In the fashion industry, there are various models or sales channels. Today, we'll explore the details of wholesale and what elements and strategies you should consider to be successful in this channel.
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It's a sales model or channel that caters strictly to the wholesale market. Typically, it can be:
- B2B (business to business), such as large department stores or multi-brand marketplaces.
- B2C (business to consumer), for instance, independent wholesale buyers who resell or owners of multi-brand stores looking to stock their businesses.
For the brand or manufacturer, referred to as the Wholesaler in this context (which could be you), the wholesale business involves higher production volumes, primarily aiming to lower production costs and offer a lower price to distributors or wholesale buyers, who will then resell your garments.
Wholesale is a common strategy for independent designers or emerging brands because high production allows them to negotiate more easily with manufacturers, ensuring better production prices not only for wholesale products but also for their own production.
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In fashion, there are several sales channels and models, but the most popular are:
- Retail (selling to end consumers)
- Wholesale (selling in bulk)
Let's understand the former to later discuss the advantages and disadvantages of both.
Retail refers to the direct sale of the brand to its customers, i.e., a B2C or D2C (direct to consumer) model. The most popular channels in this format are:
- E-commerce
- Physical stores
- Sales through social media
The significant aspect here is that there are no intermediaries between the brand/designer and the end buyer.
The fundamental format of fashion retail is where most profits are made. Since there are no intermediaries, the profits belong to the brand. However, as the business scales up, direct sales incur high costs such as rents and advertising expenses (like ads and commercials). Therefore, it's essential to pay special attention to the company's finances and be clear about the margins.
At GAT Fashion Lab, we have over 20 years of experience in the fashion industry, manufacturing for the most important retailers in Latin America. Learn more by clicking here.
In retail sales, gross profit margins should ideally be above 60% to cover sales expenses. Luxury brands, for example, may have margins exceeding 80% or even more.
The decision of how much to earn in a sale is solely up to the brand owner. The only recommendation is that it should be more than 60%.
Another crucial aspect of retail is total control over communication and sales experience, as well as direct knowledge of customers. This is crucial for understanding their needs and creating products that truly meet their expectations.
If you are just starting your brand, a very important recommendation is to project your sales and include all the costs that a business may have, such as your salary, rents, etc. This way, you can get a clearer idea of how much you should sell to be profitable and when you need to grow, you have enough profitability to do it.
This is a very common mistake among entrepreneurs who do not calculate their cost structure well, and when they grow, they are not profitable because they never calculated it on time, so avoid this problem.
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The main difference from retail is that there is an intermediary in the sale, which as mentioned earlier, can be a person or a business. This intermediation almost necessitates that gross profit margins be lower than in retail. While this may sound disadvantageous at first, it also has a significant advantage: there is a lot of saving in sales expenses, as intermediaries manage them.
This strategy is particularly good for emerging businesses as it allows them to have higher production volumes and cash flow. However, one must be careful with payment terms and try to sell on demand or by order to avoid ending up with dead inventory.
Although margins tend to be lower, if you optimize for wholesale, profits can be just as high or even higher than in a retail model. However, you must be very careful with the business's finances.
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In the wholesale world, there are many actors dedicated to helping you connect with wholesale buyers. However, this can be expensive, and to start, there are several options you can manage on your own to reach these coveted wholesale buyers. Here are some options:
Trade shows may seem like a high expense, but they bring together all the players in the fashion industry, especially wholesalers, small multi-brand stores, large department stores, and online resellers. So it's a good option to find buyers. Plan your participation, research who attends, and evaluate options to make the best move.
Just as hundreds of buyers attend Physical Trade Shows to stock their businesses, there are online portals like FAIRE that connect emerging brands with buyers through technology.
It's a perfect place to showcase your creations, especially valuing craftsmanship. Its main advantage, compared to a physical fair, is that costs are very low, and you can create your account for free.
Faire is a wholesale B2B marketplace, so you need to be organized to sell at least in packages of 6 units, so keep that in mind and plan your operation there very well.
On this platform, products and their suggested retail prices are usually displayed, and a discount of between 20-50% is given to wholesale buyers.
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Take careful note of the numbers; Faire is one of the fastest-growing technology-based companies in recent years and has connected over 850,000 entrepreneurs and buyers.
This model is especially popular for luxury products. They can be physical stores or online platforms that buy from designers and brands, showcase on their portals and stores, and manage traffic and everything related to sales.
Normally, these companies have teams of hunters who visit fairs and search for brands online to do business. In the beginning, they place trial orders to evaluate products and start with small purchases of 20-40 units per design, and depending on the brand's reception in their channels, they can help you scale to a large volume.
This is a B2B2C model, meaning one business buys from another business, which ultimately sells to the end consumer.
This model is very interesting for emerging brands as appearing in such a high-level retailer adds a lot of prestige to the brand or designer, which enhances its perceived value in the market.
An example of this type of retailer is Shopbop.
These platforms are very different from virtual fairs since, although they also connect with buyers, they are essentially software that helps you manage your wholesale sales operation. One of the main advantages of these platforms is that they have very rigorous registration processes, especially for buyers, and have certified buyers from large retail chains, as well as luxury retailers.
Initially, the main disadvantage is that they charge a monthly or annual fee for using the software. However, this should be seen as an investment and a saving, as they facilitate connection with potential buyers, as well as managing all the business information, which ultimately translates into efficiency and savings for the business.
To give you an idea, a platform like Joor, in addition to helping you manage your inventories and sales on a channel like Faire, allows you to have your own online wholesale store and manage your wholesale sales directly with your own customers, consuming a single inventory and calculating all expenses in one place. It's definitely an investment worth considering.
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- By selling wholesale, production and volume increase. With higher production, the unit price decreases. A wholesale business gives you more production volume but lower margin. In the case of retail, production, especially when starting, is usually lower, increasing the unit cost of each garment, but margins can be higher.
- Selling wholesale allows you to have a demand-based or pre-sale model more easily than in retail.
- Wholesale sales give more visibility to the brand, allowing you to grow faster, and in some cases, such as exhibiting in luxury retailers, adds a lot of perceived value to the brand.
- Selling wholesale saves you a lot of sales expenses, especially advertising expenses, store rent, and payments to salespeople.
- Producing in volume requires more working capital, and in case of being left with a production, there are more risks, especially financial, than with small productions.
- Gross margin is usually lower than in retail, but as we've seen, if you structure well, you can have a better margin.
- You do not control the sales experience and contact with the final customer.
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Regardless of the sales model chosen, there must be production involved, and for that, it is essential to find a good supplier. Therefore, at GAT fashion lab, we have a blog to find the ideal supplier/manufacturer; you can read it by clicking here.
Certain items must be taken into account when choosing the ideal manufacturer:
- They must have good references from past clients.
- They must have an MOQ (Minimum Order Quantity) suitable for the quantities that your brand wishes and can produce.
- The brand must be very clear about the manufacturer's specialty and verify that they can make the garments needed, such as a manufacturer specialized only in blouses.
- You must review their product catalogs beforehand to have a clearer idea of what their work is like.
- Delivery times are vital in this process precisely to avoid inconveniences, so it is essential to ask the company what their delivery times are and see if they fit what the brand needs.
- Not all manufacturers make samples of the garment to be made, but this step is essential to refine details and make the necessary corrections before starting production, so it is recommended to choose a manufacturer who makes the sample, whether physical or digital.
- The manufacturer you choose is recommended to have included technologies within their production process; all this is due to the fact that this streamlines the process and contributes to an item of sustainability.
To learn more about the requirements a clothing manufacturer should have, click here.
At GAT fashion lab, we are full-package manufacturers with the highest quality standards in the market and good delivery times. Learn more about us and our services here.
Boutique Blog &#; by Anna M
LA's Best Wholesale Clothing Vendors for Your Boutique!
As a former boutique owner myself, I have been there, trudging through what seems is an endless amount of online vendors that either don't have the styles your looking for, the low prices or the quick shipping you will need to run a strong boutique business. Even google, who usually does a great job will populate half of its search results with business that aren't even located in the USA (common google, get your stuff together.) Fortunately you've landed at the right spot and below I am going to curate a list of clothing boutique vendors that will provide you with the most important tool to be a successful boutique, great clothes. Terminology To Help You Understand the Market There are several suppliers that offer clothing and those include: wholesale distributors, manufacturers, drop shippers and wholesale showrooms. Let's go through each Wholesale Distributor: Distributors provide clothing sourced from other manufacturers. Distributors could be referred to as middle men. You might think these companies simply get a cut of the action by offering higher price goods, but this isn't always the case. Distributors offer unique benefits, like consolidating multiple brands in one shipment and offering cheaper clothing that they liquidate from clothing vendors. Only these sites seem to be the companies offering these unique lucrative deals. Manufacturers: Manufacturers or brands are the businesses that design and produce clothing. Drop Shippers: Drop Shippers are specialized companies that purchase from brands a large amount of inventory and then ship these individually to your customers. Drop shipping has come a long way in the last ten years and offers an incredible opportunity to build a boutique with little to no capital. Wholesale Showrooms: Have you ever attended a clothing show and walked the long aisles of brands soliciting their newest designs? Well that's what a wholesale showroom is but virtually. These companies and sites offer a place for boutique owners to view and purchase directly from all of their favorite vendors on one site. Top Ten Boutique Wholesalers 1. Bloom Wholesale Bloom Wholesale is hidden gem. I friend told me about this site years ago as a place to find really great deals. Not only do they have some great finds but they ship fast and their shipping is capped at $9.95 for all shipments and orders. Bloom is interesting in that they are one of only a couple companies that provide closeout deals. The bulk closeouts prices can be as low as $7.00. Drop shipping is another service they provide, with drop shipping you can grab their pictures, sell the items and have Bloom ship them out. 2. Mio Wholesale Mio falls under the classification as a Distributor. Mio has been around for over a decade and their successful longevity speaks volumes to their great service. The things I like about Mio Wholesale is you can get a lot of great brands and consolidate the shipping in one order, this will save you a lot of money and time. They only work with quality boutique brands and have great customer service. Price is moderate and discount codes are not offered. You get what you pay for with Mio and if you want to be sure to have a quality product for your boutique this is a great vendor. 3. Judson & Company Judson & Company is family run manufacturer out of Alabama. They have been around since and they might hold the crown for the older manufacturer in our boutique industry. I love Judson, they concentrate on all things accessories from hats, jewelry, scarfs, kimonos, bracelets, screen prints to some clothing. If your a boutique not maximizing sales with accessories then you aren't doing it right. Their warehouse is in Alabama, so that central location means they can deliver wholesale items to your boutique sometimes within 1- 2 days! If you plan on brining in accessories to your boutique definitely give Judson a look. 4. Wishlist Wishlist Apparel is a young women&#;s contemporary manufacturer that specializes in staple classics. If there is a league of boutique brands, Wishlist might just reign supreme. They are one of the top brands in the boutique market and you can chalk this up to two reasons, quality and price. Wishlist makes the top 10 list as the only wholesale brand not because of special discounts, amazing customer service or any other perk but solely because their quality and trends are top notch. 5. KatydidWholesale Katydid landed the last top five spot because they are an easy-to-work-with company that delivers great quality boutique clothing. Hear from them in their own words "The apparel we offer is made for beautiful women who love to live life to the fullest. With so many styles at Katydid Wholesale, there&#;s something for everyone! We have the best women&#;s clothing for retail stores and boutiques of all sizes. Our women&#;s clothes and accessories are the perfect addition to help your customers fall in love with your store!" 6. Fashiongo FashionGo is likely the first virtual wholesale showroom to exist. You might have seen FashionGo at a fashion event show or boutique gathering, they have a new partnership with the Magic show fashion event that makes them ubiquitous in the wholesale clothing world. FashionGo is a marketplace that hosts thousands of individual wholesale vendors, brand and distributors. Since FashionGo is a one stop shop for everything what would be a reason not to shop with them? Prices Prices can be higher shopping through FashionGo rather then going direct because of the commission fee's Fashiongo charges its vendors to use the website. Unless you go direct, there will always be a middle man :) 7. LA Showroom Like, LA Showroom is a wholesale marketplace that specializes in offering a huge assortment of wholesale clothing and accessories. They claim to also be one of the first wholesale marketplaces, so if anything we have them to thank for helping to radically transform the wholesale boutique industry. If you would like to register with any wholesale showroom is worth noting that you will need a business license, sellers permit and previous invoices with brands. Once you have all of that in place you can scroll through the endless pages of wholesale clothing vendors and distributors that will supply your boutique with more then enough goods to stock your shop. Like Fashiongo, LA Showroom has commission fees charges to its vendors. 8. Faire The new girl on the block is Faire. This company is making waves in the wholesale boutique clothing marketplace by being the first site to offer 60 day terms. Their goal is to give the small boutique owner all of the same competitive advantages that a big box store like Walmart and Ross has. Sounds great! But Faire has yet to convince and migrate a majority of the top USA wholesale brands and distributors to use its platform. The reason is simple, high commission fees. Faire has a high vendor commission fee. The cost of providing those wonderful benefits like 60 day terms for the boutique means the vendors have to raise their prices and thus you will pay more for the same clothing found on other platforms like Bloom or FashionGo. As it stands Faire has a large selection of wholesale clothing vendors and time will tell if their bet on 60 day terms is one that boutiques desire. 9. Wholesalecentral At Buywholesaleclothing my list of vendors and distributors is curated and condensed but if you're ever curious to see the whole list of wholesale vendors, Wholesalecentral has that for you. Wholesalecentral likely has every wholesale clothing and accessories provider in the world. Not only can you browse the endless lists of wholesale suppliers but they do a great job of listing all minor and major fashion gatherings in the USA. In their words "Wholesale Central provides premium sourcing tools that help wholesale buyers &#;nd wholesale suppliers and products." 10. Orangeshine Orangeshine is another great wholesale showroom on the market. It does everything right from attracting wholesale vendors and distributors with low commission fee's and provides an easy-to-use layout for easy boutique purchasing. There was a time when Orangeshine was my go-to wholesale marketplace because of its consolidated shipping. This was a great perk that only they offered but have since discontinued this great resource. Why might you choose Orangeshine over FashionGo and others? This is their pitch. "From an online marketplace with exponentially growing number of registered users, new users and purchases to professionally photographed product images while providing full customer service and order processing for buyers, we have everything you need to get your foot into the booming online business with minimal effort and costs." Advice on utilizing online wholesale boutique sites There was a time not too long ago when everyone did their purchasing at fashion shows like Magic and the Off Price Show. These shows still exist today but the advent of online wholesale shopping has made them somewhat obsolete for many. With that said I always implore my ladies to go to at least one clothing expo a year and here is why. Attending a fashion show isn't really about purchasing clothing and perhaps it never was, its more about building connections and establishing relationships with not only the brands but also other boutique owners. These invaluable relationships offer the support and advice you will need if you want to make it in this business.
Contact us to discuss your requirements of women's clothing wholesale supplier. Our experienced sales team can help you identify the options that best suit your needs.