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True Cost: Where Your Dollar Goes

Shao Qing Ang

Posted on January 16 2020

We are no strangers to the thrill of a good deal. When we first started shopping for activewear, we were awed by the $8 sports bras and $15 leggings on Taobao. So when we first started planning for Ezra, we wanted to reproduce this thrill for you. We remain committed to affordability, but our understanding of the term has since shifted. Here’s why.

Like every other company, there are several costs we face when it comes to producing and launching. These costs are influenced by multiple factors across the supply chain – think quality, scale, infrastructure and facilities etcetera. It is difficult for small businesses to enjoy very low costs because of their lack of scale.

The rise of white labelling has made it relatively easier for small businesses to manage these costs. White label producers have ready-made designs that can be produced on the get-go. Upon purchase, the producer manufactures the products and brands them according to the business’s needs. By sharing sourcing and design costs and the scale of operations, white label producers provide small businesses with relatively low prices. Don’t get us wrong, white labelling is not bad! These producers present us with more opportunities for production and consumption. A good portion of these facilities are also certified and promote high workplace safety and employee well-being standards.

Our decision to produce in Bali was driven by our desire to: (a) enjoy greater flexibility in production; and (b) produce closer to home and work with local communities. Of course, producing with local communities in Bali means our cost breakdown looks different. We make sure we know where our dollars go:

  1. Materials:
    Sourcing for materials is one of our favourite stages of production – we believe in the need for good materials, so we only use quality fabrics. We also personally stress test all materials before we commit to production. Since we don’t produce at the scale of white label facilities, we don’t always enjoy subsidised costs.

  2. Production:
    As our production facilities are much smaller in scale, not everything can be done in a single facility. For instance, our fabrics are first embroidered at one facility, before they get transported to another facility to be sewn. Since we interact with more members of the community and go through more intermediaries, this means we also incur higher costs. We’re committed to ensuring that they’re remunerated fairly for their time and skills, so we don’t depress their wages for higher margins. 

  3. Shipping:
    We provide complimentary standard shipping for all local orders because we understand the painful surprise of being met with high shipping fees at checkout. We want you to be able to try our apparel without worry.

Based on our research and experience, our average unit costs are higher than if we were to produce with a white label manufacturer. However, we want to manage our costs in a sustainable and ethical manner. This means that we don’t, and won’t, stinge on the dollars that matter to livelihoods of our workers. Instead, moving forward, we plan to look at partnerships with local fabric suppliers and new tools and innovations as we grow. For instance, we’ve been working on carefully planning our order quantities in order to reduce overstock. In doing so, we save on the dollars that would’ve went to producing more goods.

To us, being affordable means being priced reasonably and competitively, in a manner that does not compromise the fair treatment of our workers. By reducing the margins we earn on each product, we don’t pass these higher costs on to you.

Moving forward, we will include a cost breakdown for all future launches. You’d be able to see our cost breakdown and the margins we earn for each product. We also do a quick comparison to what we estimate would be the costs of producing white label and the average retail price of products like ours. We hope this helps you better understand our supply chain and where your dollar goes.

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