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Hot Chocolate Designs

Working Capital, Working Wonders: How Hot Chocolate Designs Went from Cash Crunch to 65% Sales Growth

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Hot Chocolate Designs

Working Capital, Working Wonders: How Hot Chocolate Designs Went from Cash Crunch to 65% Sales Growth

  • $5 million in annual sales
  • 60% yearly biz growth rate
  • 65% sales growth
  • International brand

Hailing from Venezuela, Hot Chocolate Designs (HCD) is a much-loved fashion brand known for its one-of-a-kind retro gothic apparel, designed entirely in-house.


HCD kick-started its retail journey in 2004, adding ecommerce into the mix ten years later in 2014 — and sales figures have been getting sweeter ever since, hitting a whopping $5 million in 2020. 


The brains behind the success are HCD founders Carolina Aguerrevere and Pablo Martinez, along with Managing Partner Fernando Aguerrevere. This powerful trio has steered HCD from startup to international multichannel brand over its 17-year reign. 🙌🏽


Armed with decades of experience in product and project management, Fernando is the glue that holds HCD's operations together. When he’s not crafting strategies to look after HCD's global customer base, you'll find him balancing the books and focusing on supply chain optimization to ensure the good days continue.


But HCD's success hasn’t been without its challenges. When fast growth threatened to sink its cash flow and halt progress, the team soon found themselves desperate for a funding solution to support demand. Here’s what happened next.

"Even if your sales are great, poor cash flow can break a young e-business." — Fernando Aguerrevere, Managing Partner, HCD

HCD Founders, Carolina Aguerrevere and Pablo Martínez

Challenge: Rocketing Sales and Long Lead Times Result in a Cash Flow Slump

Like many fashion brands, Hot Chocolate Designs manufactures in China to boost its margins and secure larger product volumes. 


But there’s a downside: HCD has to cover huge production costs upfront (up to 30% of the total order) while navigating long lead times, which can be up to 4 months.


And once the sales started to pour in, it became even harder for the team to navigate this cross-border setup and stay in stock.

"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 fulfil orders, and so risk lost sales and bad reviews."

HCD couldn't turn to traditional banks, since most of them simply don't understand the fast growth, diversified assets or online structure of businesses like theirs. So, Fernando and the team had to start thinking bigger to find a way to fill the capital shortage.

"US banks are still reluctant to lend to niche ecommerce fashion retailers, especially if they are asset-light with no buildings or vehicles. If they do, cash-release is slow and inflexible, not great for managing seasonal spikes."

Then the pandemic hit, and every ecommerce entrepreneur's worst nightmare came true for HCD — one of their main credit lines vanished virtually overnight, leaving the business even more cash-strapped.


With two huge fires to fight, Fernando knew it was time to find a flexible funding partner to help move their brand out of cash flow gridlock. The question was, who?

The Solution: Lightning-fast Funding for Cash Flow Stability

Fernando got to work searching for an ecommerce funding provider that could meet HCD’s capital needs, fast.


Luckily, it wasn’t long before he crossed paths with SellersFunding.


In less than 48 hours, SellersFunding offered HCD a flexible credit limit to rectify their cash flow and help the brand continue to scale unhindered.

SellersFunding was able to step in almost instantly. We got rapid approval for up to $100,000 of working capital. Enough to buy inventory and keep our supply chain flowing smoothly.

To make HCD's funding journey even smoother, SellersFunding integrated with their Shopify Plus platform, so any funding allocation and spend was easily visible and calculable.


With SellersFunding's customer success team always on-hand to guide the HCD team, onboarding was a dream.

"SellersFunding was able to connect with our Shopify Plus system. We could access and utilize funds in 48 hours and fully automate our agreed capital and interest repayments. The experience was frictionless and transparent. Customer service is amazing too. Support is always at hand, and from real people, not chatbots."

The Result: 60% Year-on-Year Growth in Ecommerce Sales

Armed with ecommerce funding they could count on, HCD was able to scale up its inventory orders during the pandemic to match the brand’s soaring demand. 


So, how did it all end up? The company remained sufficiently stocked throughout the pandemic’s limited production and freight slots, without straining its cash flow. 


The team also managed to double down on ecommerce stores, and invest in optimizing its online presence.


But here's the best part. 


HCD's strategic investments have paid for themselves, online sales are through the roof with a 60% year-on-year growth rate, and direct ecommerce sales now represent an impressive 65% of HCD's global sales.


"SellersFunding removes bottlenecks and makes it easy to access reliable funds at any time. Its rates are competitive too. So, any cost of raising capital is soon offset against a healthy sales book and happy repeat customers."


With more cash in their business, Fernando can focus on other important tasks to scale HCD to new heights. The new partnership has gone so well that the team is now looking at other SellersFunding solutions like the Digital Wallet.

"SellersFunding takes away the inventory-funding burden. It lets us focus other resources on critical activities like advertising, so we can gain more traction and click-throughs."

"SellersFunding takes away the inventory-funding burden. It lets us focus other resources on critical activities like advertising, so we can gain more traction and click-throughs."

As sales rise, we can rely on SellersFunding to extend available capital to help us scale for the future. We very much see SellersFunding as a long-term partner. We're currently looking to board its Digital Wallet Solution too, which will automate supplier payments, reduce admin and strengthen our procurement even further. Now that's sweet!

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