Tuesday, July 27th, 2010...12:22 pm
Reflections on the first 9 months of running a small apparel company
Last November, I launched the small business “experiment” of Fashion Loves People ♥ Kirk, a line of organic tees printed with vintage fashion illustrations by J. Kirk Davis. Kirk and I are partners in it, and we release a new design every few months.
I set out on this venture for the sake of putting myself in the shoes of the designers I write about here, and my plan from the beginning was to share the process with you along the way. So in a fit of transparency, here’s what I’ve struggled with and, hopefully, how I’ve made the most of it.
This is a doozy of a post, but hopefully it sheds some light on the world of the independent designer. (Disclaimer: Not that I am one.)
Struggle #1: Price point
How pricing works. Brands like ours have two options for their pricing structures: Either direct-to-consumer (DTC) or wholesale. In a DTC model, your profits are the difference between your hard costs and your list price — so if the base cost of your product is $10 and the list price is $20, you make $10.
In a wholesale model, your profits are the difference between your hard costs and your wholesale price, and your retailer’s profits are the difference between your wholesale price and their list price. (Whew.) So if the base cost of your product is $10 and your wholesale price is $15*, the retailer will list it for $30**. You make $5 and the retailer makes $15.
*Sellers typically make a lower margin in a wholesale price structure than DTC.
**Retail markup is at least x2, sometimes more.
In the wholesale model, the sellers themselves most often still sell their goods online for the same list price as a retailer will use, because you don’t want to undersell your retailers. (Especially if your product hangtag has your website address on it, you don’t want shoppers to find your products for sale on your site for less than they paid at retailer. They’d probably feel ripped off.) In this case, when a shopper buys directly from the seller, avoiding the middle-man of the retailer suddenly gives them a wonderfully higher margin than usual.
Where we ended up. When we first launched our shirts, we had a DTC model and sold them online for $28. But, sales weren’t that great. People can buy graphic tees online for a lot less than that, so why spend that much from us?
If I may answer that — $28 covered the excellent organic cotton shirt we selected, the “upgrade” eco-friendly water-based inks, the custom-printed tag, the custom illustration and design and, of course, a touch of profit.
But, it turned out that people had to see and feel the shirts in person to appreciate what they were getting. So, we turned our focus toward getting into retail shops. To do this and make any profits, we had to increase our price point to align with a wholesale pricing structure. This was a really difficult move for me to make: I didn’t want to take me and my friends out of my own target audience, as I’m not usually one to splurge on expensive t-shirts.
But on the positive side, besides the benefit of the exposure of retail shops, a higher price point at the retail level would also allow us to align with other similar tees on the market — some even coming in a good $25 more than ours. (Some that use the same base tee that I use, even.)
We increased our list price in May to $48 per shirt, and so far it has been working at retail. Only time will tell.
Struggle #2: Selling myself
To potential customers. When you have a thing you want to succeed, who do you turn to first? Your friends and family. Hopefully none of mine are sick of hearing about new t-shirt design launches — but, there’s a fair chance some are. Or at least in my mind, there is. I hate asking favors of people. I’m also not crazy about getting such a low response rate from people I like — I have to tell myself that I’m just as bad at responding to mass emails. (Because I really am.) Anyway, it can be hard.
For our next shirt launch, I will be more discerning about my email list. I haven’t kept a Fashion Loves People follower / customer email list, but I’m compiling one now as a starting point for going forward. I will email people who have an interest in FLP, rather than, well, everyone I know. I think this will be better for both me and my recipients.
To retailers. Selling to retailers is an entirely different game… but also hard. Very competitive. Several months into the life of our line, as I was courting a few retailers, John McClain at Habitat Shoes graciously agreed to give me some much-needed advice on pitching to retailers.
He told me I needed a linesheet — a catalog of our offerings with their wholesale prices listed. In my next retailer meeting, though I rocked the linesheet, I learned that I also needed an order form. Now that I have my own of each, I feel so pro. And everyone seems to think I know what I’m doing.
What I still don’t have down is seasonal timing. Retail buyers place their orders for any given season months before it rolls around. (To allow for brand production time.) I’ve heard a lot of, “We’ve already done all our fall buying. Call back in a few months?” You’d have to ask someone smarter than me for what the buyer’s calendar is.
Kylie Grater from Early Jewelry will tell you the virtues of going to tradeshows, which is where she got her line off the ground. I’m not there yet, but her business advice in general has been priceless. Which leads me to…
Struggle #3: Asking for help
Contrary to the advice that many people will give you, I have had a hard time asking favors of friends. Maybe it’s that the friends I’ve asked are all so talented — I want to value them as highly as they deserve, and doing so monetarily can be difficult when I run a brand that makes no money.
So, I think I have solved this: The trick is to ask favors of people who aren’t already working as a professional in whatever area you’re asking them for help in. Ask the friend who wants to get into it, not the one who already is. This may make perfect sense to you, but I had to learn it the hard way. The work you get may not be quite as awesome, but at least you didn’t go into debt.
And remember: Advice is free. Ask for it constantly, from friends and from heroes. I so wish I did a better job of this.
Struggle #4: “Just doing it”
I’d like to tell you a story. Last spring, I approached many retailers about carrying my line, and one who graciously responded was Greenloop. Greenloop said, “send us your product images and let’s make this happen.” But I didn’t like my product images at the time. Greenloop probably would have gladly accepted them, but I was playing the perfectionist and ended up not following through on the opportunity altogether. That was DUMB. (And hopefully the door is still open.)
I have other stories like this. Many times, I am my own worst enemy. But I’m learning.
Struggle #5: Profits
We haven’t actually made any. Yet. But we’re working on it! And at least I don’t have any debt.
But, did you know that small businesses can’t get small-business loans until they’ve been in business for at least six months, and they can’t get a small-business line of credit for two to three years? This is what I was told at the Austin Small Business Development Center, anyway. That shocked me — what about a restauranteur, who would need loads of capital upfront? They have to have it saved up personally? I thought this was the Entrepreneur Age.
In our case, I was able to personally cover the costs of our first few print orders, and by the time I was ordering my fifth or so round of printing (including several reprints), I had them paid for in advance by drumming up a few pre-orders. I’m also lucky enough that my printer is deferring my payments until I have the money (retailers don’t pay upfront; pay-on-delivery is pretty standard), but not everyone has that convenience. And my payments have been for measly print orders — imagine if I were outsourcing the production of a full garment line, where the costs would be so much higher. I still don’t understand how small independent designers do it, like Samantha Pleet or Mociun or Lorick Lady.
Struggle #6: Making sales
Like I mentioned, sales haven’t been through the roof. Fortunately, affirmation has been, which has meant the world. But we wouldn’t mind getting past the point of just getting by. From my experience at Storenvy, I see brands all the time that print lots of merchandise and then don’t sell nearly as much as they’d planned… and as much as I’d hoped otherwise, we are not immune.
But for my next product launch, I like to think I have some tricks up my sleeve. I’ll be stepping out of the box and taking some chances, thanks to some very amazing people. Stay tuned. Here’s hoping it works!
I know myself enough to know that my role in the world is not of “creator,” but of “sharer.” That’s why I write this blog: To share good design with a good backstory.
I didn’t start this apparel line to become a creator. I started it to enhance my perspective as a sharer. And while I have always had such a soft spot in my heart for supporting independent designers…
I now have an even softer one.
(Like being a better tipper after you’ve worked the tables yourself.)
Thanks for reading.