5 Differences Between Wholesale Clothing and Private Label Clothing

Posted by Tiffany Chimal on 5/3/18 12:31 PM

In Fashion Entrepreneurship, Design Your Business

The Amazon Effect tells the story of Amazon Fashion, a strong competitor in retail grabbing as much as 4% of all U.S. retail sales in 2017. As an online shop owner, brick-and-mortar boutique owner, or fashion entrepreneur, it’s wise to plan out a solid retail strategy that will make your business sustainable for years to come in spite of private clothing label challenges like Amazon Fashion.

A sustainable retail strategy means keeping your cost per unit low, selling fast, and having happy customers who love your products. How can you do that? There are a lot of factors, but the nuts & bolts of it come down to how you source (or make) the products you sell.

Shop private label apparel

Finding clothing to sell in your online shop or boutique can be done in six ways:

1) buying wholesale from clothing wholesale suppliers / distributors

2) cutting & sewing clothing yourself

3) manufacturing your own clothing design 

4) dropshipping

5) importing clothing made by fashion designers (i.e. “going to market”)

6) jobbers

Out of these six sourcing methods above, each comes with its own pros and cons, but let’s focus in on wholesale and manufacturing your own clothing design, also known as ‘private label manufacturing’.

 

Wholesale Clothing

Where do I find wholesale clothing for boutique owners?Boutique owners and fashion entrepreneurs ask themselves this question when they’re sourcing for products to sell or if they are planning to open a boutique or online shop for the first time. Working with wholesale suppliers has a number of pluses, namely:

  • Sell standard products - Wholesalers will provide you with dozens of catalogs of products that have already sold in boutiques worldwide. That’s why when you go shopping you can often see the same garment in multiple stores. Wholesalers will sell the same catalog products to your boutique and everyone else. Although you won’t be selling a unique product that no one else has, receiving catalogs from wholesalers consistently cuts the time you have to spend sourcing products yourself online or travelling to apparel markets.
  • Large initial minimum orders, smaller reorders - Wholesalers have large initial minimum orders, restocking fees if you send unsold merchandise back in poor condition, and no payment terms, meaning they want 100% cash upfront and they want you to buy lots of products in your first order.
  • Fast turnaround from order to shelf - Typically working with wholesalers to get products for your shop is faster than manufacturing your own private label. You simply order the products you see in their catalog, pay for the order, and receive the shipment in a couple of weeks. However, fast turnaround sometimes means that high quality won’t be a priority. If you’re looking for high quality boutique wholesale clothing, be sure to vet your wholesale suppliers by starting with small orders initially and spot checking the quality before you sell it to your customers.
  • Less control over price - Since you’re selling a wholesaler’s products, an increase in their sale price to you will mean a decrease in your profit margin or an increase in your retail price for your customers. You want to avoid the latter of the two options since customers grow wary as prices gradually rise. When working with wholesalers, you’ll also need to keep an eye out to see if wholesalers who are selling the same products online that they sell to you, but at a cheaper price than your retail price. This happens when your wholesaler sells retail, and it’s crucial for you to find out about it before deciding to work with a wholesaler.
  • Sell Established Products - Wholesalers will offer you established products that they’ve been selling worldwide already. Their products already have a brand identity so you don’t have to spend money on marketing them.

 

Private Label Clothing

According to One Click Retail, the top-performing private label apparel categories on Amazon.com in 2016 included men's bottoms, women's intimate apparel, women's denim, and men's underwear. Launching a high-quality private label fashion brand starts with finding a quality manufacturer. Working with great manufacturers to launch your own private label line comes with many benefits, for example.

how to find a good manufacturer

  • Sell unique products that you can’t find on Amazon - One of the greatest benefits of having your own private label line is that you make apparel that is unique and that you know your customers will buy. Your private label brand will not be established like wholesale brands, so you will need to do a little bit of marketing to grow sales of your new brand on Instagram and Facebook for example.
  • Small batch order quantities - Private label allows you to choose your order quantity for your production order. Most manufacturers will have minimum order quantity requirements, but with MakersValley’s network of Italian manufacturers for example, you can find some with very low minimum orders starting from even 20 units, 100% Made in Italy. There is also a growing number of small batch domestic apparel manufacturers popping up with low minimum orders; however, you will usually pay a higher price per unit working with a domestic factory rather than an overseas factory. Manufacturing small batches of your private label lowers your risk since you can make a small quantity of products, see how it sells, then reorder later.
  • Slow fashion - Private label manufacturing requires a time investment. Finding a quality private label apparel manufacturer will take time, as well as making your first apparel prototype, your production order, and shipping it to you from overseas. Many boutique owners who are starting their own private label start to diversify their clothing supply chain strategy slowly by sourcing, for example, 60% of their products from wholesalers, and creating the other 40% as their own private label clothing.
  • Increase your profit margin - With private label clothing, you can increase your profit margin because you will be buying your products at the manufacturer price, instead of paying the manufacturer price plus the wholesale distributor’s commission. For example, if you buy a red dress from a wholesaler you may pay $20, of which $18 goes to the wholesaler and $2 goes to the actual manufacturer who made your product, and sell it to your customers for $40. Now, if you work with a private label manufacturer and pay $10 for a red dress, $10 goes to the manufacturer because you cut out all of the middle men distributors in the supply chain. When you sell your dress for the same price of $40, your profit increases for that red dress from $20 to $30.
    Another strategy is to sell your private label clothing line to other boutiques to create a new revenue stream for yourself.
  • Have 100% product control - By launching your private label line, you get to have the final decision on how your product looks before you sell it to your customer because you designed it. When you make your own private label line, you can have control over the design details and labels sewn on your garment that make it unique. Customers will need to come to your online shop or boutique to find your special product and they will not be able to find it on Amazon or at a boutique next door to yours. Also if customers have feedback on your products, you can actually implement their feedback into your next production order.

What have been your experiences working with wholesalers, the pros and cons? We want to hear from you.

If you’re interested in private label manufacturing, send us your idea for your garment and start learning more about the process today.

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