On Starting An Eco-Friendly Toy Distribution Business
Introduction
We recently caught up with Andrew McGregor, the co-owner of Artiwood Australia. Artiwood is an award-winning Australian importer, distributor, and wholesaler of eco-friendly, educational toys and baby accessories. You’ll find its quality products in-store and online with reputable, independent retailers nationwide. In the last six years, the business has grown three-fold, its brand portfolio has doubled, and its won numerous industry awards including Supplier of Year.
Artiwood began as the personal passion of its founder, John Daniels. For many years he helped small family-owned handicraft manufacturers in rural Sri Lanka bring their products to market. In 2015, he sold his fledgling business to Andrew and his business partner, Garry Smith. Since then, they've transformed Artiwood into an industry-leading, exclusive distributor for a growing portfolio of rising boutique brands from Europe, Asia, and North America. For some, it's now their largest distributor outside of North America.
However, while Artiwood’s owners have changed, one thing remains unchanged. The same commitment to high-quality, ethically sourced, safe, and creative products remains central to its business. In a crowded market, its eco-friendly ethos has been, and always will be, its most powerful differentiator. It offers retailers and consumers a clear and compelling reason to support its brands and buy the toys it supplies.
Here's what Andrew told us about his business and its journey over the last two decades.
What's your backstory and how did you get into entrepreneurship?
Both myself and my business partner have Fortune 500 oriented backgrounds. We'd spent years building successful corporate careers. However, there came a point when it was time to leave the corporate treadmill and do our own thing. We searched for three years for the right business to acquire before taking the plunge with Artiwood.
Never try beating others at their own game. Instead, find a unique niche, stay true to its path and make it your own.
Up to this point, my corporate career had been spent establishing, growing, and reforming the operations of an entrepreneurial British firm. This included developing new branch offices in Asia and reforming many of its established legacy markets. During this period, I successfully converted a loss-making regional network into a profitable entity while doubling its size.
I then moved to London and grew an established European network. It quickly became the company’s largest region. Finally, as Chief Operating Officer, I took the same company through the 2007 Global Financial Crisis before delivering record results 18 months later.
However, after spending two decades transforming companies for others, I was keen to leverage this hard-won experience in my own enterprise. In support of this goal, my business partner, Garry Smith, and I looked for an under-performing company with plenty of potential. Ideally, we wanted something in an industry where our skills and experience would prove highly transferable.
I really enjoyed working cross-culturally, alongside people with a similar worldview and a vision for creating and building great brands. As an importer of burgeoning, boutique global brands, Artiwood proved the perfect nexus for all these passions.
Take us through your entrepreneurial journey. How did you go from day 1 to today?
Artiwood was a rare gem. We fell in love with the company, its products, and its potential from the moment we first saw it. It had all of the hallmarks of a business geared for great things. It had picked up a handful of emerging global brands with plenty of potential. Its reputation, while limited, was much loved.
It also operated in a very clear and well-defined niche. Sustainability and ethically sourced products are the building blocks of Artiwood's business. Its toys are all made by hand using natural materials like wood, rubber, cork, and cotton. You’ll never find an assembly line of plastic extrusion moulds in any of our factories. It’s the human touch that ultimately enhances our toys – a distinction we like to call heirloom quality.
Artiwood’s founding owner was also operating a highly outsourced operation. Its warehouse was managed by a third-party logistics firm, graphic design was delivered by a Romanian contractor and its IT network was maintained by a Sri Lankan supplier. As a result, the business could be relocated easily and came with few constraints likely to inhibit growth.
In the years since we’re retained many aspects of this outsourced model and, in doing so, made it easier to grow rapidly. Last year we grew 74%. This would have been difficult to achieve had we been leasing our own warehouse with finite capacity. We also made a conscious decision to automate as much of our business as possible so that manual processes (i.e. headcount constraints) wouldn’t hold us back.
For example, most sales are generated via our wholesale website. This means there’s almost no manual data entry involved in processing orders. This frees our sales team to focus on nurturing new business prospects and delivering services that improve customer retention.
Some of the best business partnerships you'll ever build are with companies who grow with you as you grow.
We’ve also set ourselves very clear and strategic long-term planning goals. These outline how we want the business to look in three years. They cover elements like revenue, product portfolio, technology implementation, and headcount. We also focus on strategic marketing goals designed to raise our profile and further its potential.
In other words, we project a look and feel that reflects the kind of business we're striving to become. This includes investments in our website design and functionality, custom-built booths at critical industry trade shows, comprehensive social media exposure and plenty of industry awards. No detail is ever too small.
For example, we recently ran a social media competition to secure additional YouTube channel subscribers. We wanted at least 100 subscribers to get a customised URL for our new channel rather than accept a generic link.
The impact of this strategic focus is easy to measure. In the last 12 months alone, we’ve achieved record sales and added more than 140 new customers. We won a Product of the Year award at the Australian Toy Association’s (ATA) annual industry awards in March last year – and repeated the achievement again in March this year. In December, we secured placement for two products in the ATA’s annual top toys for Christmas ranking.
In our first three years, we met and exceeded most of our initial three-year goals. My business partner and I then debated, agreed, and locked in a new three-year plan. To our delight, we saw the bulk of it achieved in less than two years. For us, this persistent laser focus has fostered much of our success. It's created real momentum by continually focusing our efforts on initiatives that incrementally build towards our end goal.
How are you doing today and what does the future look like?
We have an ambitious schedule of technology upgrades including new back-end systems and web capabilities planned. We’re also developing more flexible supply chain solutions to improve our supply throughout the year. This includes sourcing from new regional distribution centres and undertaking more frequent, dedicated, production runs for key customers.
We’re also keenly aware of the industry’s ongoing COVID-driven challenges. Shipping companies are struggling to rebalance disrupted global supply lines. COVID safe practices are creating congestion and delays at major export ports. Constrained exporters in the USA, Europe, and elsewhere are also causing empty containers to pile up in their home markets rather than returning to Asia fully laden. As a result, shipping costs have doubled, and containers are in short supply in markets like China and Thailand.
We’re also working with our key suppliers on maintaining factory productivity and quality control. Ongoing travel restrictions mean Artiwood, and its suppliers, are unable to review and monitor factory performance on the ground. While we’ve seen few issues of concern so far, we worry that with the passage of time, industry best practice will erode and inefficient COVID measures will become entrenched.
From Day One we diligently modeled growth at different rates. This helped us identify thresholds beyond which accelerated growth would jeopardize our financial health
With so many fundamental supply challenges on the horizon, for the next 12 months or so, we're focusing our efforts on deepening existing supplier relationships. It's incredibly reassuring to have a brand portfolio with such depth. Together, with our incumbent suppliers, we can bring new product categories to market without having to source and integrate new relationships.
We're currently working on three new product categories that further our vision of becoming a one-stop shop for any retailer's core catalogue. For example, an established British brand we support, Bigjigs Toys has just launched a superb new range of Silicone toys.
We consider ourselves incredibly blessed to be in this position. However, it didn't happen by chance. It's taken six years of dedicated effort to build our brand portfolio including many, many hours spent endlessly walking the halls of industry trade shows in Asia and Europe. In our experience, some of the best business partnerships you'll ever build are with companies who grow with you as you grow.
Through starting the business, have you learned anything particularly helpful or advantageous?
The best business advice I ever got was to never try beating others at their own game. Instead, find a unique niche, stay true to its path and make it your own. The phenomenal growth of our business is a testament to the power of this counsel.
It’s also important to manage your cash flow carefully. Too many growing companies go out of business when they grow faster than the cash available to fund their expansion. Securing multiple sources of finances was critical for us. We funded growth through our own private funds, bank financing, reinvesting profits, and negotiating flexible payment terms with key suppliers.
Collectively these measures allowed us to grow the business three-fold without ever exceeding our cash limits. We also made a conscious decision not to take on angel investment or any form of capital that would have us relinquish control of our business.
In our early years, we came close to running short of cash a few times. However, careful cash flow projections prepared months earlier had warned us of the emerging risk. As a result, we planned proactively for these shortfalls, managed our cash prudently, and carried the business successfully through these challenging periods. Early on we also modelled growth at different rates. This helped us identify thresholds beyond which accelerated growth would jeopardize our financial health.
However, these days, the ongoing success of our business is underpinned by its people. The right talent can literally transform your business overnight. For example, we made a senior appointment as a national COVID lockdown was unfolding in March 2020. Despite the external environment, we ultimately decided the talent on offer was too good and too rare to pass up. A year later, our business is all the better for it.
We're enormously proud of our team. They're loyal, talented, hard-working, and dedicated to the cause. The best advice I ever got regarding recruitment was simply that vocational skills are always teachable and highly transferable. Therefore, once you've ticked the skills box, focus on aptitude and attitude when hiring new talent. The right people will always look after your business and its customers.
Like everyone, we've made a few unsuccessful hires along the way. However, we've eventually found the right talent through targeted referrals from trusted colleagues and industry contacts. The team we've got now is simply the best.
What platform/tools do you use for your business?
We use four technologies to drive the bulk of our business. Our CRM and accounting systems are Australian-developed applications; Tall Emu CRM and MYOB. This ensures we have greater input into their development and secure timely local support.
We use Magento as our e-commerce platform and have outsourced most of our office technology to the Microsoft cloud including email, productivity software, and all-important network back-ups.
On the marketing front, we use Constant Contact for emailing marketing and Handshake for sales support at tradeshows and on the road.
What have been the most influential books, podcasts, or other resources?
Our most valuable resource has always been the global network built over many years during our former corporate lives. It’s been invaluable having a network of trusted peers we can turn to for advice or who can point us in the right direction for the help we need.
This experience has taught me to value every relationship I've made. While the passage of time can diminish some relationships you never know when you may need them again someday. As a result, I try to set aside time every month to continually refresh and reconnect with others in my network.
Never be afraid to ask the obvious questions and never be afraid to ask a stupid question. Fear is the mother of all evils when it comes to achieving your dreams.
Advice for other entrepreneurs who want to get started or are just starting out?
It’s important to take the time to think clearly and carefully about what’s really important to you. There’s no point dreaming of becoming a Fortune 500 company if all you really want is a family business that’ll pay the mortgage and leave you debt-free in retirement. Equally, if you want to become a billionaire identify the skills you’ll have to master and be relentless in developing them while identifying everything, personally and professionally, you’ll ultimately have to relinquish as you grow.
Running your own business is hard work. You’ll only strive and go the extra mile if you’re always working towards a goal and a vision you truly believe in.
Where can we go to learn more?
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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