Toys success a case of relentless innovation
marketing lecturer Mike Lee has been working with Zuru on the new product lines.
He said it would not be a difficult transition for the company because the new lines were not Zurubranded. ‘‘It’s a different type of brand altogether.’’
Zuru’s business model was based on finding markets that were traditionally mature with little competition, he said, and coming in at a price point that was below the premium end, but not offering a nofrills product, either.
They were able to do that because they had the resources to manufacture at lower cost.
‘‘That’s what they have based all their decisions around, what can we do cheaper than the current players and offer a slightly better product?’’
The first seed of Zuru was sown when Mowbray’s brother, Mat, was 12 and won the New Zealand Science Fair with a model hot air balloon kit set.
‘‘He started making them more and got me involved. We were selling those door-to-door and then eventually in local stores, so I guess we stumbled into it really.’’
Over time, they built up the enterprise before moving to China in the early 2000s, Nick aged 18 and Mat 21, with $20,000 of their parents’ money to help them start manufacturing.
Their story about living on $1 a day in an eighth-floor apartment in a building with no lift has become part of Zuru lore. A year later, their sister, Anna, joined them. Now, 90 per cent of Zuru’s toys are now made in China.
It was hard work to begin with, Nick Mowbray said, although the trio are now listed on the NBR Rich List as being worth a combined $3 billion. ‘‘Moving to China so young, not having any money . . . the first five years were pretty horrific.’’
One hard lesson was the importance of incremental innovation. ‘‘We learnt how to innovate, stay on trend and identify the categories to go after.’’
Having a central Asian base for manufacturing gave Zuru the ability to bring products to market quickly, Mowbray said.
‘‘All our design, development, engineering, finance is done out of our Shenzhen hub, so our operating costs are much lower than most of our competitors’. Also, we build factories and automate our production, which means we are building quality products with better margins than our competitors. We run a lean supply chain without holding inventory globally.’’
The company has had to grapple with the effect of coronavirus this year, which Anna Mowbray earlier estimated would cost it tens of millions of dollars. But since the Chinese impact had waned, things had improved. Zuru was ‘‘hiring like crazy’’ in New Zealand, and the toy market generally had lifted because children were at home around the world.
In recent months, Nick Mowbray has been outspoken about the New Zealand response to Covid-19, calling on the Government for swifter action. Mowbray has been part of efforts that brought millions of pieces of Personal Protective Equipment (PPE) to New Zealand, and has helped to distribute PPE around the world.
He said some of Zuru’s Chinese staff were making personal donations to Italy, and he has teamed up with Blake Lively and Ryan Reynolds to donate to the United States.
Mowbray, who now owns Kim Dotcom’s former mansion with his siblings, also matched donations to Salvation Army food banks and run a campaign to encourage donations – it had raised more than $2m. Mowbray said that when he contacted the food banks, they were down to only having three or four days’ worth of food. ‘‘It was good timing.’’
Mowbray said he was motivated to help in part by conversations with the prime minister. Urged to close the borders earlier, Jacinda Ardern had said she was concerned about the effect on vulnerable people.
Mowbray said hard graft had helped the company get to the ‘‘top of the hill’’, and from there it became easier to see the path ahead.
‘‘You get to the top of the hill and understand how everything works and it clicks together . . . you’ve got to keep going, keep getting up the hill to get to that point but at that point it comes together and becomes clear. But getting to that point requires a certain degree of persistence.’’