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 challenges like Amazon Fashion.
6 ways to source your store inventory
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? Well, it comes down to how you source (or make) the products you sell.
Finding clothing to sell in your online shop or boutique can be done in six ways:
- Buying from clothing wholesale suppliers / distributors
- Cutting & sewing private label products yourself
- Manufacturing your own private label clothing
- Importing clothing made by fashion designers (i.e. “going to market”)
Out of these six sourcing methods above, each comes with its own pros and cons, but let’s focus on buying wholesale and manufacturing your own clothing designs, also known as private label manufacturing.
“Where do I find wholesale clothing for my boutique?” fashion entrepreneurs ask themselves when they’re sourcing 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 and minuses, namely:
- Selling 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 cuts down the time you have to spend sourcing products yourself online or traveling to markets.
- Large initial minimum orders, smaller reorders - Wholesalers require large first-time minimum orders, restocking fees if you send unsold merchandise back in poor condition, and no payment terms. That means 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 the 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 clothing, be sure to vet your wholesale suppliers by starting with small orders and spot checking the quality before you sell it.
- 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 to 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 for wholesalers who sell the same products online that they sell to you, but at a cheaper cost 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 them.
- Sell Established Products - Wholesalers will offer you established products that have sold well worldwide already. Their products already have a brand identity so you don’t have to spend money on marketing them or adding your brand label to 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, instead of wholesalers, to create your private label products comes with many benefits, for example:
- Unique products that you can’t find on Amazon - One of the greatest benefits of having your own private label line is being able to offer unique apparel and that you know 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.
- Small batch order quantities - Private label allows you to choose your order quantity with more freedom when you use the right resource. Most manufacturers 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 20 product units, 100% Made in Italy. There is also a growing number of small batch domestic apparel manufacturers popping up. However, you will usually pay a higher price per unit working with a domestic factory 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 they sells, then reorder later if and when you sell out.
- Slow fashion - Private label manufacturing requires a time investment. Finding a quality private label apparel manufacturer will take time; so will making your first garment sample, production order, and shipping your products. Many boutique owners start out by diversifying their clothing supply chain slowly by sourcing, for example, 60% of their products from wholesalers and creating the other 40% as their own private label clothing line.
- 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. Then, imagine you turn around sell that dress to customers for $40. However, if you work with a private label manufacturer and pay $10 for a red dress, $10 goes straight to the manufacturer because you've cut out middle men distributors. When you sell your dress for the same price of $40, your profit increases 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 - When you have a private label clothing line, you have the final say on how your product looks before you sell it to customers because you designed it. When you make your own private label, you alone control the design details and labels sewn on your garment. Customers will need to come to your online shop or boutique to find your special product, rather than just defaulting to Amazon or the boutique next to yours. Plus, if customers have feedback on your products, you can actually implement their feedback into your next production order of that piece to make it sell better.
What have been your experiences of working with wholesalers, the pros and the cons? We want to hear from you.
If you’re interested in private label manufacturing, send us your product idea and start learning more about the process today.