How to start a fashion label: Production and Business Model
Your guide on how to build a sustainable and profitable fashion business if you’re not a nepo baby.
Welcome to another epizode of the “Things I wish I knew before launching a clothing label” where I talk more in depth on how to start a successful international fashion business. Today I’ll be covering production and business models, so let’s get to it shall we.
Production Model
Pre Order, Made To Measure or In Bulk
When deciding the production model, two things are important to consider: how much budget you have and what’s your desired business model.
If your budget is limited and you want to go slow and test few things out than consider starting with a pre-order production model. This will help you test your ideas without sinking in money. So just make the samples and test them across social media. Before you set up a social media account though, make sure you at least have a landing page ready. This will help you gather emails of people who are really interested in what you’re selling. I didn’t do this, but I would if I could magically go back in time and do it all over again. So learn from me and don’t be a dumba**.
Then comes the made to measure, which is what we use. Back when I was beginning, there were almost no labels which produced made to measure. Apart from big fashion houses which were working on an haute couture principle, there was no option for mere mortals to get the same service at affordable prices and decent time for delivery. You could say we were one of the pioneers that started this model and one of the few ones that managed to turn it into a susscessful profitable business. You could consider this model as an option if you want to work with a bit of a higher price range. What I mean by that is retail prices between 200$ - 400$. The reason why you can’t use this model for cheaper clothing is because it requires a lot of craftsmanship which can not be executed by someone working on a simple assembly line but rather it takes a certain type of skillset and knowledge into every aspect of the operational activities. This is not to say that the production model is not scalable, it’s just to say that if you’re choosing this model you’ll need either trained artisans or you’ll need to provide the training for them, hence the heftier price tag.
In bulk is a method used by 99% of the industry. The model offers various advantages, among which being extremely cheap when producing in countries like China, Bangladesh and India. The only prerequisite is ordering thousands of items all at once, hence the overproduction. If you absolutely have to pick this model than my advice is to go with a factory based in Portugal, because the quality of production there is uncomperably better and higher end. Sometimes these manufacturing facilities could even offer fabric sourcing which will save you a lot of time and energy on the long run. If for whatever reason you decide to go with your own supplier, I’ve compiled here a list of online fabric suppliers you could potentially explore.
Business Model
Business To Business or Business to Customer
How you’ll market your label will be directly influenced by several things, among which the business model you’ll pick.
Of course, I did this all wrong too. Why? Well why not?
You know that song “Vienna” by Billy Joel?
It goes something like this:
Slow down you crazy child…
Where's the fire, what's the hurry about?
You better cool it off before you burn it out
You got so much to do and only
so many hours in a day
which actually reminds me of what I was like and sometimes still am. The point of this is to pick your poison one at a time. If you’re doing this solo, chances are you won’t be able to do everything all at once, like I was convinced I could. There’s so many hours in a day and you can’t do it all alone, which leads me to the next question, the starting point. To B2B or to B2C?
Marketplaces
Marketplaces are a great way to start and test the waters, as they come with a build in audience which you’ll need at first since no one has heard of you and unless you’re located in fashon centers like NY or London, you have very slim chance of getting the word out there on your own. They also have payment tools sorted out for you, as well as a self management system to make it easier to upload items and some of them even have marketing services available.
Best fashion marketplaces for independent designers we’ve seen some results with are Wolf and Badger, CultMia, The Reflective, Dia&Co, LDC and Etsy. I’ll write another article to discuss the pros and cons on each one of these separately in an upcoming article, so you can get a more comprehensive view.
Direct to consumer aka D2C
Once you have few customers, you can start thinking of opening your own e-commerce store which means one thing and one thing only, Shopify the undisputable king of ecommerce. I’m not even kidding people. I’ve had my fair share of nightmares with different platforms, where everything was malfunctioning and I can guarantee you that Shopify is the best. Despite having everything that you could ever need to run an e-commerce store, they also have the best and most helpful customer service in the world, as well as an entire marketplace of Shopify approved experts you can hire to help you with everything from code implementation to marketing and sales.
Other not as awesome alternatives include Wix, BigCommerce and WooCommerce.
Dropship (concept stores)
When I was starting out in 2013, most stores were still buying inventory in bulk at wholesale prices and this was considered to be a wholesale business model, also known as business to business (B2B). Somewhere in 2015 dropship started gaining traction. Dropship is a spin on the good old commission based business model, which means that a retailer will display your products and will only pay you after their customers place an order. In short you make money when they make money.
Now be careful out there when accepting to work on this type of model. Most of the stores these days don’t want to pay you immediately after the piece is ordered but will wait for 45 days to even sometimes 60 days. For us these are unacceptable terms due to the fact that we work with a very vaulnarable group of women who need payment immediately. This is why everyone we work with needs to pay in advance before we start production. Our terms also don’t include accepting returns. The reasoning behind it is since the item is purchased on a lower price and with almost 70% of our orders being custom made to precise measurements, we don’t have the luxury of reselling the item and so the store needs to be able to take care of the aftermath that comes with burdensome returns. Not to mention the fact that they don’t pay you for the content you provide them with like the use of product photos for instance.
A reasonable commission fee is somewhere between 15%-30%, but this is up to you and your negotiation skills honestly. For us everything above 20% is unaccaptable, since everything above that just doesn’t make sense for us financially.
Rental
If you do decide to produce your items in bulk and for some reason don’t end up selling them, one possibility for you would be to rent them out. Obviously Rent the Runway is leading the pack here if you’re based in the US. If you’re based in the UK Hurr and By Rotation are pretty big there.
We used to work with a clothing rental platform based in Norway called Fjong. Sadly they declared bankruptcy earlier this year and we no longer work with rental anymore. However, I do have a list of about 30 rental platforms so comment down bellow or DM me if you’re thinking of exploring this business model and I’ll send it over. In other words, I did the work, so you won’t have to.
Wholesale (tradeshows vs. online wholesale)
To be honest we haven’t explored this business model much. We have worked with it, but only with small concept stores and small quantities.
What I do know though is this. If you’re serious about it, you should definately look into tradeshows and fairs if you have the budget for it. I would also consult with an agency who has previous experience with wholesale. Since organizing it alone will take not only a lot of time, but also energy and money which might not be well spent, as even though it seems like a pretty straightforward thing to do, pulling it off in practice is something else entirely. Booking stands can be tricky and you’ll need to know these things if you want to attract the right crowd, as in buyers will only visit few halls, not the entire fair. Prepration for it can also be tricky, as you’ll need to have things like line sheets, lookbooks, samples and even organizational systems in place if someone wants to commit to an order.
Few big fashion fairs you could potentially explore are Pure London, Modefabrik Amsterdam and Who’s Next Paris, with the latest even offering a collaboration with a crowdfunding platform where you could raise money to launch your collection.
All of our wholesale orders come from the online platform Faire which is hosting a myriad of small concept stores around the world, but mostly US. It’s a great starting point if you want to test out if this model’s right for you. They offer pretty good payment terms and the greatest thing about it is that they handle all of the returns. The not so good thing about it is that they collect 25% of your total order, plus processing fees. Whew, if you’re thinking that’s way too much you would be correct, but I do believe it’s worth it since they assume most of the risk, especially when it comes to handling returns, so it all evens out at the end.
Alternatively what you could also do is cold email outreach. We tried this and sadly it doesn’t work. Unless you have a warm intro by someone they know, buyers will just ignore your emails or they’ll end up in spam. This is why before you even think about this model, my advice to you would be to hire a PR agency to do this for you. I do have a list of concept stores and fashion buyers you could potentially reach out to with their emails, so if you do want to try, let me know and I’ll send it over. And after you do, I’d love to hear from you. Maybe you’ll have a different experience and could teach me something in return. :)
Livestream platforms
Livestream platforms gained popularity while the pandemic was raging on. While some of them tend to be huge in Asia, for Europe, US and the rest of the world is less so.
Biggest one to explore is Popshop.live backed up by Kendell Jenner and Sophia Amoruso. The one we used though is called ShopShops. It was a very interesting concept and we had so much fun doing it, but for us it didn’t quite pan out to be honest. The crowd there seemed to be very engaged, however the volume of the orders we received wasn’t enough for us to be able to form a team around it and since we couldn’t pull it off with the existing one, we had to make the hard decision to pick a lane and stick with it. I encourage you to try it though if you’re in that phase of experimenting. It’s so much fun and quite frankly very uplifting as you get to receive live feedback and chat with potential customers.
I hope this was usefull for all of you young aspiring fashion designers out there. Another part of this series is coming out next Sunday. Until then, because sharing is caring, if you know someone who is an independent fashion designer and will find this helpful please share it with them.
I know time these days is a precious currency, so thank for you reading.
Hasta la vista lovelies from my Salad Brain.