Monthly Archives: March 2016

Mar 29

What Scenario Should You Cost Your Fashion Product For? By Boaz David

By Maria Pesin | Vibe Consulting

WHAT SCENARIO SHOULD YOU COST YOUR FASHION PRODUCT FOR?

As a start-up fashion brand, costing your product for the first time is one of the most challenging parts of your fashion business.

When you source a factory you will have their costs for making both a small run of your product (i.e. 50 units) and a bigger run (i.e. 200+ units). For many designers, the first season is experimental and you might not know exactly how many orders you will get. So the big question is: Should you price your product based on the cost of a small run or the cost of a big run?

To better answer this question let’s think generally about your business. As a start-up fashion brand your first year in business is most likely going to be all about testing! This will be a test run for your concept, your product, your development and production chain etc. Realistically, you will most likely only start to see profit in your 3rd (or more) year, so these first years become about building your brand/ business, not about making money.

That same assumption should be carried into costing and pricing your fashion product. The first couple of seasons you will produce small runs and therefore you will pay high cost for production, resulting in your margins being far from where you would like them to be. Which by the way, is VERY NORMAL for any start-up business in any industry.

Therefore, when you cost your fashion products you should start with deciding on the market that you are looking to compete in (in fact that part should have been decided back when you created your business plan but just in case you haven’t yet, now is the time to do so), and decide on your retail price based on that market, then open your cost sheet and cost the following two scenarios:

Low units – this will reflect the cost of your fashion product in the short term when producing small runs (30-50 or any other minimum units that you are allowed to do).
High units – this will reflect the cost of your product in the long term down the road when your brand is built and you will produce the higher units (200, 300 and more).

Now plug-in your desired wholesale and retail prices into these two scenarios and see what kind of margins you have for both. The things to look out for are:

That when producing the lower units you are not losing money and hopefully even have some revenue margins (anywhere from 30-40% is normal for this stage)
And when producing the higher units your margins are where you need them to be for your business to be healthy (normally around the 50% is good).
To sum this up, your goal when costing your product is to have a view of both your fashion business today as well as 2-3 years from now. You must make sure that your plan for today’s cost allows you to stay in business meanwhile make sure that when you‘ll build your production units down the road that your cost will allow you to have the margins needed to have a healthy, profitable business. If neither one of these two points are met you will need to find a way to either adjust your product, your costs, or your wholesale/retail prices.

Need a cost sheet? Click here for our cost sheets, they are simple excel sheets and already have built in formulas for the 2 scenarios.

Need more help with costing and pricing your product? Check out our Costing workshop here or click here to book your one on one costing session.

By Boaz David of HumanB

 

Sales Suck
Mar 28

Help! Sales On My New Fashion Brand Suck

By Maria Pesin | Business , Fashion , Sales

 

Many of life’s failures are people who did not realize how close they were to success when they gave up. – Thomas Edison

What do you do when your fashion brand sales suck?  Sales takes time.  We know it takes a while for a brand to catch on.  But if sales are really low you need to analyze why.  You must answer the following questions.

  • Do I have a good sales team in place?
  • Have I given them the tools they need to sell?  Good samples, marketing material, product knowledge?
  • Am I priced correctly?
  • Are they seeing the right stores for my product?
  • Am I seeing enough stores?
  • Does my line have a unique point of view?  The industry is very saturated and does not need a new brand unless it has a USP (unique selling proposition).

If you answer these in the positive then the next question you need to ask is:  What are the stores saying?  Do they like your line?  Because if they don’t you need to figure out why and fix it.  Many new brands do not have a slam dunk their first season. They need to adjust to what they are hearing from the customers.  Perhaps the buyers don’t like your fabrics or color story.  Or,  maybe the styling is too basic or too novel and not wearable.  Whatever it is you need to find out.  Then you can adjust your line based on the feedback.

Change is not a threat, it’s an opportunity. Survival is not the goal, transformative success is. – Seth Godin

Evolving your collection based on feedback is important to success.  When I first opened the Jessica Simpson Coat collection the retail sales were low.  I learned that it was in the wrong price range for the Jessica customer it.  I reduced prices dramatically and sales boomed.  The moral of the story is to pay attention to what isn’t working and improve it so that your sales can improve.

Mar 25

Why Selling to Department Stores Might be Fatal for Your Fashion Brand

By Maria Pesin | Business , Fashion

 

Are you ready to sell your fashion brand to department stores?  If not selling to one might be fatal for your brand.  Most fashion entrepreneurs dream of seeing a department dedicated to their brand in a major department store where customers are buying millions of dollars worth of styles making the entrepreneur rich.  However, if you are not ready to work with them they can easily cost you so much money that your business might never survive.  The following are questions your should ask yourself first”

Do you have product currently in stores or on websites that is selling extremely well?  You must have product that you have a history of success with that you can recommend to department stores so that the stores have a good chance of performing well with your line.  If you know that your embroidered t-shirts are hot then that is what you should sell the store.

Do you have all your logistics in place?  If you don’t ship correctly and according to a stores vendor manual then you can get a chargeback (or many chargebacks)  which can erode your profitability if not destroy it.

Are you willing to start small?  A store buyer may be excited about your line and want to start with a big order.  But that is not always a smart move.  Most times you are better off starting with a test order to see how you perform before you expand.  Then you can build on your successes and eliminate the kind of styles that do not sell for them.  Also, sometimes it is better to have more product in less branches and make a bigger statement in the branches that have more traffic.

Do you have deep pockets?  It is expensive to sell big stores.  They may ask for money towards advertising and/or marketing.  Or they may want mark-down money (this is money a department store asks for if your merchandise does not reach the margin plan for the buyers department) at the end of the season.  They also might ask for extra time in paying their invoices so you are laying out a lot of money for production for months before you get paid.

Do you have salespeople who know how to build a business with department stores?  You need to understand what it takes to build a business.  It is not just taking an order and shipping it.  You also need someone who knows how to negotiate, how to get selling reports, how to make sure there are no chargebacks and how to make sure the right product gets into the stores so that it sells well.  There are many other details that an experienced salesperson will know how to cover.

Do you have enough margin in your product?  Because it is expensive to sell a department store you have to make sure you have enough margin in place to that you are profitable with the account.  If you lose money at the end of the day it can surely put you out of business.

Do you have good production?  If you run late many stores will ask for a discount or even worse not take the order.  You can be stuck with lots of inventory you have to sell at a loss.  If the quality is subpar or the fit isn’t right they may return it.  Or it could sell poorly and then the buyer needs markdown money.

Big orders can mean big problems and big losses.  So make sure you can answer these questions in the affirmative before you sell to a department store so that big orders can mean big profits.

Mar 23

The Secret of Selling Without Feeling Sleazy

By Maria Pesin | Business , Fashion

 

I find most new fashion entrepreneurs are afraid of selling.  They feel selling is sleazy.  So much so that they spend lots of time working on their product but never work on selling it.  They are afraid of rejection.  But, they also don’t understand the sales process.  They think salespeople ram merchandise down buyers throats.  They think they aren’t ethical and that they do whatever they need to in order to make a sale and don’t care about their customers.  Sales is a sleazy business.  Basically they don’t want anything to do with it.

The truth is sales is nothing like that.  Unless of course you are a poor salesperson.  And those never last.   Sales is a transaction between two parties where the buyer receives goods in exchange for money.  Both the buyer and seller get something.  The buyer gets product, the seller gets money.  It is a win win for everyone if done right.

I have a client who is new to the fashion business.  She is very green and really knows nothing about the industry.  She makes mistakes that can cost her a lot of money.  I think she is very lucky to find me.  Not because I am so great, but because I know I can really help her to avoid costly mistakes and guide her towards real success.

That is what sales is really about.  If you have a great product that you know would benefit the stores you sell it to; than they would be lucky to find you.  Assuming that your line would sell well making the stores customers happy and making money for the owners, that sales is a win win.  If you take the word sale out of the equation and look at it as service you are performing sales is not so scary nor is it sleazy.  You are actually doing something beneficial for the account.

Read my article: 5 Tips for Persuading Fashion Boutiques to Carry Your Line

 

Mar 17

What Do Fashion Business Marketers Do?

By Maria Pesin | Business , Fashion

 

What do  fashion industry marketer do?  Well, basically they plan, direct, or coordinate marketing policies and programs in an effort to build brand recognition and ultimately sales.  A fashion market director is at the forefront of the fashion industry, ensuring that products reach the consumer and that the company’s brand is managed appropriately.  Their first step is to  determining the demand for their products.  They analyze how they fit in the market and how they compare to their competitors.  They  identify the demographics and psychographics of their brands potential customers.  They are constantly researching the market to keep current with their customer and communicate their research to the merchandisers and designers of the brand.

Marketers put their hands on many of a companies activities.

  • They develop pricing strategies with the goal of maximizing the firm’s profits or share of the market while ensuring the firm’s customers are satisfied.
  • Work with designers to make sure that product development  is in line with the branding.
  • Formulate, direct, or coordinate advertising and promotional activities or policies to promote the company and their products.
  • Plan and execute social media campaigns.
  • Work with Website developer.
  • Develop packaging.
  • They use sales forecasting or strategic planning to ensure the sale and profitability of  lines, analyzing business developments and monitoring market trends.
  • They consult with buyers and store management to gain advice regarding  the types of products or services expected to be in demand.
  • They study selling reports to see what styles are selling and which are not in order to direct future seasons lines.
  •  Conduct economic or commercial surveys to identify potential markets for products.
  • They work to develop a brand experience for their consumers that will create an emotional connection to the brand.

Not all brands have Marketing Managers.  Many fold these activities into the head of sales responsibilities.  However in today’s competitive market, employing a top marketing expert will help to keep your company competitive.

Mar 10

How The Weather is Changing The Fashion Industry

By Maria Pesin | Uncategorized

Has spring arrived early?  Well, it looks like it has.  Winter started late and seems to be ending early.  Yesterdays high temperature in NY was  77 degrees while the historical  average is 47 degrees. Todays high is expected to be 75 degrees with 48 as the historical average.  Wow!  Last night I went out to dinner and actually ate outside on a deck overlooking the Hudson River.  There were women wearing flip fops and men in short sleeves.  It’s the beginning of March for goodness sake.

Are people out there buying spring?  I’m not sure but it will be interesting to see the March retail numbers when they come out.

The weather in this country has been very unusual for the past several years.  The seasons don’t start and stop at the same time they did before.  In fact clothing made for specific seasons shipped at certain times make less and less sense. Making wear now clothing that is shown by manufacturers closer to the shipping date seems like the next big trend.

This spring 2016, Matthew Williamson has launched his first buy-now-wear-now collection. This line follows last year’s announcement that he would be stepping away from the London runway. The designer also closed his Mayfair flagship and has decided to focus on a direct-to-consumer model.

Burberrys and Tom Ford both announced last month that they will be launching see-now/buy/-now collections.  In a press statement Tom Ford stated; “In a world that has become increasingly immediate, the current way of showing a collection four months before it is available to customers is an antiquated idea and one that no longer makes sense,” Ford said in a release. “Our customers today want a collection that is immediately available . . . Showing the collection as it arrives in stores will remedy this, and allow the excitement that is created by a show or event to drive sales and satisfy our customers’ increasing desire to have their clothes as they are ready to wear them.”

This seems to be a trend and can certainly help with syncing fashion to the weather patterns.we

Mar 03

Why It Is Important To Hire A Lawyer With Fashion Industry Experience By David Colby

By Maria Pesin | Uncategorized


Why is it important to hire lawyer with fashion experience for your brand?

Hiring an attorney with fashion business experience may be one of the best strategic decisions any fashion-related enterprise can make. Whether you are a designer, retailer or other fashion entrepreneur, having an experienced legal advisor is not just for big business anymore.

No doubt the fashion business has always been a challenge. But with the rapidly changing way information is shared and processed, the dynamic of today’s business climate presents many new challenges and opportunities. An attorney who practices in the industry should be part of your team of advisors to help you build a solid foundation, protect your interests, counsel on your options and advise on the best way forward.

A lawyer with fashion experience has insight on the expectations of deals and transactions involved in the fashion industry; thus, having a better understanding of the whole picture, they spot issues for you and not only can help you avoid costly mistakes, but can help you make the most of opportunities.

Legal issues arise during all phases of the business lifespan, from the initial formation and incorporation, to raising capital and hiring employees, and to the ultimate exit in an acquisition or IPO.   Making the right legal decisions early on creates a strong foundation to build upon; if any legal issues are not addressed at the onset, they are much more expensive problems later on. In the long term, it is cost effective to hire an experienced fashion lawyer because of the potential time, money and stress that can be avoided.

Of course, new business owners are often hesitant to hire a lawyer because of the costs associated — or the perceived costs, at least. The fact is, many legal services are more affordable than most people believe. If you put the time in finding the right person or firm to represent your business, you can get quality representation at a fair price.

One of the important things to consider is how to find the right attorney for your startup. A lawyer who specializes in real estate or personal injury litigation, although technically qualified, would probably not be the best fit for your fashion start-up, for example. Yes, you need to hire a lawyer, but you also need the right one. There are major implications to hiring the wrong lawyer because each type of business has its own legal obstacles to hurdle, and you need a lawyer that knows your industry inside and out.

David L. Colby, Esq., a Business Attorney and Managing Partner at Colby Law Office, P.C. in New York City and Miami. His firm is focused on the needs of creative entrepreneurs worldwide. David is also an Professor at both Parsons School of Design and the Fashion Institute of Technology in New York. He can be reached at dcolby@colbylaw.com