Retailer AuMake — which focuses on Chinese shoppers or “daigou” — is up 21 per cent after buying Ugg boot maker Jumbuck Australia.
AuMake (ASX:AU8) specialises in selling Australian products to daigou at a premium price.
A daigou (which means to buy on behalf of) is anyone outside China who shops on behalf of a China resident. AuMake estimates 40,000 Australian daigous send 100 to 200 parcels to China every day.
On Wednesday AuMake shares reached 35c — just two months after it raised $6 million selling shares at 8c each.
The new range of sheepskin boots, coats and scarves will add to AuMake’s offering of cosmetics, vitamins and infant formula, and open up opportunities to attract Chinese tour groups to a new showroom in Auburn.
Aumake already has a strategic alliance in place with the local Chinese Tour Guide association, and say the new location will be lure for groups of tourists with deep pockets, making their way to the Blue Mountains who want to show off products from their holiday.
Sales of UGG products reeled in $754,000 for parent company Jumbuck last year, at a 260 per cent growth rate they attribute to the “growing appetite of Chinese consumers for Australian wool products”.
Chinese customers can pay mark-ups of up to 30 or 40 per cent on products through daigou retailers because of high demand for trusted Australian products in China.
Originally from Australia, Ugg boots date back to the 1920s, when they were worn by shearers in rural Australia. They now account for 10 per cent of domestic footwear production.
AuMake’s Sydney retail store in Pitt St made sales of $2.6 million last financial year, at a gross margin of 20 per cent.
The deal, said to be worth $500,000, is due to settle over four years if the company meets certain targets.
Earlier this month AuMake bought supplement brand Health Essence and its range of 16 healthcare products, to be sold at an average gross margin of 39 per cent.