Bottoms up as seats lift BubbleBum
Published 20/12/2011 | 08:00
Bubblebum is just two years old, yet it is rapidly emerging as one of Northern Ireland's most successful export-based companies.
So it is no surprise that founder and chief executive Grainne Kelly was this year a finalist in the Ernst & Young Entrepreneur of the Year Awards, as well as the firm being the winner of Ulster Bank's Ireland Start Up Company of the Year title.
The BubbleBum product is now well known internationally - it is a car seat that is packaged into a neat size suitable for air and other travel, which is inflated into size and firm shape for use. It meets the needs of parents of young children, who often experience difficulties in obtaining child seats for use in hire cars, or friends' vehicles, when away from home.
It is an obvious product for worldwide use, but the Londonderry business has had to overcome serious difficulties in getting the product into national markets overseas.
The most stark example, says Grainne, has been with Brazil.
"We have been trying to get it into Brazil for more than the last 12 months," she says.
To achieve this, BubbleBum had to get a national law changed.
When internationally agreed car seat standards were translated into Portuguese and became law in Brazil, they contained an error.
The international standards specify that a car seat should be 'firm', but this was mis-translated into Portuguese as 'rigid'. Consequently, this export market was closed until the law was reformed - which it has now been.
Other national markets presented their own challenges, not least because there is no internationally and universally accepted product testing system. "For the US, the product had to undergo all the testing processes again," explains Kelly. Another issue has been product labelling. "For Japan we needed to provide a Japanese [language] label on the seat."
While international regulations have been a challenge, it is a challenge worth dealing with, says Grainne. "It's a major issue in the sense that it's a pain in the backside, but it's not anything that we can't overcome."
Taxation practices have also had to be addressed. Much of BubbleBum's online exports have been in the EU, allowing it to make sales VAT-free. But this creates difficulties for the rising number of retailers who stock the product, in terms of price competitiveness. This is particularly true as the applicable rate of VAT varies substantially from country to country. While some governments impose a concessionary low rate as low as 5%, others levy a full rate of VAT - in Belgium the rate is 25%. To enable Belgian retailers to compete with the online sales, a different distribution deal and profit margin had to be agreed. This was enabled by both distributors and retailers accepting lower than normal margins. "We are doing our best to help them," says Grainne. "The retailers are not happy, but they are taking a cut in what they are getting. The retailers are not taking their usual 50%, but we can't sell it any cheaper than we are."
At present, the biggest export markets are Switzerland and France, but soon the US will become the largest selling area.
"In Switzerland, it is working really well: we have run straight into high volume sales."
This has been achieved by dealing with one of the country's major retailing chains. Several deals have been finalised for distribution across the US, including both major retailers and with the largest US catalogue company.
There should also soon be substantial increases in sales across the UK - the product will become available in Asda in the early part of next year and in Halfords' stores in May.
This level of growth creates new challenges. Grainne says the Chinese manufacturer is well placed to increase production to meet the higher levels of demand, but financial lines of support need to be available. "To have a scalable business we need the support of our banks - and at the moment banks have no money."