01 Jul WHOLESALE VS. DIRECT SALES
IF YOU CAME FROM INSTAGRAM POST, PLEASE SCROLL DOWN A LITTLE BIT FURTHER.
My conversation with Veronica Pesantes, the co-founder of the clothing brand The Onicas, inspired me to write this article. We talked about the difficulties that fashion designers face when they follow the wholesale business model and try to pitch their brands to different retailers. It turns out that today, many designers choose to sell directly to customers – through their websites or showrooms – because they got tired of running after buyers and literally fighting for their attention.
I know that many fashion designers feel exhausted while trying to sell their collections to stores. But running your own online store is another pain in the neck.
So, what is the best way to go?
This question made me write a new blog post about pluses and minuses of each strategy. My resume – you shouldn’t be looking for an easy way. There is no miracle pill. It just doesn’t exist. Why? Because you need to make efforts anyways, doesn’t matter which way you choose. The real question is which strategy is easier and closer to you as a person. Follow the link on my profile to read the full analysis with pros and contras.
So, you are an emerging fashion designer, and you have your first collection. What do you do next? How do you sell it?
There are two ways. First is selling it through stores. In fact, they are intermediaries between you and your customer; it doesn’t matter if it is an online store or a retailer. When you take this route, the most important thing is to convince the buyers for these shops that your collection is unique and is going to sell well for them, for them to agree to present your product.
The second way is to sell your collection directly to customers through your own website or showroom.
Let’s see what the pluses and minuses are of selling your product through retails stores.
- Perhaps the biggest advantage is the exposure that you get once your clothes are presented in a chain or a huge store. Exposure means sales. The bigger exposure this store has, the higher your sales will be. Your brand can gain access to a huge target audience quickly. It takes a lot of time and investment to gain this kind of audience on your own.
Attracting customers to the store or traffic to the website is no longer your problem. It does depend on you a little bit, but we will discuss this later.
- You need to share the income with the store, which means that you get less money compared to when you sell your clothes by yourself. However, don’t judge too quickly; let me finish the analysis because there are some pitfalls.
- You still need to invest money in marketing and promoting your brand. Don’t assume that there is no need to spend money on advertising. This is a huge mistake. Stores are mostly interested in promoting their own names, not yours. Their first question at the meeting is – What is your brand’s marketing strategy? How do you plan to promote your product and attract visitors to their store?
Hence, you need to be mindful about pricing, and make sure to include absolutely all expenses (cost of production, logistics, packaging, marketing expenses, discounts), your profit margin and the profit margin of the store.
3. You lose control over how your product is presented in a specific store. They might have their own merchandising policies, product displays, and action plan, and your brand may easily get lost and remain unnoticed. You will need to make more effort, again investing in putting your products on the main page or on the central display, especially if the store has a huge variety of brands.
And now, let’s take a look at the second strategy, which is selling products through your own online shop or a showroom.
- Higher income, because you don’t have to share it with anyone else. All your earnings belong to you.
- You are in control: the way your brand looks, how your product is displayed, how you communicate with customers, services, delivery, etc.
You could say that this way is so much better. However, let’s look at the minuses:
- Marketing expenses become significantly higher, as attracting people to your website or showroom is your responsibility and your biggest headache.
People need to know your brand. They need to trust you to buy from you. That’s why you need to constantly (key word) invest in the advertisement of your brand and your new collections (especially in the beginning), work with influencers (bloggers, fashion editors, stylists), be popular in social media, organize events and attract people to your showroom.
Yes, you have a higher income compared to the first strategy, but you also have a lot more expenses.
When you are just starting out your business, it’s going to be difficult to work on both strategies. Choose the way that suits you better. For example, if your brand is very important to you and you need to be in control, then, of course, you should choose the second strategy. If you are an excellent salesperson, you can easily build your networking, and if you have connections in the fashion industry, then, perhaps the first strategy is for you.
You decide which way to go, but remember that in any case, both paths require patience and consistency from you as well as knowledge of marketing strategies and tactics.
Coming back to Veronica, we have decided to initiate a fashion biz meetup in Miami so that professionals in the fashion industry can get together, network, exchange experiences and ideas, and maybe complain, but also learn from each other. We are still thinking about the place, but will let you know very soon. Who knows, but we may make the topic for our first meetup: Wholesale vs. Direct Sales. If you want to share your experience in each strategy, please let me know through the comments below.