The owners of Australian swimwear brand Lilly and Lime have decided to sell their e-commerce business after COVID-19 travel restrictions caused sales to plunge.
Since 2016, co-owners Ashleigh Hill and Emma-Jane Hughes have successfully operated their year-round e-commerce business, selling D-cup and up sized bathing suits around the world.
But when COVID-19 brought international and domestic travel to a standstill, the business suffered a devastating decline in turnover.
Last year, Lilly and Lime experienced a 59% drop in Australian winter sales at a time when people would normally travel to northern parts of the country or overseas.
Sales from wholesaling to boutique shops in the US also ground to a halt throughout 2020, as COVID-19 cases in America soared.
“We were relying on those sales to repay some of our pre-existing business loans and to fund our new collection,” Hill tells SmartCompany.
“We were on track to pay all that off, then COVID-19 hit.”
Hill wants to share one of the mistakes she made early on in her business journey to help other business owners avoid making it too.
She says in hindsight the business loans that she took out in the early years of running the e-commerce store were not a good idea.
“We were trying to fix the mistakes that we made early on — taking risks and then taking out business loans that we probably shouldn’t have, with high interest rates,” Hill says.
Hill’s message for business owners is that there’s always a better option than a quick and easy loan.
“There are so many options. I would say be cautious with taking out loans that are easy to get.”
From closing to selling
The business owners managed to pay off their loans but the decline in sales due to the pandemic meant they weren’t able to fund the business with the injection it needed.
“It would have meant self-funding another collection and we just didn’t have the energy to do that,” Hill says.
Hill says it was a difficult decision to close and abandon her plans to create new products, engage a local third-party logistics company in America and source more sustainable fabrics.
“The decision didn’t come easily. One minute we were like ‘let’s close it down’ and the next minute we were like ‘how can we keep it going?’” she says.
When the co-owners announced the closure in April on social media, their message was met with what Hill called an “uproar” from loyal customers.
“Because of the uproar from our customers, we started pursuing a sale of the business rather than closing it down,” she says.
The co-owners decided not to waste the Lilly and Lime brand, its loyal customer base and the technical patterns that they had built from scratch.
At the moment, the business is still operating but no interested buyers have committed to purchasing the brand.
“The selling process is definitely an unknown area for us,” Hill says.
“Obviously there’s quite a few companies that sell e-commerce businesses online.”
The most surprising element of getting the Lilly and Lime ready for sale was preparing the financials, Hill says.
“When it comes down to us either closing down or selling, the effort we put in doesn’t mean a lot. It’s all about financials,” she says.
In 2019-2020, the business had it’s best year in sales, recording $600,000 in revenue.
“We developed a really good year-round swimwear business that wasn’t just seasonal to Australian summer,” Hill says.
“That’s quite rare for swimwear labels.”