Flexible financing helps consumer products companies thrive at any stage

Stance shows how e-commerce, retail, and wholesale channels can work together to drive growth

By Kevin Sullivan, Executive Vice President, Wells Fargo Capital Finance

Ten years ago, socks were perfunctory: athletic or dress, white or black. Today, they’re available in a variety of colors, patterns, and styles complemented by exciting new technical innovations, with an avid customer base that’s willing to pay a premium to show their personal style.

The team at Stance pioneered this space, unleashing creative expression on an apparel staple. In the process, they’ve grown a previously untapped category to a multi-million dollar business.

The right working capital financing plays a critical role in their growth trajectory. Since inception, they’ve morphed from a wholesaler selling into the retail distribution channel, to a multichannel company with additional direct-to-consumer (DTC) sales and company-owned retail stores. Their journey demonstrates how savvy consumer products companies can adapt—and thrive—in today’s dynamic market place.

Manufacturers move beyond wholesale channels

Hybrid business models that employ a mix of e-commerce, retail, and wholesale tactics are prevalent today. Some industry leaders that were “born digital” are now branching out with brick-and-mortar stores. Established wholesalers like venerable surf brand O’Neill have added a DTC presence, as well as company-owned retail stores, to spur organic growth.

Launching a new sales outlet requires substantial capital. It also changes the composition of a company’s borrowing. Factoring makes sense for companies that sell products exclusively to wholesalers and need to speed cash flow or improve working capital. Online sales, however, require a larger inventory for swift fulfillment, making an asset-based loan an effective option. Consumer products companies that sell through multiple channels will need multiple financing tools to meet their changing requirements.

It makes it important to work with an experienced finance provider that can offer a range of credit facilities. Stance found that relationship more than seven years ago with Wells Fargo.

“As our business has evolved, so have our financing needs,” said John Wilson, President and Chief Operating Officer at Stance. “Since the beginning, Wells Fargo has supported us with credit facilities that match our goals, and made it easy to adjust our terms as our business grew.”
He added, “That long-term, collaborative relationship helps us operate and grow efficiently.”

Smart investments spur new sales

Today, leading consumer products companies are more agile and diversified in their operations. They blur the lines between manufacturers, wholesalers, online sellers, and brick-and-mortar retailers. It’s one of the reasons retail sales remain strong, even though the channels consumers use for purchasing have changed dramatically.

If your business is exploring a new sales channel, consider these best practices:

  • Understanding your customer base. By leveraging your customer behavior data, your business may be able to drive acquisition and growth.
  • Invest in the right people. Hiring outside expertise can fast-track a new strategy and avoid costly pitfalls, since wholesale, retail, and online sales require different technology and experience.
  • Understand your acquisition costs. Building a DTC business shifts marketing and promotional responsibility to the manufacturer—rather than the retailer. Due diligence is critical to analyze customer acquisition costs and create realistic forecasts.
  • Find a flexible lender. Staying competitive means quickly adjusting to consumer trends and market shifts. That’s complicated when you finance with multiple providers—or companies that offer only a single product.

Instead, look for a financing provider with a dedicated consumer products practice, deep expertise within the industry, and a range of end-to-end financing solutions, including asset-based lending, factoring, and other commercial services. Working together, you can seamlessly support your changing needs with a full spectrum of financing solutions.

Stance did its homework and made smart choices. It’s paid off with sales increases in premium staples consisting of socks, undergarments, and tee shirts. The right financing helps them maintain their production quality and operate efficiently.

“When we were just a small startup, Wells Fargo believed in us,” Wilson said. “At every stage, they’ve given us sound advice and made our growth a priority. We couldn’t ask for a better capital finance resource.”