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Ali Hui says she is in a position to drop her prices after 21 years work on streamlining her business and building relationships with suppliers and manufacturers. The former nurse who fell into business unintentionally runs online baby essentials retailer Babu. Auckland-based Hui says she is proud to be dropping prices, particularly at a time when everyone is feeling the financial squeeze.
Hui talks to Aimee Shaw about having the confidence to take the next step in business: opening a physical shop in the next 12 months and expanding overseas, and how her hand drawn designs – often sketched during flights – still feature throughout the Babu range.
What has your venture set out to achieve?
When I had my son Jack, when he was four or five months old, I couldn’t find any good quality soft sheets. Now, you can find everything, but almost 23 years ago it was near impossible. I found a factory in Morningside, and the owner imported fabric, he showed me this fabric close to what I wanted – it was a thick jersey interlock and delicious, and so I bought two rolls, took it home, laid it out on the floor and cut some to make the first sheets for Jack.
From there all of my friends were asking if I could make them some sheets – that sort of took off. Those made sheets that were fitted at the bottom to stop them being pulled off and tangled and making your back sore remaking them. I had a bad pelvis, was really unwell with all of my pregnancies, and so getting in and out of the cot to make it after every sleep was torture. We elasticated the bottom so it would fit on like a fitted sheet.
I had six squares from every single sheet set, so we started making face cloths out of them. Those products really went crazy and that’s when I decided to get a logo done, based on what used to be Jack’s nickname, Babu. At the time there was pretty much only Baby Factory and Mokopuna. There wasn’t many of us around.
How quickly has your business grown?
In the early days I had picked up 10 retailers in Auckland, and I think it was about year three that I went to a trade show in Auckland and I picked up between 50 and 60 retailers, so I got another machinist and we got an office.
There was a company closing down up north, so we bought their cutting table and fabric roller and I quickly learnt how to lay fabric, how to do all the cutting, and then I came up with eight or nine other products that were staples for babies, such as burp clothes, waffle blankets and hooded towels. It was great and everything was ticking along, and we were getting busier and busier.
I went to Australia to do a trade show and came back totally overwhelmed with at least 70 Australian orders, so we employed another person and shortly after we were starting to see huge shortages in the workforce for us. So I went to meet a woman in Vietnam and starting making products out of there.
At that time, organic was non-existent and if you could get it the pricing was enormous and so when we were working out of Vietnam we extended our range hugely. But they were lagging behind the curve in organics, and I knew that, because I went off to a trade show in India by myself and found the supplier that we still work with today. We’ve been working with them for 11 years, and I go there two to three times a year.
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Babu is an online retailer, but is planning to open its first physical shop in the next 12 months.
Tell me about your alternative revenue stream?
We also run and manage production for other people. With the Sleep Store, we produce their cotton range out of India. We run a production business as well as a brand.
The Sleep Store is one of our biggest customers. They had bought a couple of other brands under their parent company and Lou Tanguay and I redesigned some of those. I’ve been running some of their production for quite a long time now. They are a powerhouse – we’re not as big as them as we are just one brand – so we run that as a side onto our business because we have all of these amazing relationships overseas. I’m a real stickler for quality, so it has worked out really well. We work with a number of New Zealand brands, and not just baby brands.
How many people does Babu employ?
We’ve shrunk recently and that’s because we’ve built an amazing team of 136 in India. I have a full time merchandiser in India who runs production with me, and two sub-merchandisers – that takes an enormous weight off my shoulders.
In New Zealand, we also have Bella, who does our graphics and website design, Wendy who is logistics and operations, Heidi who is finance, Renee who is accounts and finance, Merryn, who works part-time, and Kingi, my husband, who does all the shipping part-time, and we contract consultants as we need.
How much change have you seen in the past 20 years?
So much change. We used to get our orders by fax. Back then starting a business involved a lot of advertising spend in Home & Garden and Oh Baby magazine, it was really hard to get your name out there and get people to the website. Now, you can set up a brand, throw up a website and open an Instagram page in a night.
A lot of the baby brands now have products that are picked from ranges offshore and curated with their own labels on them, so they can move product really fast, whereas we hand draw our own prints and make our own patterns and so a more traditional retailer in that sense. There are 60,000-plus babies born in this country every year, and what we have learnt over the years about sticking to our knitting is that we are not a fashion brand – we are core basics and don’t get involved in fashion. We stock our basics and blankets all year round.
While a lot has changed, there are some things that haven’t. I still hand draw the designs for our products. Often I’ll tease out a concept, and I’ll place it and tell the illustrator how I want it to look and tweak the design with the illustrators. By the time I have finished meddling with it about 30 times it comes out right.
A lot of the designs I’ve done have been done on a plane, and that’s because back then nobody could get in touch with you. I’d often fly out to China on an overnight flight and get quiet time to be creative or come up with a different section of the business plan. The very first design was the star, also drawn on a flight.
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Ali Hui draws the designs for Babu herself – a lot have been sketched up on flights, including ‘Chubby Bear’, which she says is her all-time favourite design.
What’s next for Babu?
We have quite a big shift coming for the brand next year. We’re doing a bit of a re-launch with 13 new base colours that will carry through across the range.
Our prices are also going to drop a little bit and that will be possible because of how we buy our cotton and how we manufacture now. The people we have been working with for such a long time,
Because we have invested so much into the factory and the people we’ve been working with for such a long time, including through employee and community give-back initiatives, our manufacturers have negotiated better cotton prices with the supplier for us, and we’ve come up with a clever, streamlined way of how we work, such as all of our labels being made in house – we’ve bought a lot more work in house.
I envisage a retail store in Auckland and would love to do something in Christchurch. But after Auckland our second store will probably be offshore in the United Kingdom, definitely in London somewhere. I’m English, I moved over to New Zealand when I was seven, and a lot of my Kiwi family such as cousins who were born here run restaurants and breweries over there, so taking Babu there would be an easy option – and just as easy doing it there as it would be in Auckland.
Both stores are definitely on the burner, and something everybody is really keen on doing. Because we don’t do retail I think it is often hard to find us, compared to other retailers who have shops. Retail gives great exposure, and we’re now sitting in an environment where it seems odd to be doing retail. We will do a few pop-ups before committing to anything, to see how it goes, but I’m really keen on moving forward in some capacity, so the brand’s exposure can grow.
How much time and money have you invested in the business until now?
When we first started we put in $10,000-$15,000 doing all the branding. A lot that I wouldn’t do now. We put a lot of investment into travel and working with our overseas markets, and that was enormous too.
We have put in a lot of money over the years – probably 10 times more than I thought we would. I was really blindsided by the actual cost of things because I wasn’t a businessperson, I didn’t do a very good business plan and I did a lot of winging it, so I think I wasted a lot of money.
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Babu founder Ali Hui is excited to take brand to Britain, and plans to open a store in London.
What’s one thing you wish you had known before starting?
How to read accounts and manage my finances. That would have been insanely helpful. Creativity is quite a natural thing once you let it come into your life, but finance isn’t – and understanding finance is tricky. I so wish I had learnt that early in the piece, because I didn’t learn that until five or six years in.
What’s been a blessing in disguise for the business?
Covid – we were so busy. Our merino dropped in two weeks before Covid and once we got made an essential business we sold out. It was enormous for us. People who were searching for merino couldn’t find it anywhere else and therefore found us, many who hadn’t shopped with us before.
It was a fascinating time, and unfortunately I had friends’ who’s businesses were going under. It reset our cash flow and was really beneficial for us from the cash flow perspective and repositioning the brand again. About 80% of orders that came through at that time were from new customers.
Most helpful piece of advice you have ever received?
The best piece of advice I got from my old boss, who said “always save for GST and taxes” – that has been a godsend. Cash flow is tricky, so managing that and your taxes is key. The worst piece of advice I received was to drop our quality, so that people wear through our clothes faster, so we can sell more.
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