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Mabels Labels

While many bricks-and-mortar retailers are developing multichannel marketing systems by

adding online options to their distribution strategies, one Canadian online retailer is moving in

the other direction. Mabels Labels, a Hamilton, Ontario, company that manufactures and

markets personalized labels for childrens clothing, lunch boxes, and other items, has started

selling its products through Walmart Canada.

Mabels Labels began when four momsJulie Cole, Julie Ellis, Tricia Mumby, and Cynthia Esp

grew tired of their kids coming home from daycare, school, or camp without all their

belongings and decided to come up with a solution to the problem. They created a line of

personalized labels that can be affixed to clothes, lunch boxes, backpacks, water bottles, and

anything else kids tote around and often leave behind. Ten years later, the business had sold

more than 50 million labels in 97 countries through its website, and they have registered the

trademark for the slogan, Labels for the stuff kids lose! They have mastered social media,

hired public relations companies to generate attention in mom-oriented media, won plenty of

business awards, and built an incredibly loyal customer base. Many celebrity moms have used

Mabels Labels, including Jennifer Garner, Rachel Weisz, Reese Witherspoon, Gwyneth

Paltrow, and Victoria Beckham.

Despite the devoted online following, the move to sell products through retailers was in response

to the needs of the market, particularly the calls from customers needing labels quickly. As Julie

Cole explains, We all know that feelingyouve procrastinated ordering and your child leaves

for camp TOMORROW. Now when youre having a last-minute panic, youll have the

convenience of being able to pick something up in a nearby retail location.

The move to Walmart also provides a convenient way for parents to experience and access the

products. The labels are now more widely available to busy moms on the go, who can grab the

labels along with other essentials ahead of sending kids off to camp or back to school. People

who dont feel comfortable shopping online can now get their hands on Mabels Labels, too. The

partners worried about cannibalizing their own online business by going the retail route, but after

conducting market research and focus groups they determined that the two channels served

different markets.

A New Product for a New Channel

Mabels Labels come in a variety of styles, including sticky labels, clothing labels, shoe tags, and

bag tags. All labels can be personalized by choosing the label style and a colourful design and

adding the childs name. This highly individualized approach works well in an online

environment but created a major challenge when the partners decided to make their labels

available in a retail setting. One approach they considered was to stock the most popular names

in spinning racks at the stores, the way some other personalized products are displayed, but they

were concerned about the potential challenges of managing that system. Cole says, How do you

keep track? Oh, the Jennifers are sold out there and the Alexes are all gone there. It was too

overwhelming.

Mabels Labels solution was to create a new line of products for the retail channel. After two

years of development, they created Write Away!, a new line of peel-andstick labels that are

written on with marker and a clear overlay that is pressed over top as a lamination, making the

labels dishwasher and microwave proof. They sell at Walmart for $10.47 for a package of 30.

Working with Walmart

The partners were intimidated at the thought of approaching such a big retailer, but they had an

incredible experience. From the outset, Walmart Canada was extremely open to learning about

an offering from a small Canadian manufacturer, especially one with a strong online presence

but no retail presence. The partners discovered that, for Walmart buyers, its important to stay in

touch with what Canadian moms are buying online and what brands they care about. Businesses

owned by women are also a big focus for Walmart. Cole describes their reception by Walmart:

Heres little Mabel and big, old Walmart. But they responded really warmly to us. They

recognized the value of the product and knew their customers would love it.

Developing New Capabilities

Retail was a whole new territory for the partners, and so it was hard for them to even know

where to start. Walmart could move vast quantities of their Write Away! Labels, but what they

didnt realize at first was how thoroughly a Walmart listing would transform their businessand

how quickly. From establishing a new supply chain from China to decoding the world of third-

party logistics, Mabels Labels had just four months to reinvent the way it did business to meet

Walmarts deadline for the 2012 back-toschool season. It was as if we were starting a second

company, says Cole.

The firm approached this task systematically, doing intensive preparations under the guidance of

a key adviser with experience dealing with Walmart and carefully executing the sweeping

changes needed to become a Walmart supplier. The Mabels Labels teams copious preparations

helped it overcome the be careful what you wish for moment many Walmart suppliers

experience when they realize how much theyll have to do to meet the retailers exacting

standards. They first needed to develop realistic sales projections. From there, they determined

the production volumes and capital theyd need and mapped out how theyd pick an overseas

manufacturer to produce enough labels for 275 Walmart Canada stores. A month after the pitch

meeting with Walmart, the two parties struck a deal that met Walmarts two key requests. One

request was that Mabels Labels charge $12 a pack for the labels on its website, 15 percent more

than the $10.47 Walmart would sell them for. (They need their everyday low prices, says

Cole.) The other was that Walmart would have exclusivity on the Write Away! line among big

box stores for one year

With the deal done, two of the Mabels Labels partners flew to China to tour three factories

recommended by manufacturers they respected. The partners had each plant manufacture a

limited run of the labels and then went through a round of quality testing before making a

selection. Next, they hired a China-based company recommended by the Canadian consulate in

Hong Kong to conduct continuous quality control. As well, they hired a third-party firm in

Canada to handle electronic data interchange, the paperless system that Walmart uses to issue

purchase orders, receive invoices, process credit memos, and handle other administrative tasks.

Finally, they hired a third-party logistics firm to manage shipping the labels from China, taking

them through customs, unloading the container, packing smaller shipments, and trucking them to

Walmart warehouses across Canada.

They also had to come up with the financing to make all of this happen months before the

products hit Walmarts shelves and long before the label maker saw a cent. Cole says that the

upfront preparatory work theyd done for the Walmart pitch prepared the partners for how much

credit their firm would need. They were careful to have this financing in place before even

pitching to Walmart.

Cole says that the Walmart deal is a huge step for the company, and will mean some hiring. I

can hardly believe it. The labels are on the shelves as of last week. I have never been to Walmart

so many times in my life, she jokes. It was a huge investment, but the outlay of time and

money is already paying off.

The strong performance of the Write Away! line in the first few months of sales in Canada

helped persuade Walmart to carry the labels in some of its U.S. stores for the 2013 back-to-

school season. Plans are also underway for Mabels Labels products to soon be available in

Target.

QUESTIONS FOR DISCUSSION

1. Why has Mabels Labels been so successful selling exclusively online?

2. Can Mabels Labels maintain its competitive advantage when selling through retail stores?

How can it reduce the threat of other competitors entering the write-on label market?

3. Should Mabels Labels be concerned about Write Away! labels cannibalizing its online

products? Should it continue to sell a different product in stores and online?

4. Channel conflict does not appear to be an issue yet, provided Walmart is able to sell at a retail

price lower than Mabels online prices. What steps does Mabels Labels need to take to prevent

channel conflict once it starts to sell through other retail chains?

5. Mabels Labels website was very focused on moms, its target market. Now that products are

available in retail stores, should it consider targeting other segments that might have different

uses for write-on labels?