The Wrapping Paper Company are a successful Australian manufacturer that can teach a thing or two about running a successful online business and how to go about choosing the right tools to make it happen. They’re also a beloved Saasu customer.
We interviewed Harry Dam, one of Wrapco’s founders, and he shared the pitfalls and successes of running Wrapco online and how he overcame some of his biggest challenges in business.
We explore Wrapco’s story in-depth to give you inspiration, a sense of what’s involved in running a successful online business and how you can use Saasu, combined with other tools, to make it happen. Let’s dive in…
What’s your business and product? Describe it in 1 to 3 sentences.
The Wrapping Paper Company Pty Ltd (Wrapco) is Australia’s leading designer and manufacturer of gift wrap products and accessories for complimentary gift wrapping. We’re a B2B company that started trading in June 1997 and the only manufacturer in Australia producing a comprehensive range. We also export to New Zealand and other customers worldwide.
How did you come up with the idea for your business? Give us a little bit of the history.
My wife Carolyn & I ran a graphic design studio for a few years prior to starting Wrapco. We designed product packaging and developed marketing strategies for clients which would often generate huge sales revenue for our clients.
The opportunity came up when a client’s business entered voluntary liquidation. We decided to buy the business and start it again as Wrapco, so we could design and manufacture products of our own for retailers.
It was a steep learning curve for us and during the first 8 years we continued running our design studio on the side.
How big is your business now?
We’ve become the leader in our market segment. We employ 11 full time staff and, when necessary, casual staff in peak seasons. Our manufacturing plant is just under 2000 square metres and is based in Braeside, Victoria.
What do you think were the key success factors that got your business from its humble beginnings to what it is now?
Until Wrapco entered the market, poor design, quality and service by suppliers indicated there was a great opportunity to lift the game.
We were determined to improve those three areas. We launched new products into the market and we continue to find new designs and ideas to remain relevant to our customers. Because we manufacture locally, we can be lean in our systems, inventory and product design.
We launch new designs for each season or occasion. This makes it hard for our opposition to keep up. Sadly, our designs are often blatantly copied and manufactured overseas by our competitors, but there’s little we can do to control this. We’ve found that litigation doesn’t work so we continue to design new product.
What’s your favourite part of running an e-commerce business?
It’s 24/7 and it’s never off. Although we always had a website, it wasn’t until 2003 that we got an eCommerce site. Before then, we employed 6 salespeople in Australia but found it challenging to reach potential customers in the entire country. At that time we surveyed our 2000 customers to understand how we could connect better and the majority were eager to do it online. For small retail stores this was a real bonus as they often don’t have time to see sales reps.
That’s when we started eCommerce and never looked back. We now have just under 30,000 customers online. We no longer have sales reps and we rely 100% on our 3 websites to sell. We also use newsletters and social media to communicate with our existing and potential customers.
It still staggers me when orders are placed after midnight. You wonder what people are up to, but that’s the beauty of eCommerce.
As you scaled your business, what systems did you use to support your online business?
As Wrapco continued to grow, in some years over 30% pa, we realised we needed to become more efficient to continue as an Australian manufacturer.
We decided to look at all aspects of our business. First, we looked at manual entering of online orders into our previous accounting system, MYOB. The first attempt to automate this was diabolical, as MYOB had major limitations. A few years later we came across a product which connected MYOB and our eCommerce sites. It worked at the time, but due to the limitations of MYOB’s database architecture, it stopped any further advancement for us.
A developer started working with us to improve our websites and they also developed a cloud based warehouse and shipping software based on our immediate requirements called PACSAAS. Over the past 3 years, it has been refined to incorporate all aspects of online order management, warehouse management, inventory control, barcoding and shipping and consignment management. PACSAAS reduced a manual 18 step order handling process into a simple 2 step process.
We’ve processed thousands of orders and reduced our labour costs by well over $200,000 pa. The efficiency has allowed our sales to grow while reducing staffing levels through natural attrition.
In the past 2 years we’ve started working with APIs and that’s where Saasu has been an absolute dream. With Saasu’s features we could see the writing was on the wall as far as in-house bookkeeping was concerned and, early last year, our full time bookkeeper resigned. Instead or rehiring, we automated nearly all of the standard bookkeeping processes using APIs that run automatically in the cloud connecting our eCommerce sites, Saasu and PACSAAS.
I like to think of APIs as our personal software robots that can do automated tasks at preset periods of time. APIs integrate all our transactions, sales, payment gateway transactions, reconciliations, purchase orders, inventory control, shipping and some online communications. We now use Saasu to manage the accounts of 6 different businesses we operate.
Because we no longer used MYOB, we got rid of our internal Windows server system. The cloud has become our new server environment.
We now use Google Professional (Google Apps for Work) for email, office software and file storage space. Google has been an amazing decision and has streamlined internal communication, quoting and communicating with custom printing clients.
Did your accountant support the move to Saasu?
They needed convincing about the benefits of Saasu and why we chose to use it. Being a manufacturer, real-time inventory control was a must for us and they now see Saasu works to our advantage. At BAS time, other than a few minor bank feeds and transaction tweaks, we’re ready to go immediately to the accountants for their final review and lodgement.
There was a time previously when it would take over a month to catch up on Christmas sales transactions being reconciled and settled.
Moving to Saasu has allowed us to do this in a manner that all national and international transactions can be managed seamlessly without human intervention. These transactions are then all fed into PACSAAS for managing stock, packing and shipping orders via various shippers seamlessly.
The final part of this efficiency equation is to develop an in-house, stripped down ERP system to coordinate all of our manufacturing processes.
What key financial metrics do you use to guide your decisions? How do they influence you?
Business growth has occurred organically over the years and often we make decisions keeping lifestyle and our family in mind.
We’re mindful of how we’re tracking daily and we’re extremely conservative when it comes to borrowing. Our business has always been cash positive without an overdraft and we tend to only commit to new borrowing if and when we’re positive we can afford to do so.
Some of the key metrics we look at is Real Revenue Growth and Product Pricing Index adjusting in relation to our competitors’ prices as well as costs of materials and currency fluctuations.
We look closely at our Operating Expenses and ensure that where possible we can reduce standing costs. We regularly review cost of insurance, telcos, car expenses etc.. For example, by installing an optical fibre line into the building, we were able to shift to Voip and save thousands per annum.
We also recently looked at our Total Cost to Manufacture and reviewed pricing from all major raw material suppliers. Ink is one of our major manufacturing costs. We found by shifting to a new supplier we could save 20% plus in cost and get a better quality product.
For all Australian manufacturers, labour costs can be a real killer. We monitor closely our Labour to Sales ratios to ensure that it’s within industry benchmarks. Our labour costs decreased dramatically with the Increased efficiency our systems provided.
What resources and key tools are crucial for your business?
Thanks to the cloud, our systems changed massively. The most crucial tool is the administration backend within PACSAAS. This allows us to monitor the status of all sales and inventory levels on a minute basis.
This information is fed via APIs into Saasu along with feeds from our bank and payment gateways. At any point in time we can see exactly what’s happening with orders and what stock is required.
We’ve automated a daily alert system that details low stock levels, incorrect payment settlements and delayed orders. This allows us to monitor forward orders and plan production to meet due dates.
Before PACSAAS was developed, we committed to customers to ship within 7 days when goods were out of stock. Now, it’s rare if an order is delayed more than 1 day.
Saasu allows us to incorporate real-time inventory levels and values. It has become crucial to know exactly what our net position is at anytime. Saasu can allow our financial advisers to be informed immediately of our situation. We see Saasu as being the control centre direct to our accountants and reporting to the ATO. We also regularly use Saasu to ensure that our cash position is enough to meet payment obligations to the ATO and suppliers.
Using Google Docs allows us to share quotes, spreadsheets and files securely with clients or suppliers outside of our company, allowing for quicker responses.
What has been your biggest challenge so far in business and how did you overcome it?
I’ve been in business just under 40 years and the biggest challenge to date has been to survive as an Australian manufacturer. By any metric set within our industry or even manufacturing, our manufacturing business should not exist and yet it still does.
Providing real jobs in Australia where people get to make something great really matters to us. We’re blessed that we work within an industry where we can design and manufacture beautiful things that people desire and will pay for.
The first thing we learnt is that we had to stick with what we do well. Don’t diversify that much that you become all things to all customers. Stay with what you know and do it to the very best of your ability, provide great service and excellent quality.
Also know that when you do provide a great product customers will pay immediately, so don’t give credit unless it’s essential. Over 80% of our transactions are paid before shipping which in a B2B world is rarely heard of.
By default everything we do is design-focused and we’ll not let the mundane become a solution.
We also understand the impact our products have on the environment. We want to be as green as we possibly can be, which is still one of our greatest challenges.
All our raw paper stock is either 100% recycled or sourced from chain of custody FFC plantation fibre. We use Australian manufactured inks without heavy metals or harmful toxins that meet the highest environmental standards in the world. Over 95% of all the raw material is used and less than 5% is sent to be recycled.
We’ve installed a 60kw solar system that generates 100% of the power we use.
We import a range of accessories that compliment our product range. So we ensure that the manufacturers are also environmentally aware and respect our desire to not provide products that could be detrimental to our environment.
What advice would you share with entrepreneurs looking to start their online business from scratch?
Don’t hesitate, give it a go, now! I believe there are still too many Australian businesses without a genuine online presence. They may have a landing page with an online catalogue and contact info but today that’s not good enough.
Businesses need to embrace the possibilities of the online space and look at the real immediate benefits there are in using the cloud. The online space gives amazing opportunity to develop a business with minimal costs but there can be pitfalls.
Business owners should familiarise themselves with what’s available and how it works. If online is to be the only source of sales, they need to do their due diligence on the providers.
Cybercrime is becoming a daily reality and good quality server providers can ensure that not only data and transactions are protected but that your business remains online. Our website was hacked a few years ago and we ended up being offline for 10 days. This can cause serious damage to any business especially if you rely heavily on having an eCommerce site.
The overarching caveat has to be, do not expect others to do this for you, educate yourself. As the owner of a business it’s your responsibility to be aware of what can happen and be prepared for any eventuality.