Before launching Grace & Stella Co., a Canadian skin-care and beauty line, in 2016, co-founder Adi Gullia conducted a trial run.
His father had brought home a foot mask from Japan that Mr. Gullia thought would sell well, so he decided to launch it on Amazon, targeting the U.S. market. The test run worked: The product sold out within a few weeks. The company’s other products are also manufactured by other firms in Asia and Eurpe and private labelled by Grace and Stella. The firm is contemplating manufacturing its own products in the future.
“Amazon was already popular in the U.S.,” says Mr. Gullia, “and the U.S. market was 10 times bigger [than Canada’s].” He knew that Americans were more apt to spend than their “more frugal” Canadian counterparts, and liked the fact that Amazon’s customer-acquisition costs were lower than other digital channels.
Buoyed by a successful foray into digital sales, Mr. Gullia launched the Grace & Stella line’s signature product: the Dead Sea Mud Mask, followed by numerous other face, body, foot and hair-care products. The brand targets millennials who want to have a spa-like experience.
The company now sells 40 beauty products in 45 countries, including Britain, the United States, Canada, Spain, France, Italy and Germany.
E-commerce accounts for 60 per cent of the firm’s sales, which are in the “eight figures annually,” Mr. Gullia says, with $1.5-million to $1.8-million in annual sales in Canada alone. He says it’s an avenue that allows the company to enter new markets without making a costly investment in brick-and-mortar operations.
Canadian firms like Grace & Stella are part of a new breed of Canadian exporters capitalizing on the digital economy while enjoying the benefits of being in Canada.
Instead of raising a lot of capital and conducting market research for years before launching abroad, these small and medium-sized enterprises (SMEs) are harnessing the power of technology to expand their businesses – while still growing successfully at home.
In 2018, Canadian service exports are projected to surpass $120-billion, according to Export Development Canada (EDC).
“With the digital economy, firms don’t need to have a heavy asset footprint in other markets to sell their products globally,” says Julie Adès, senior economist with the Conference Board of Canada in Ottawa. She says that instead of spending years on costly research and development, many Canadian firms are using technology to forge relationships with customers abroad and building their exporting networks.
One way Grace & Stella is doing that is through social media. Mr. Gullia knew that in order to stand out in the crowded beauty market, he would have to have a carefully crafted branding strategy. Thus, much of his early investment focused on branding and marketing, ensuring that Grace & Stella appealed to and resonated with its millennial audience.
To that end, the firm harnessed the power of social media to build its brand. With a Facebook page, YouTube channels and an Instagram account, it capitalized on users’ positive feedback about their products, as well as the endorsements of social influencers. “We work with dozens of [social influencers] on a monthly basis,” Mr. Gullia says, adding that the company also collects users’ e-mails and sends them promotions.
The company also has benefited from traditional media exposure, pitching their wares on Dragonsʼ Den in 2017. Though Mr. Gullia ended up securing financing elsewhere – including an EDC loan – he benefited from Dragon Michele Romanow’s marketing expertise. “It’s a good way to expose your brand to Canadians,” Mr. Gullia says, “and Michele was very helpful.”
Networking was also key to the company’s success. “One of the best ways [to build your business] is to be around the right people,” he says. Mr. Gullia says that before launching his business, he hopped on Skype calls to meet key contacts and forge relationships. These contacts helped him get the “knowledge that people have. It’s better than getting your information online.”
As Canada is Mr. Gullia’s home market, he says he hopes to expand here in the coming year. He’s also actively selling to businesses in Europe and the United States, ensuring that all his eggs aren’t in one basket should his agreement with Amazon change. “We consciously wanted to diversify,” he says.
Mr. Gullia suggests that would-be online exporters not rely on one technological platform for sales. He recommends setting a sales target, and once that target is achieved on a given platform, pursuing other sales channels. “Facebook or Google can shut down your account,” he says. “Start thinking about how to diversify.”
One way is through your own company website, Mr. Gullia says. This in turn can also provide you with key metrics on site traffic, repeat visits and exactly what customers are buying and how much theyʼre spending.
Troubleshooting is also important in the new digital economy. online sales have opened doors for Canadian firms abroad, they also increase competition, Ms. Adès says. Customers and businesses no longer just have local options – they can compare prices, as well as new technologies and products. “These are factors can deter organizations from taking risks in the global market,” she warns.
Mr. Gullia knows this well. Despite his success, he’s experienced growing pains. “Every country has its own intricacies,” he says. For example, in Europe, there are different rules for cosmetic labelling than in Canada.
He says Grace & Stella learned too late that they had to register their products online before selling them in Britain – a move that led regulators to shut down their sales for months.
Europe also requires each firm to appoint a person on the ground who takes responsibility for the firm’s products – and has an address in that country. “It’s something people don’t know about,” Mr. Gullia says.
“You can do everything right, but one mistake on your part could result in new businesses going down overnight,” he says.