Image: Hot Chocolate Design
INDUSTRY
Apparel and Accessories
CHALLENGE
Secure crucial inventory in time to avoid running out of best-sellers — without ever straining cash flow.
RESULTS
Grew 65% year over year by always having plenty of hot stock and capital to keep growing.
SOLUTION
“SellersFi was able to step in almost instantly. We got rapid approval for up to $100,000 of Working Capital. It was enough to buy inventory and keep our supply chain flowing smoothly.”
—Fernando Aguerrevere, Managing Partner of Hot Chocolate Design
Venezuela-based Hot Chocolate Design (HCD) is a much-loved fashion brand known for its one-of-a-kind retro gothic apparel, designed entirely in house.
HCD started its retail journey in 2004, adding e-commerce into the mix in 2014. And sales have been heating up ever since, hitting a whopping $5 million in 2020.
The brains behind the success are HCD cofounders Carolina Aguerrevere and Pablo Martinez, along with Managing Partner Fernando Aguerrevere. This trio has steered HCD from startup to international multichannel brand over its nearly two decades in business.
Experienced in product and project management, Fernando Aguerrevere is the glue that holds HCD’s operations together. When he’s not growing HCD’s global customer base, he’s balancing the books and focusing on supply chain optimization to ensure Hot Chocolate Designs drives sweet success.
But HCD’s increasing success has come with challenges. When fast growth threatened to consume cash flow and halt progress, the team soon found itself in need of a funding solution to support demand.
“Even if your sales are great, poor cash flow can break a young e-commerce business.”
—Fernando Aguerrevere, Managing Partner of Hot Chocolate Design
Like many fashion brands, Hot Chocolate Design (HCD) sources in China to boost its margins and secure larger product volumes. But there’s a familiar downside: the brand has to cover huge production costs upfront (up to 30% of the total order) while riding out long lead times (up to 4 months).
Balancing inventory and cash on hand is challenging for all businesses. And success makes it even more difficult by demanding rapid scaling in all ways. The more you sell, the more you need to replenish (and quickly), which requires more cash. Winning in e-commerce creates a whole new set of accelerated pressures for which merchants must be prepared.
“Having a massive upturn in demand is amazing but not without its challenges. If you don’t have enough stock in the pipeline, you can’t fulfill orders. Then you risk lost sales and bad reviews.
—Fernando Aguerrevere, Managing Partner of Hot Chocolate Design
In spite of proven success, HCD couldn’t get funding from traditional banks. Those the brand approached simply didn’t understand the fast growth, diversified assets, or online structure of HCD’s business model.
“US banks are still reluctant to lend to niche e-commerce fashion retailers, especially if they are asset-light with no buildings or vehicles. If these banks do lend, cash-release is slow and terms are inflexible. This is not a great solution for managing seasonal spikes.” The team had to find a different way to fill the capital gap.
Then things became even more difficult when the pandemic hit. Almost every e-commerce business, including HCD, saw one of its main credit lines vanish virtually overnight, leaving the business even more cash strapped.
Facing multiple obstacles, Fernando knew it was even more urgent that HCD find a flexible funding partner to help move the brand out of cash flow gridlock.
In less than 48 hours after finding SellersFi and setting up an account, HCD a flexible credit limit of $100,000. This funding made balancing inventory acquisition and healthy cash flow a snap.
“SellersFi was able to connect with our Shopify Plus system. We could access and utilize funds within 48 hours and fully automate our capital and interest repayments. The experience was frictionless and transparent. Customer service was amazing too. Support was always available — from real people, not chatbots.”
—Fernando Aguerrevere, Managing Partner of Hot Chocolate Design
Fueled by hassle-free, low-interest funding, HCD was able to acquire inventory and keep selling during the pandemic even when its competitors could not. This gave HCD a huge advantage and accelerated sales and brand growth.
In fact, having cash when competitors were scrambling to pivot meant that HCD remained sufficiently stocked throughout the pandemic’s limited production and freight slots, without straining cash flow.
The team also managed to double down on its e-commerce presence and invest in optimizing advertising, social reach, and brand recognition.
But here’s the best part: HCD’s strategic investments have paid for themselves. Online sales are through the roof with a 65% year-over-year growth rate. And direct e-commerce sales now represent an impressive 70% of HCD’s global sales.
“SellersFi removes bottlenecks and makes it easy to access reliable funds at any time. The rates are competitive too. Any cost of raising capital is soon offset against a healthy sales ledger and happy repeat customers.”
—Fernando Aguerrevere, Managing Partner of Hot Chocolate Design
Ready to scale your brand?
Other stories
Icelandic Glacial Water got the bridge capital it needed during a major funding raise for a first-of-its-kind eco innovation.
Read how Diamond Whites delighted customers and achieved 110% growth using funding for customer payment options.
CROSSNET fulfilled a huge order worth millions with flexible e-commerce funding . . . and landed massive contracts.
