So, you want to start a clothing company
In 2009 I launched my first business. It was a clothing company that we ran for 4 years. In that time, we were partnered with two charities and ended up setting up Canadian manufacturing. It was a lot of fun building a brand and team. Since I started there have been many people who have approached me asking my advice on starting their own brand. I thought it might be interesting to write a little bit about the universal advice I would give to someone who decides they want to try and build a clothing brand to sell on ecommerce.
This will be broken down into four sections:
- The Brand
- Product Strategy
- Your Website
- Making a Sale
- After the Sale
Brand IdentityThe first thing to think about when you’re ready to start a clothing brand is the brand identity. This is more than the logo and the colours , it’s the personality, the audience and the compass you will use navigating the rest of these steps.In clothing specifically you are left to compete almost exclusively on brand. There are very few fashion innovations and the way that you will win is through building an audience that resonates with your brand. The brand is what makes the first sale. The quality of the product is what will generate repeat business.
Part of this identity is going to be generating some visual language that will represent your business in all platforms. The key here is consistency across all platforms; in your photographic style, your website, social media and the product itself. This is incredibly important when building an online brand because the customer needs to resonate immediately with the business. They need to see themselves in everything the brand represents if you want them to wear your logo on their chest.
When trying to find a target market for your clothing company many people will focus on niche markets. For example lululemon built their brand by focusing on an underserved niche of yoga goers. Today they have many customers who do not participate in yoga, but it is foolish to try and emulate where they are currently if you are just starting. It’s about imitating their process, not current perception.
Most successful clothing brands that do not focus on a niche audience are generally leveraging an existing network, whether that is a celebrity, influencer or athlete. This is quick way to kickstart a brand because you are borrowing the trust from someone who has built an audience. If you are looking to borrow someone’s influence you need to ensure that influencer is a good representation of the brand we defined in the previous step. “All press is good press” isn’t a truth when building your brand. You will be defined by that press, so treat partnerships carefully.
Cost of Inventory
This is really getting into the basics of business and understanding what you are signing up for. The primary lesson I’d like to touch on in clothing is understanding the cost of inventory. Bear with me because there may be a little math in this one. You have your branding done and you are starting to think about all the product that you want to make. You want to do the logo in black on a white t-shirt, maybe in white on a black t-shirt, but maybe you should have some colour as well. You end up having 4-5 colourways of the same design and you need a proper size run of each colour, all of a sudden your single design needs a minimum of 100 shirts. A single design with the size run of XS, S, M, L, XL. If you were going to do a minimum stocking you’d probably have 1XS, 3S, 5M, 5L, 3XL. This is 17 shirts of each colour. You want one though and your buddy that helped with design does too and you guys all wear large so you’ll make it 8L. Depending on your target market you would skew the size splits.This gives us 20 shirts per colour.
Let’s use some simple numbers to understand costing. Let’s assume each shirt costs $10 all in (manufacture, print, internal tags, external tags, etc). You want to sell them for $20. This means that if you order 100 shirts it will cost you $1,000 and you have the potential to make $2,000. You only need to sell half of your inventory to make your money back. This is where it gets tricky, because you will probably want to take a couple shirts for yourself to wear, you want to give some to a couple buddies. Maybe you want to give some out to influencers for exposure. Assuming you’ve taken 20 of your shirts for marketing purposes, your earning potential is now down to $1,600.
Unless you are pre-selling a limited edition run, you are likely wanting to have some inventory to fulfill online orders that come in. So once you are down to 1 or so per size per colour, you’re ready to place a reorder. Let’s say you have 4 colours in small, medium, large, extra large. If the inventory depletes perfectly this puts you at 16 SKUs (stock keeping units), so you would place a reorder with 16 pieces left in inventory.
100 shirts to begin
20 for marketing
16 left in inventory
This means 64 shirts sold giving yourevenue of $1,280from your originalcost of $1,000.
Most growing businesses will want to order more than they did last time because demand is growing, but let’s assume you will just repeat the order and order 100 shirts again. You don’t need as many for marketing as last time, so let’s allocate 10 shirts. You now have earning oppourtunity of $1900. The initial wave of sales was mainly to friends and family and now you are trying to get the first order from someone you don’t know. You want to run some digital advertising to get it out there. You’ve worked hard on your branding so you want to make sure you get some high quality photos, or maybe even a video to run an ad with. At the very least this will cost you a couple shirts for the local up and coming photographer who loves the brand. Unfortunately the ads aren’t free and you will likely want to put a couple hundred dollars towards getting the brand out there.
As you are trying to grow your reach, you are just starting to get a little profit, but your existing customers are asking for more than one t-shirt design. It really isn’t a clothing brand if you sell one t-shirt in 4 colours. This shirt is a good entry point though and you’re almost out of inventory so you want to order another 100 shirts. Except on this order you also want to try and sell a hoodie, maybe you want to do a second t-shirt design so that your existing customers have something to buy. All of a sudden the order is costing more than the business has made in the last two orders.
We could keep running the scenario but the reality is that it is really difficult to make any money with a clothing company because inventory is expensive. Forecasting is a difficult science and at this stage you don’t have any retailers giving you a purchase order to fund your manufacturing run. You are just hoping that you can sell it all at full price.We haven’t even accounted for mistakes in production, a product that doesn’t sell, discounting, other marketing costs, etc.
This isn’t meant to discourage you from giving it a go. If you can weather the initial run or get creative with preorders, you can definitely get some money. I want you to be incredibly aware of the difficulties because I learned them the hard way, no reason you should too.
When showing designs to family and friends, I would often ask “Do you like this design?” When your focus group is made up of friends and family the answer is usually “yes”. As I saw my future order getting too big, I decided to change my question to “Would you spend $25 on this shirt?” All of a sudden the feedback became much more constructive and it saved me thousands of dollars in dead inventory.
It is important to use buying intent as the metric when seeking feedback. You can do this by running targeted ads with different designs as the image and see what performs best. Some brands will put the product on the website and allow for purchases to go through all the way to the checkout page where you are notified that the product is out of stock and give customers the option to be notified when in stock. The data you collect here will be a much more thorough test of the buying intent.
For nearly every client of Renga that is selling a product online we strongly recommend using Shopify . We have lots of experience with Shopify as merchants, employees and partners. The tools that Shopify provides merchants are invaluable to running your business. You have the ability to manage inventory, orders, sales reporting, payment capture, shipping, point of sale, and the list goes on and on. Shopify has 24/7 phone, live chat and email support, that is beyond helpful.
Many features that fall outside of the “out of the box” functionality on Shopify can often be solved by one of their third party apps from the Shopify App store .
I can’t recommend it enough. If you have any questions or comments, reach out to me.
Pick a Theme
Shopify has a catalogue of fully responsive themes ranging from $0-$180. There are many options and features that can be found in each theme. Shopify allows you to test the theme and customize it in your shop before you purchase. The only thing you can’t do is publish it as your live theme or access the code base. When looking for a new theme the main things to look at are the configuration options of the home page, the collection page, the product page and the blog. These are going to be your core areas of customization that will have varying options depending on the theme you pick.
Shopify has a visual theme editor which allows you to see how your changes will look on the live website before you decide to save or publish anything. I would strongly recommend testing a few out and spend about 30 minutes trying out all the different home page modules and how they may be configured. Navigate in the live preview to a collection page and you will then see the customization options for the collection page on the left sidebar. You can do the same for the product pages.
High Quality Assets
When navigating the theme store you probably noticed that all of these themes looked amazing, the main reason is because they have high quality images that all work together. You can make the Debut theme that Shopify provides look fantastic with high quality images that are all properly sized with a clear brand identity.
The quickest way to make a Shopify site look clean is to ensure that every type of photo is the same aspect ratio. Meaning all product photos are a 1:1 aspect ratio (square). Ensuring that all slideshow images are of the same ratio (eg. 3:2 or 2:1). Without doing this, your grid will feel much more sloppy. Your slideshow will feel jumpy as the content below jumps up and down as the slides change.
Making a Sale
This is where it’s tough for me to give any advice because I believe that outside of the large bucket general advice, it needs to be customized to your brand.
The large bucket ideas that will work in 2019 for a clothing company are:
- Instagram (Paid & Organic)
- Influencer Marketing
I will give this advice to nearly all clothing companies, but so will Google. You need to make content and marketing strategy that is surrounding the whitespaces of your brand. This means if your brand is targeting gamers, perhaps you run game reviews or product reviews on PC’s, mouse, keyboard, etc. Providing value to your market that allows them to engage with your brand without it feeling like a commercial.
After the Sale
Shipping has gotten more expensive. A lot of new clothing companies start to put themselves into trouble by offering free shipping without understanding the cost of shipping. For example at the time of this article I put a one pound package 5 in x 3 in x 1 in shipping from Toronto to Vancouver. The cheapest rate that I am given is $16.66.
If you are trying to sell a t-shirt for $20 and it cost you $10 and now you are going to offer free shipping. You’ve spent $26.66 for $20 of revenue and that’s not factoring in the cost of the packaging and any stickers you might want to throw in the package.
Shopify has a feature called real-time carrier calculated shipping. In the checkout the customer will enter their shipping address, in the backend Shopify knows your ship from address and the product weights. It will do a live calculation of the rate from the services that you connect. You can even add a margin on top of the calculated rates to make sure you can cover the cost of the packaging.
Shipping can quickly break a business model. I’ve experienced this myself when I started a subscription coffee service. The premise was that you get a pound of coffee delivered to your door at whatever frequency you determined. It started to break because I didn’t have the volume to negotiate better rates with a carrier and there isn’t enough margin in a single bag of coffee to offer free shipping. I could service local subscriptions by hoping in my car and putting them on the doorstep myself, but that isn’t very scalable. This means you need to either increase your margin by reducing cost or increasing your price. Many businesses will split shipping with the customer. If shipping is generally 10, they’ll put a $5 shipping charge on the item and then sacrifice $5 of margin (If they can afford to do it).
Many ecommerce businesses that win big create an experience that feels special when it arrives at your door. My favourite example of this is moo.com. Whenever I get a moo package it’s exciting, their expensive business cards and I’m always happy to open it, because the packaging is sharp and on brand, sometimes there are little samples of new products they have. Simply it’s a continuation of their brand experience. The interaction with your brand doesn’t end at the checkout screen. It continues through right until the product gets in their hands. We just talked about the thin margins caused by shipping rates, but I would strongly recommend using any bonus margin to create a “surprise & delight” customer experience.
After you have gotten the sale, it’s important to maintain relationships with your customers. A great way to do this is email, Shopify has a built-in Mailchimp integrations where customers are automatically added to your Mailchimp list. This is a great way to announce new product launches, sales, etc. You would be surprised how well email converts to sales in 2019. Build your mailing list!
Sorry for the length of this post. I was going to break it down into multiple parts but I didn’t. If you managed to get this far and still have lots of questions I’m always happy to answer an email. You can get me at firstname.lastname@example.org .
If you are past the point of consideration and are looking to build a brand or refine your brand, no matter the industry, Renga focuses on just that. Shoot me an email.