‘Disruption,’ ‘disruptors’ and ‘disruptive’ are words that we hear a lot in the business and entrepreneur world, but how many founders and entrepreneurs actually qualify for the label of ‘disruptor?’ Truly innovating and challenging a traditional way of doing something is disruptive, and so traditional industries typically have the most potential for disruption – i.e Read More…
Melbourne business walking the talk
Fri 14 February 2014 - 3:33 pmEditor's Choice | Entrepreneur | Featured | Profiles | Retail | Sustainability
When the Australian Fashion Report 2013 was released in August last year, there was a bit of noise from the usual suspects. But when the clock struck midnight, it was onto the next day’s news.
Yet the findings of that report are staggering.
Compiled by international aid agency Baptist World Aid, the report was the culmination of two years of research and independent assessment of the ethical practices of 41 companies and 128 clothing brands.
Nick Savaidis, owner and founder of fashion and sportsgear label Etiko, beat every single other better-known brand, to stand out as the only company in Australia to achieve an A+ rating for the integrity of its supply chain.
Nick says the reason Etiko achieved that ranking is because he and his brand are totally committed to the cause. “While other companies may have some interest in it, they’re not going to do it at the cost to their profitability,” he says.
A closer look at Etiko and Nick’s approach to business reveals a certain humanity that often doesn’t rate a mention at the table of his corporate competitors.
“If you ask most Australians whether they oppose the issue of child labour, sweatshop labour, or slave labour – I’m sure the vast majority of people would say ‘yes’,” he says. The problem though, is that doesn’t always translate into a customer’s actions at the counter.
Prior to starting Etiko, in his days as a high school teacher and being involved with school soccer, Nick reflects on news reports about the extensive use of child labour in the sporting goods industry.
“I just couldn’t believe that companies would take advantage of desperate people simply to maximise their profits, but at the same time, I’d go into shops and ask retailers if they could guarantee their gear hadn’t been made by children or sweat-shop labour – mostly they didn’t have any idea where the products came from,” Nick says.
Sports balls were the first step for Etiko (sold as Jinta), and also the first non-food manufactured products in Australia to be certified Fairtrade. From there, the brand has expanded to include its own sneakers, T-shirts, and accessories. Sold in its online store, its own shop in Melbourne and via retail partners, Nick is also looking to expand its wholesale division which supplies to other retailers. “We’ve also just had Victoria Zoo come on board, and they’re our biggest reasonably sized retailer to work with us to date.”
A problem for most brands is that they simply cannot map out their supply chain – they don’t know where their products really came from.
“We don’t stop just at the factory floor, but we go right back to where the cotton is actually grown. Being able to get certifications from a variety of sources to back-up our ethical claims was a key part of getting that A+ ranking,” Nick says.
Etiko, which has been trading since 2005, takes three-pronged approach in ensuring it ‘walks the talk’ of its brand name, which is the Greek word for ethical. Firstly, by first-hand visits to the sites, secondly via third party verification labels such as Fairtrade International, and thirdly by working with NGOs to seek their support and advice.
“Most brands will send their middle management type people, and they’re given the standard tour, they just get shown one portion of the factory – the nice part – and what often happens behind the scenes is quite disturbing. So you can’t necessarily rely on the visit. They see what they want to see – and then they don’t go beyond that,” Nick says.
“When I go to Pakistan, or India, or Sri Lanka, or any other country that I deal with, I make it a point of getting to know the workers on our supply chain. Not every single one of them, but as many as I can. What I do is not only visit them at the factories, but visit them in their villages, in their towns. You’ll often get invited into family homes, and it gives you an opportunity to get to know them away from the factory owners. And you get to hear what their lives are really like, and what impact, if any, Fairtrade is having on their lives.”
“I’ve met auditors who are based in these countries and who work for some of the biggest fashion brands in the world, and when I was recently in Pakistan one auditor told me that in the 17 years he’s been auditing, I was the first owner of a business he’d ever met.”
This kind of approach to supply-chain management comes at an obvious cost. Yet as Nick points out, a perusal of Etiko’s products quickly reveals the prices are commensurate, if not cheaper, than equivalent quality products from non-certified brands.
“People are surprised at our prices, and have this expectation that because something is fair trade it’s going to be a lot more expensive,” he says.
The difference in Etiko’s approach lies within the core goal of the business – to be profitable, but never at he expensive of its values.
“We’ve been able to do that by keeping our overheads incredibly low. We run our whole business on the smell of an oily rag. So there’s no fancy offices, no fancy cars, or fancy lifestyles, and when I travel it’s in budget accommodation, and we’re a small team,” Nick says.
Etiko is in fact just a three-person operation, but has plans to upscale its business.
“The aim is to start taking what is considered niche to the mainstream, and our goal this year is to go beyond the activist community – who we love – but they don’t make up a huge portion of the population. We need to get out to a wider market,” Nick says.
“We’ve shown that you can actually create a profitable business and do some good, but now what we’re wanting to do is to take the brand mainstream and in order to do that we’re trying to raise equity investment, and we’re talking to people and looking for people who can actually see the potential in what we’re doing, not just in Australia but internationally as well.”
The challenge Nick says, is how does a small venture like Etiko create change?
“Well we have to remember that we’ve made an impact and we’ve got a growing following. But we’ve got a long way to go. The goal is to make it a much bigger operation, build our team up, and find more resources.”
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