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WHAT MAKES BASICNET SO STRONG? ITS RENEWED, "LIGHTWEIGHT" BUSINESS MODEL
What Italian company BasicNet proves, as its president and founder Mark Boglione explains, is that, even in a highly competitive world, "we can afford to have an Italian export industry that is capable of renewing itself." According to Boglione, "doing business in a mature sector, that we revolutionise with new technology, is what we should really be aspiring to with our "Made in Italy" brand.” In practice, this approach entails the total outsourcing of production. BasicNet, which operates in the field of clothing, footwear and sport and leisure accessories, mainly under brand names such as Kappa, Robe di Kappa, Jesus Jeans, Lanzera, K-Way and Superga, has, in fact, become a service company. It maximises the value of its own brands and distributes associated products through a global network of licensee and independent companies.
Mr Boglione, wouldn't you say it’s a paradox that to remain competitive we must stop production?
To the contrary. If we think that one day we’ll have the world buying tee-shirts that are made in Italy as opposed to China, where labour costs are incomparable to those of Western economies, we're kidding ourselves. But there is room, in my opinion, to explore a whole new frontier in Italian export, and that is precisely what we are trying to do.
So to be successful, now and in the future, must we develop a new business model?
Without a doubt. We have put years into building a structure that now allows us to operate a network embodying our intangible values in tangible terms. We are capable of working with a large number of entrepreneurs, to whom we grant the right to use our brands, all over the world. We're not selling tee-shirts or shoes, we’re selling the opportunity to do business with us.
Was it difficult to build this new, lightweight entrepreneurial framework?
It took us 15 long years to complete the project we had mapped out, but we are now reaping the results. Our company has a vertical presence worldwide, and yet we are small. We are agile, flexible and fast, not to mention very reliable.
So, what does BasicNet sell exactly?
All proceeds derive from the transfer of services: we don't produce anything directly. In particular, we're talking about services for having our products made and sold. BasicNet is a business network that fully exploits and extols the potential of new communication technologies. Our information management is practically in real time.
What remains in-house?
The most important part: the development and industrialisation of new products and the global marketing strategies. We should never be led to believe that a lightweight structure doesn’t involve people - to the contrary. We have four hundred employees in Turin only, and the network has one thousand people in permanent employment worldwide. BasicNet Group’s fundamental assets are our brands, which remain our own, as does the product development, the production of samples and the industrialisation in licensee factories that sell to commercial licensees.
So, essentially, how do you make money?
We are given commission every time a tee-shirt is sold by a factory, and paid a royalty each time it is sold by a licensee. Operating in this way has allowed us to grow quickly and solidly alongside business partners who defend their positions all around the world. Here are some recent statistics for you: in 2008, our preliminary budget data reported an annual increase of 11% for licensee aggregate sales, taking them to 305.5 million Euros, while direct sales jumped by 30.5% to around 116 million Euros.
Who is responsible for quality control in such a well-constructed organisation?
Quality control is 100% in-house. We place a huge emphasis on quality, because it can be standardised. BasicNet's target is to make tee-shirts with the same high-quality features, year in, year out, so as not to disappoint the customer. Anything is possible when you have a suitable business model and the right managerial tools. Here's an example: how do the big fast food chains manage to make identical sandwiches everywhere in the world? And yet it can be done, provided that the recipes are accurate and everyone follows them to a tee. And there you have it: the major brand names are what they are precisely because they can guarantee the same quality seen elsewhere in the world.
Could you give us an overview of your global presence?
Currently, BasicNet Group's network of licensees covers approximately 120 markets. Europe alone accounts for almost 70% of our volume. We're also doing well in Asia and South America. The U.S., on the other hand, is a country we are struggling to break, with the exception of Superga. We've been taking a crack at the U.S. for 30 years with the Kappa brand, but it’s not easy. We've decided to start from scratch there with a new partner. In general, I would say that Kappa, with the exception of the U.S., is now recognised as a global brand. K-Way is starting to sell outside Italy: it is emerging in Canada, for example, and also in some European countries such as France, Spain, Germany, and the United Kingdom. Superga is half way towards what we call capillarisation, or rather widespread diffusion: it's going well in South Korea, in South-East Asia and North America, while we are yet to begin selling in South America.