Naadam's co-founders are interested in breaking the existing cashmere supply chain to pay reasonable wages for herdsmen. This is his first step.
Last year, 28-year-old Matt Scanlan wrapped up $2 million in cash in plastic bags. Jane Jane came to the Gobi Desert.
Previously, he had transferred the money to a bank in Ulaanbaatar, the capital of Mongolia, but when he arrived in the area 20 hours after flying from New York, he sadly discovered that there was not a bank that could take out the money for him at one time. So he only had to go to six different areas separately. He took money from each branch, and the tellers provided him with plastic bags. He used these bags to pack the cash and went to the herdsmen where the original cashmere was sold, and continued for another 20 hours. A dusty journey. "I put the money in the back seat of the car, from the floor to the ceiling, but I can't see from the rear window that this is a bunch of money," said Scanlan.
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In fact, Scanlan is carrying out his sacred mission. As a co-founder and CEO of the fashion company Naadam, he has been working to change the cashmere supply chain by buying wool directly from the Mongolian herdsmen in order to avoid intermediaries ramping up cashmere prices. Three years ago, Scanlan spent a month with nomadic pastoralists and experienced the 3,000-year-old way of life they inherited. He found that although this lifestyle is very old and even out of tune with modern life, most herdsmen are reluctant to give up such a life and choose to go to cities for higher-paying mining jobs. To help these people guarding the traditional way of life, he began to think of ways to increase income for the herdsmen and make the shepherd more profitable.
But in fact, breaking the existing supply chain and creating a new supply chain is no easy task.
In fact, at the beginning, Scanlan did not plan to create a fashion company with a social welfare nature. After graduating from New York University, he found a job on Wall Street, but he did not like the job very much, so that two years later, he resigned without finding the next home. On the second day of his resignation, he set his airline ticket to Mongolia to find his university friend Diederik Rijsemus. (Rijsemus later became co-founder of Naadam.)
In the hotel where they stayed, they happened to meet an American reporter who was investigating the cashmere trade. “This reporter actually grew up in Connecticut, and the two towns we live in are still adjacent.†Scanlan said, “Isn’t it even if we’re on the other side of the world? We’re always going to meet people from Fairfield, Connecticut. ?"
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Scanlan and Rijsemus decided to conduct a more in-depth investigation of the cashmere trade based on the reporter’s existing interview materials and with the native-born pastoralists in the village. After he had ideas, he began to move eagerly and unknowingly set foot on the deep desert with the herdsmen to unveil the mystery of nomadic life. This sounded like an interesting adventure, but due to language barriers, they were not aware at first that this anticipated travel would be 20 hours in the car.
"It feels like we're flying in the desert. The driver is playing with another guy with a shotgun," Scanlan recalled. "He barely looked at the road ahead."
Prior to this trip, Scanlan and Rijsemus did not realize that they would be trapped in the Gobi Desert for three weeks until the hosts decided to return to the city to leave. But during this visit, they did learn a lot about cashmere production.
About one-third of the nearly 3 million people who live in Mongolia are nomadic herders. They stock between 250 and 1,000 animals, and they also include cashmere goats. In order to ensure that the flock can continue to eat it throughout the year, they have never had a stable place of residence. They usually live in yurts, and moving houses is also commonplace. Their life has no electricity, no tap water, and all the nutritional supplements are lamb and goat milk.
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The prairie is picturesque, boasting the rare beauty of the world, but it is also one of the coldest regions in the world, with the temperature usually dropping to minus 40 degrees Fahrenheit. Scanlan found that the herdsmen’s families were very proud of their traditional lifestyle and were disappointed that the younger generation had moved to the cities to pursue more profitable mining jobs. "The traditional culture of this country is inextricably linked to this nomadic form," he said. "This is unique in the world."
With the popularity of cashmere sweaters and accessories in the United States and Europe, the global cashmere industry has been thriving and has continued unabated. However, this trend has not benefited the Mongolian herders who produce high-quality cashmere fibers. Because they live in remote areas, they do not sell well. Brokers and traders go to the desert area once a year to purchase large quantities of cashmere, sell it to the consolidators, and sell the consolidators to the processing factories.
Scanlan stated that the brokers fixed the price of cashmere at 20 US dollars per kilogram here, and then sold it to global commodity-level consolidators at a much higher price. "This is plundering the value of the producers," he said. "In addition, artificially raising the price of raw materials, the pastors are kept in the dark."
Scanlan and Rijsemus discovered this business opportunity and decided to purchase cashmere directly from the herdsmen and then process the cashmere into products and sell them directly to consumers. This would reduce the number of middlemen, and the herdsmen would be paid more. People doing the hardest work in this supply chain get the rewards they deserve. In addition, there is no middleman to raise the price of raw materials, cashmere sweaters finished product prices are lower than the current market price. This will become a new fashion from farm to market.
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Scanlan said: "Although brands such as Everlane and Warby Parker are trying to control the increase in retailer prices, we reduce the price of raw materials by reducing the cost of raw materials. Such a price control method is more direct and effective."
Three years ago, Scanlan and Rijsemus successfully launched their plans to raise the first capital in Kickstarter, a crowdfunding website platform. They used this money to purchase the first cashmere and create a new brand of sweater under Naadam's name (Naadam is a traditional Mongolian festival, including wrestling, archery, horse-riding and other competitions.) They set the sweater price from US$ 140 to 200. Between the U.S. dollar, the initial goal was to earn 20,000 U.S. dollars. However, the popularity of the project was overjoyed and the final profit reached more than 100,000 US dollars.
After earning the first pot of gold, they have enough capital to build their own supply chain. Scanlan and Rijsemus went to Mongolia and bought cashmere from the herdsmen for $31 a kilogram (the price was more than 50% of the price given by the other brokers), but they did not resell the raw materials but instead used cashmere. In Italy, China and even Mongolian factories processed and produced sweaters, hats and gloves. Their charge for 100% cashmere sweaters made in Italy is set between US$99 and US$200. The price is much lower than that of Loro Piana of the same quality, Brunelello Cucinelli (Brunello Cucinelli) and Portolano these brands of clothing.
In the past two and a half years, Scanlan and Rijsemus have created a booming e-commerce business. In the process, they discovered that there are also market gaps in wholesale business in this area. Once the wholesale approach is opened, they can create The cashmere sales chain sells stored cashmere to retailers. Of course, it can also carry out wholesale transactions with its own brand. “Because we have raw materials, we can use the cost advantages of raw materials to talk to manufacturers about discounts,†explains Scanlan.
By reducing the interests of middlemen, they can earn 79% of profits in e-commerce, 60% in wholesale profits, and 40% in private brands. Such benefits are significantly higher than industry standards. This year, they are expected to receive about $6 million in total revenue.
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Of course, the booming business means that they want to buy more cashmere from the herdsmen, which is why Scanlan will carry huge amounts of money to the Gobi Desert last year.
As the business volume continues to grow, Scanlan believes that they need to do more than just sell sweaters at good prices. Since the company has carried its own mission since its inception, it is only by fulfilling the corporate social mission that it has been developed today that it can really help those pastoralists who are committed to protecting the traditional nomadic way in order to truly retain their hearts. To this end, Naadam is committed to investing 10% of its total profits into the World Bank Livestock Insurance Plan. In this way, when natural disasters occur, herdsmen can receive corresponding compensation. Natural disasters and man-made disasters are inevitable. They can only find ways to reduce losses. As in the winter of 2009, Mongolia lost 9.7 million animals, which accounted for 22% of the total livestock base, causing the country’s GDP to drop by 1.6%.
"This is my story," said Scanlan. "I want to prove that if I have an ideal, I always feel grateful for it, and I will work hard for it. I will eventually get everyone's love and trust. What we are concerned about is not The question of how people are dressed, but what kind of people they want to be and how they want to live, I hope they will have a good life and they want to have me and they will live better. With this belief, regardless of What I'm selling, people are willing to communicate with me. Every step of our company's development proves this, this is the most exciting thing for me."
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