IT used to be that Sigel Inc. was raking in dollar sales as an exporter of hand crafted premium boxes for home accents and gift items such as chocolates, wines and dates. Over the years, sales have slowed down as companies abroad started ordering goods from China, where items are so much cheaper.
The fact that the peso has strengthened itself against the dollar has hurt the business too. Eugene Leyran says, “At a trade show, if a buyer is interested, I would send samples right away. By the time the buyer sends a purchase order, the peso-dollar exchange rate may have gone down by two pesos.” And with a 30-day credit term extended to clients, Sigel may find itself staring at an even leaner margin by the time the client pays if the exchange rate goes down again.
The cost of manufacturing has also gone up. “Our constraint is the price of our finished product. It’s too high because it’s labor intensive. Maski ako namamahalan,” says Eugene. At times, clients would set a price for their items, and won’t budge if Eugene explains that they can’t offer the goods at that price given the forex rate. “We still have active buyers but orders have gone down due to the price.”
Sigel Inc.’s competitive edge, however, remains its exquisite designs, which attract a lot of inquiries. “By word of mouth, maraming nagtatanong about our boxes even through e-mail,” says Eugene.
To cope with the situation, Sigel has started tapping the local market. But there is that risk that their designs will be copied if their goods are sold locally. Eugene is also asking, “Should I get space at Tiendesitas? Should I go door to door to multinational companies for their corporate giveaways?”
Arcilla sees that Sigel cannot control the crisis. “You cannot control the wind but you can always adjust your sails,” he counseled.
Because Sigel’s products have been proven attractive to foreign buyers, mentor Willy Arcilla recommends that Sigel Inc. go into e-commerce. Eugene admits they have thought about it but have not really put much effort into it. By going into e-commerce, Sigel will be able to make its presence known to more foreign buyers who may be interested in their products.
Willy’s other recommendations for Sigel Inc. are as follows:
1. Join more trade fairs.
2. Give emphasis on marketing. “Nike is not Nike without the brand. It’s in the marketing.”
3. Diversify by continuing to tap the local market. Eugene sees the wisdom in this, and resolves to just come up with new designs to counter the risk of copycats using Sigel’s designs. By doing so, even if Sigel’s design is copied, he’ll have a new design out once the old one becomes passé.
Here’s a video taken by INQUIRER.net business editor Ma. Salve Duplito of Arcilla saying Sigel should put more emphasis on marketing.
How will Sigel Inc. do after following Willy’s recommendations? Let’s find out in the coming months.
May 23rd, 2008 at 4:29 pm
Hi Salve, Hi Eugene,
For Eugene, maybe we can work out something like a network of sellers. All we need are brochures or a website that showcases all available designs.
I think Willy’s idea of a site is great. It should be able to handle purchases.
I’m sure Eugene has thought about it already but I just wanted to share that the two ideas above are feasible, doable too.