While many retailers were pulling back on manufacturing due to a sudden drop in sales when the COVID-19 pandemic hit earlier this year, Vessi Footwear Ltd. was ramping up.
The Vancouver-based retailer, which sells its waterproof shoes almost exclusively online to customers around the world, was among the many e-commerce companies whose sales spiked amid a surge in online shopping as more people were stuck at home.
“There was a shift from physical to online and instead of our sales going down, they went up substantially,” says Tony Yu, who co-founded Vessi in 2018 with Mikaella Go and Andy Wang.
Higher sales of about 400 per cent, initially, were good news, but Vessi needed to find additional capacity to start filling the increased orders in Canada and countries it currently exports to, including the U.S., Australia, Hong Kong, Japan and Taiwan.
The problem was that factories in Asia, where Vessi and other footwear companies have their products made, were either closed or operating at a reduced capacity to help stop the spread of the virus.
“We were caught off guard with the slowdown in capacity and the increase in volumes,” Mr. Yu says.
Then, Vessi’s e-commerce advantage kicked in again.
Before the pandemic, Vessi, which has its own manufacturing facility in Taiwan, went looking for additional capacity in China to meet the steadily growing demand for its shoes – but the factories that met its needs were full.
However, when Chinese manufacturers resumed operations in March, just as North American businesses were closing down and cutting production, these factories suddenly had space to fill.
“We started getting messages from people we contacted [in China] saying, ‘We’re starting back up and we have space for you,’” recalls Mr. Yu.
Not only was Vessi able to start filling orders more quickly, but the company secured longer payment terms from the Chinese manufacturers looking to fill their factory floors.
It also meant Vessi had more short-term cash flow that could be used to boost its inventory and ship more products from its fulfilment centres in Vancouver, Chicago and Hong Kong.
Vessi’s next issue was shipping delays, given the huge volumes of online orders and the priority given to personal protective equipment (PPE) for frontline workers.
“This did cause a window where our shoes were out of stock” in the spring, Mr. Yu says. “So now, we’ve prepared by having additional stock here in Canada and the U.S. to avoid future delays.”
Ming Hu, a professor of operations management and analytics at the University of Toronto’s Rotman School of Management, says shipping has been a challenge for many exporters during the pandemic. It’s not just the volume of products being shipped but the reduction in capacity and managing staffing at ports to meet increased health and safety guidelines.
While airlines have extra capacity, given the decline in human travel, Mr. Hu says the cost is much higher.
“It probably wouldn’t be cost-effective for many small businesses,” he says.
Shipping and production delays have also been a hurdle during the pandemic for Toronto-based Fable Home Goods Inc., a direct-to-consumer e-commerce tableware company, which has also seen its sales more than double as part of the shift to online shopping in recent months.
“It was challenging because people wanted to get their stuff right away,” says Joe Parenteau, who co-founded Fable with Tina Luu and Max Tims three years ago. The company started selling its dinnerware and flatware last year.
Fable’s products are made in Portugal, where many workers were forced to stay at home for several weeks in March and April to help stop the spread of the virus. The work stoppages meant delays fulfilling many of Fable’s orders.
The company also faced similar shipping delays as other companies, including from Portugal to its warehouse in the Greater Toronto Area and then again to customers across North America.
Mr. Parenteau says the company was transparent with its customers about the longer wait times and regularly communicated what was causing them.
“We shared the information we had and explained it as clearly as we could,” he says. “I would say 99 per cent of our customers are understanding and I would even say empathetic about the situation we’re in and appreciate being kept updated.”
Fable is preparing for sales to keep growing, particularly during the upcoming holiday shopping season, by increasing its orders from Portugal.
“Our strategy is very much about getting as much inventory as we can now,” he says.
The company also wants to be prepared for potential delays if a second wave of the virus hits and slows the economy once again.
“We need to give ourselves more buffers for timelines,” Mr. Parenteau says.
“When the supply chain is slippery and moving it’s great, but I’ve now learned that we can’t expect that to be the future,” he adds. “We could have a second wave and we need to … look at different ways to manage the risks.”
Fable will be speaking with different shippers in order to diversify its options in the future. The retailer recommends e-commerce companies find reliable companies to get goods out of the country that also can help with any tax or regulatory requirements.
“There are a lot of great e-commerce companies out there that are worried about shipping to places like the U.S. and barriers that seem to exist, that don’t,” Mr. Parenteau says, such as duties and shipping costs. He says Fable has had success using Canadian shipper Chit Chats in helping navigate sending their products to U.S. customers and dealing with U.S. customs.
Fable continues to see steady growth in its orders and expects the U.S., the world’s largest consumer market, to become a majority of business in the months to come, up from about one third of its sales today. The company also plans to expand into Europe and Australia in the coming years, once it’s more established in North America.
Mr. Parenteau says the company wants its international expansion to be steady and sustainable for the long term.
“We want to get our name more well known in our very close locations and then expand out from there,” he says. “Once we’ve built a very strong brand here, that expansion will become a lot easier.”