To Wholesale Or Not To Wholesale Your Denim Line?
Updated: May 13, 2020
As clothing manufacturers, many of our customers are startup fashion brands. People have all kinds of ingenious and interesting ideas to make garments that fill in niches or introduce new designs. We’ve seen all kinds, from jeans for petite women, for tall men and women, to carry concealed weapons, motorcycle jeans with nylon reinforced denim, even waterproof denim jackets and reversed jeans. Some of them get their ideas from trying to find the right garments for themselves, many have little or no experience in the apparel industry.
Since we strive to know our customers and, admittedly we’re kind of curious, we often ask how they plan on marketing their apparel. If it’s a boutique or small chain store owner, they usually offer the garments in their stores and on their website. When it’s not a boutique, most say they plan on marketing retail direct, B2C online only. Facebook, Instagram and SEO come up often.
It appears not many fashion startups consider selling their clothing wholesale now days. The reason could be having to carry a large inventory, budget, maybe lack of experience. New fashion lines are no exception to financing constraints and fronting big production orders requires large cash disbursements. People prefer to start small, they order the minimum. Some put the pictures of the samples on their website to take pre-orders even before they start production. Selling bulk seems impossible at their stage.
In the olden days people had no choice, the only way to sell a clothing line was wholesale to stores, chains and department stores. Nowadays, it’s easier for people to start marketing online and see where things go from there.
Why should selling wholesale to boutiques be considered?
There are some very important advantages to selling a fashion line in bulk to boutiques and becoming a clothing distributor.
For starters, the brand is out there in stores where people can touch, buy, wear and be seen.
Selling wholesale increases production quantity and decreases cost.
Retailers are an amazing way to test the market revealing key indicators that even Google Analytics can’t find.
Stores can give invaluable feedback about trends and quality issues.
Selling wholesale to boutiques and chain stores can be key to growth and success.
The most important point people overlook is wholesaling to boutiques and small chains also help finance production, see below.
It may be hard work, it’s not very difficult to sell wholesale though. Boutiques are used to spending on new brands, in fact they constantly look for new clothing vendors. One of the first steps we recommend to clients looking to start wholesale is to go visit some local stores that sell apparel in the same category and price range. Find out who the owner or buyer of the store is, make an appointment and talk to them. If they like the idea they will place a small order as a test with ease. What’s more, they won’t mind waiting 8, 10, even 12 weeks before they receive their order. Boutiques do not expect prime delivery and they place orders way in advance.
Presenting the clothing line to boutique owners can give immediate feedback from someone with expertise selling the same type of garments. Store owners know what people buy, what they like and what they don’t like. They also know how much people would pay for certain pieces of clothing.
Of course, going from store to store will take more time than one may have. Thankfully there is another way, that is to hire a sales rep. Apparel sales reps know many stores and are in constant contact with them. Buyers come to the showroom or meet the rep at a convention like the MAGIC show in Vegas or the Couture Show in New York. Most of the transactions happen in the showrooms during market week in various major cities, Los Angeles, San Francisco, Dallas, Chicago, New York, Miami... Every major city has a garment center where they hold market week once a month. Market week allows clothing boutique buyers to visit other cities and see more fashion brands than what is offered in their local market.
Finding a sales rep isn’t difficult. Apparel showrooms are kind of like car dealers in the sense that you can find them all in the same place, they are all in the garment district. Most major market centers have websites that list all the showrooms. Talking to sales reps it’s as simple as contacting them via phone or email or walking in a showroom and asking if they can pick up the line or recommend someone. Be sure to bring them samples of the garments so they can see if the design, quality and price points matches their customer base. Sales rep work on commission, it will not cost anything to get started except for an extra set of samples to give the rep. They can start writing orders from boutique buyers within a few days.
Selling in bulk to stores may interfere with some retail pricing strategies. For example, if a pair of mens jeans cost $40 to produce 50 to 100 pieces and the B2C plan called for a retail price of $89.99, having boutiques buy in bulk may result in a necessity to increase the retail price. Even at the minimum wholesale markup of 25% (that’s almost break even), these mens jeans would have to be sold wholesale at $50. That would put the retail at $100 to $110 depending on the stores. Much higher than the planned $89.99.
So how is this issue resolved? Easy, the increased production quantity from the bulk orders of the stores will reduce the manufacturing cost. It's OK to break even to establish a brand, much less costly than compensating with advertising. The cost of the men's jeans was $40 at a minimum quantity for a small batch order to product for selling retail only. Now, there is all this extra quantity to manufacture. To give an order of magnitude, ordering 150 jeans vs. 50 jeans can have a cost variance of as much as 30%.
Some may be thinking, it’s fine to increase sales volume by selling bulk to stores but how does all of that extra manufacturing gets financed? Well, there is one more piece to this equation. The good news is boutiques and chain stores usually have credit and there are financial institutions out there specializing in advancing money on purchase orders. They are called factors. Factors usually work on invoices allowing brands, clothing suppliers and manufacturers to extend credit to the stores they sell in bulk. If the POs are from stores with good credit, a factoring company can advance some funds for manufacturing. It may take a little negotiation at first, totally doable though with the right credit rating. Factors are widely used in the apparel industry, they are the pillar of financing for garment makers, more than banks.
There are many factors out there, some don’t have minimum and work with startups. Working with a good factory also helps get financed. To find a factor try google for some of these terms:
Apparel industry factoring
Factors for textiles
Factoring for fashion business
Financing for clothing supplier
Of course, the above doesn’t apply to everyone. Each person making garments should give it due consideration as selling wholesale to stores can propel fashion brands into instant success.