on how to focus its U.S. sales and marketing efforts, and hired Deloitte, the international accounting giant, to conduct an analysis of which U.S. regions would deliver the most kick. Deloitte’s produced a market study which recommended that Mabel’s concentrate on California, which had favourable demographics and a highly urbanized population.
To follow up, the company then dispatched a sales and marketing person to San Diego to spend eight months talking up the labels and sussing out the opportunities in the sprawling suburbia of southern California.
With a steady and growing stream of U.S. orders, Mabel’s Labels three years ago decided to try something quite different, and launched a retail division, which was also meant to focus on all of North America. With the firm’s ecommerce business, the company could produce customized labels for its customers. The retail ready labels, by contrast, would be manufactured in China and then shipped back to Canada, where they’d be distributed to retailers. Unlike the original labels, the retail versions are not customized, which meant buyers could write in their kids names using permanent markers and a sealing agent sold with the labels.
The retail line, says Ellis, “was a whole other business model.” The e-commerce site could turn over custom orders overnight, whereas the retail product line wasn’t nearly as flexible. Ellis explains that the company has been selling directly to Walmart Canada since June 2012, as well as Amazon and Walmart online, plus a few hundred bricks-and-mortar stores in the U.S. “We dialed for dollars,” she says of their cold-call approach.
Still, Ellis admits, Mabel’s has had more difficulty cracking the U.S. retail space than they had initially anticipated, despite its efforts to build relationships with buyers. The company is currently signing on distributors and warehousing operators south of the border, but the overall export revenue from the retail business is just 15% to 20%, compared to almost 50% for the ecommerce channel.
Consequently, the company is now looking to affix its fortunes to distributors outside North America—in the U.K. and Europe, South America and Asia. “Really, everywhere,” says Ellis. “World domination,” she jokes, “is a full time job.”