The retail and sectoral technological innovation mecca was held from September 20 to 22, 2022 at the Parc des Expositions in Paris. Silvr represented the new financing for digital entrepreneurs, which was scrutinized and appreciated by many visitors.
During the talk entitled "How Merci Handy maintains strong growth and opens new markets through Revenue Based Financing ", Louis Marty - CEO & cofounder of Merci Handy – discussed various topics with Florian Cailles, Investment Associate at Silvr. It was an opportunity to review the basics of Revenue Based Financing, to analyze the different growth levers that RBF helps to activate, and how the cosmetic brand has been able to expand into the United States with Silvr's fast, agile, recurring and non-dilutive financing.
Florian Cailles began this talk by explaining everything you need to know about the RBF offered by Silvr: how does this new financing method work? Who is it aimed at?
The European leader in RBF is the new data-based financing method that offers:
Silvr is designed for all digital entrepreneurs, all those who do business online and spend money online. Specifically, Silvr already serves more than 300 e-tailers, mobile application publishers and SaaS platforms. RBF is a complementary financing solution to bank debt or equity.
This data-based solution will connect to your technology stacks and advertising networks (CMS, PSP, ERM, Google Ads, Facebook Ads, etc.) to provide a 24-hour financing offer. The Silvr financing will be allocated, as was the case with Merci Handy, to the payment of e-tailers’ inventory, raw materials, packaging, and online marketing expenses.
Louis co-founded Merci Handy in 2014 after completing his degree. His mother – very into cleanliness – frequently used hand sanitizer, and that's when Louis understood that this product deserved to be dusted off to become an extraordinary cosmetic product. For more details on this lovely glittery story: read the Success Story here.
Merci Handy is aimed specifically at Gen Z. On TikTok, it is the 3rd most influential cosmetic brand in the world. The brand is even branching into media, thanks to its Rainbow Studio. "We don't sell our products, we contextualize them without necessarily prioritizing their branding, we make our community feel better. We talk about various subjects that are relevant to our target market. For example, having people talk about problems such as acne when we have just released our skin patch. Because we adhere to a brand and then to its product, the investment is total: from the creation of the content, to its distribution and promotion.
Merci Handy offers 4 main categories of products for face, hands, body and mouth. The brand's choice is to own 100% of their formulas and to invest in numerous textures (creams, gels, toothpastes, etc.). With a local supply chain, loyal partners, and reasonable volumes – because "we are not L'Oréal", he says – Merci Handy has managed to create a strong brand followed by millions of people.
After numerous requests from across the Atlantic, Louis decided to move into the American market. Merci Handy now has over 300 sales partners. The wholesale development in Europe and the United States is mainly achieved via marketplaces like Amazon and huge distributors like Sephora, Nocibé, Monoprix, Urban Outfitters, etc. This growth presents several problems in terms of packaging, inventory, supply, and various investments (recruitments, Ads, etc.). They need to deal with all this while bearing in mind the need to maintain a healthy growth and WCR is essential.
For Merci Handy, this means managing a growing and internationalized demand. That's why they opened a second warehouse in the United States, in New Jersey. However, working with big players in the distribution industry presents severe constraints such as the minimum service rate. With one of their distributor partners, the service level required to work together is 98%. Below that, the brand pays late fees.
Glossary: The service rate is the ability of a company to deliver the entire order on time. It is based on the reliability and speed of the supply chain.
In addition, to maintain good deliverability, especially during Covid (during which sales of hand sanitizer exploded) and to preserve the 40% of revenues that the American market represents, the supply chain must be relaxed. Especially since restocking delays can take 4 months or more.
In terms of costs and deadlines, even some of Merci Handy's partners have already suffered from very short payment requests that put too much strain on their cash flow. Just like advertising agencies and the payment of invoices, the financial tension is strong. "Facebook doesn't give credit and takes advertising fees very quickly... With Google, it's even worse.
As regards cash flow gaps, Louis Marty talked about his most obvious example, which is the advent calendar. It was a €90 hit in terms of sales, but quite an ordeal to launch it. Let us explain. This Christmas chestnut tree represents:
"Today, we are still three months away from the opening of calendar sales, yet 94% of production costs have already been advanced." The cash flow gap is very large. That's where Silvr comes in to keep the brand's cash flow healthy by covering its inventory and packaging bills.
Florian Cailles pointed out that Revenue Based Financing – in addition to the advantages we will talk about later – is a way for all entrepreneurs to free up time to focus on the development of their business.
Merci Handy's challenge: reduce its WCR and maintain a strong cash flow. Silvr financing allows Louis "to factorize his expenses", so that his suppliers, manufacturers and distributors do not have the same problems. To respect this commitment and to scale up while maintaining growth and a healthy cash flow, he finances online media purchases and inventory with Silvr.
After using traditional financing methods such as raising equity, equity, various grants, etc., Merci Handy sought a new financing solution to continue to grow, and therefore called on Silvr! Because these bank debt and equity financing methods do not meet the need for speed and therefore agility in financing inventory and marketing investments for e-retailers.
At the supplier level: Merci Handy does not need to tighten conditions with their traditional producers and suppliers. Due to Silvr financing, which represents a cash flow advance for the brand, it pays its suppliers quickly, and can therefore better negotiate costs, quality guarantees and deadlines. It also offers the possibility to negotiate the coverage of certain fixed costs and tests. For Merci Handy, this more fluid inventory management is a real growth lever.
Merci Handy has therefore been able to improve its service rate to over 95%. With a considerable reduction in cash flow, and thanks to the flexibility and speed of Silvr's financing, Louis Marty can more serenely undertake order peaks and free up time to ensure the growth of his business. The time saved by Silvr - a solution that is in the process of being 100% automated - means that no more stocks are slept on, relieving the logistics and cash flow of the brands and therefore improving the working capital.
So what do you think? You can try Silvr's solutions here.