USA y Europa - Financial Times: Crafting a link in a retail chain - Dinka

USA y Europa – Financial Times: Crafting a link in a retail chain 18 de enero de 2007

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Sandra Felsenstein is connecting Argentina´s craft business with retailers hungry for unusual new products, writes Peter Marsh.

Scattered around the world are many thousands of “micro-manufacturers” of craft items such as jewellery and handbags, often offering high standards of design and quality. Most, however, have little idea of how to sell their products in international markets.

At the same time, retail outlets are eager to get their hands on products that look new and different – but are out of their depth when it comes to discovering them.

Just over a year ago, Sandra Felsenstein, a 27-year-old former industrial engineer, decided to start a business that would try to link these two groups. Her approach was to find a series of high-quality manufacturers in her native Argentina – a country with a good reputation for design yet poor connections to the rest of the craft trade worldwide – and link them with shops and distribution companies elsewhere.

Dinka, the four person company she founded in Buenos Aires, is now showing signs of success. Ms. Felsenstein has organised links with 30 Argentinian companies that have agreed to let Dinka promote their goods in export markets. Under these deals , Dinka will find buyers for their products and handle shipments and customs formalities in exchange for a proportion of sales revenues.

She has laid the foundations, too, for establishing a network of retail outlets in other countries, arranging connections with retailes in Chile, Peru, Ecuador as a first step, while signing up a distributor in Austin, Texas, that she hopes will be a bridgehead into the potentially large US market. Ms. Felsenstein says she is also “exploring several opportunities” for finding retailers in Europe – particularly in Spain, Italy, Germany and Switzerland – where she thinks sizeable sales could be established for Argentinian-made goods.

“Our aim is to provide an entry gate for (foreign) businesses while at the same time removing a lot of the pressures on Argentinian companies (in craft fields) which are interested in exporting, yet lack the scale and expertise to be able to do this” says Ms. Felsenstein.

One person who thinks the Dinka concept has a good chance of working is Johanna Adkins, the owner of Ziva31, an Austin based jewellery and accessories merchandiser, who has a deal with Ms. Felsenstein to bring some of Dinka’s products into the US. “A lot of my clients really love the products” says Ms. Adkins. “They are truly original creations which look as though they are constructed not as commodity items but as works of art”.
Ms. Felsenstein has put her entrepreneurial ideas into practice after several years working in the Argentinian operation of Johnson & Johnson, the US consumer goods company, and spells in finance and consulting. She also had an interest in design, along with a strong desire to strike out on her own.

The suppliers and retailers she is linking are typically small, with revenues often measured in tens of thousands of dollars a year, and rarely above $1m. As for Dinka itself, Ms. Felsenstein has set her sights on reaching sales of no more than a “few hundred thousand dollars a year”.

Such modest projections are typical of the global craft business, which is concerned mainly with selling small hand-made items including earthenware, glass objects and paintings. They are bought in small numbers and only rarely sell for more that about $100. “Micro” companies in this field frequently have to scratch around to find sales outlets, even in their own countries. “What Dinka is tryiung to do seems a plausible effort to help the marketing efforts of a group of companies for which export is a challenge”, says Robert Held, director of Robert Held Art Glass, a maker of decorative glass objects in Vancouver, Canada. The company exports most of its output, mainly to the US and has reached annual sales of about $1.7m but only after nearly 30 years of effort.

Ms. Felsenstein meanwhile, faces a number of challenges. The most obvious is to establish a good network of suppliers, a task she thinks she has just about completed. “I think 30 is the right number”, she says. “I am not looking for any more”.

One supplier is Tutulas, an Argentinian maker of specialist lingerie and other women’s clothes. Karina Gentjovich, its 29-year-old owner, says: “Sandra has been able to locate some sales outlets we would not have been able to find by ourselves. With a small company as Tutulas, we are too busy to make a good job of designing and making our goods; we just don´t have the time to think too much about foreign sales”.

Ms. Felsenstein is encouraging suppliers to produce specific types of goods that she reckons could have appeal outside Argentina. But this advisory activity could be difficult to sustain given the small number of Dinka employees and the relatively large group of design and manufacturing suppliers. But so far the links with the 30-strong group seem to be working well.

“I think I have a good relationship with Sandra and we accept ideas from her on the basis that we are all trying to help each other”, says Maria Licandro, owner of Juana Marana, which specialises in silver jewellery.

For small businesses such as Dinka – particularly those selling across national borders with high expenses and distant prospects of sizeables revenues – cash is always a problem – (see below). But the biggest headache is finding a worthwhile group of foreign retailers who are keen on Dinka’s products.

Ms. Felsenstein is seeking more outlets by marketing the company through ist website (www.dinka.com.ar) and visiting crafts and fashion fairs worldwide to build contacts. In her favor is a global crafts market in which novelty and quality are highly valued as well as Argentina’s appeal as a largely untapped source of goods. Further, low labour costs and a weak currency mean items hand-made in Argentina are likely to be sold abroad at much lower prices than domestically produced goods.

Her idea of acting as a broker-cum-sales operation for small crafts suppliers has been welcomed by arts and crafts businesses abroad.
Claudia Lis, a German-born ceramic artist with her own small business in Wales says she has been struggling for years to try to find either commercial or government agencies that could help her sell her products outside Britain.

“If there was a group like Dinka operating in the UK with a similar role, I’d definitely contact them to see how they might be of help”.

Small steps for sustained growth

For entrepreneurs the world over, cash is king. In the case of Dinka, a Buenos Aires – based distributor of craft-based products, the difficulty of ensuring a large enough flow of cash to cover expenses is made harder by the necessity of funding expensive trips outside Argentina to find sales outlets for its suppliers’ goods. But Sandra Felsenstein, manager director, has find a way around this by adopting a “staged” approach to Dinka´s development.

Since its launch just over a year ago, Dinka has built up annual sales of about $20.000, a modest figure that Ms. Felsenstein hopes to expand in the next few years.

The revenues come from retail outlets abroad buying products from Dinka’s network of 30 local suppliers, which Dinka itself purchases at a lower “distribution price”. In the first year, nearly all the sales have come from neighbouring countries, which has kept down sales and promotional expenses.

“During 2007, I expect to be able to further the scope of our operations so sales volumes increase, giving us more cash to pay for marketing campaigns that are further afield, especially in Europe and the US” she says.

By expanding in stages, she hopes to be able to fund a bigger marketing effort using the cash from increases in revenues. If all goes to plan the sum of about $40.000 that has been used to fund the company – an investment by a business partner of Ms. Felsenstein who prefers to remain anonymous – will be gradually recovered.

USA y Europa – Financial Times: Crafting a link in a retail chain
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