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Selling To Department Stores And Boutiques-0
November 30, 2016
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Selling To Department Stores And Boutiques

Selling to department stores and boutiques is something that many designers strive for. But is it the best decision for your clothing line or fashion business? Selling to boutiques and department stores has many benefits, but like anything else in this world, it also has its drawbacks. So before you decide to invest time and money in creating a wholesale channel, it’s important to assess the positives and negatives when it comes to selling to retailers.
*Note: If you are just now working on a fashion line, check out this post, How To Start A Clothing Line That Sells!

HERE’S THE TRUTH ABOUT SELLING TO DEPARTMENT STORES AND BOUTIQUES

 

They order more units.

Yes, retailers will order more units than individual customers. Boutiques will usually order a full size-run and department stores will order anywhere from hundreds to hundreds of thousands of units, depending on what the actual product may be. The more stores the retailer owns, the more units they’ll order. That is why department stores and chain stores are desired by a lot of designers to sell to.

You can make more money.

This one isn’t totally true. When selling direct to customers, you charge them your retail price. But when selling to retailers, you charge them a wholesale price, which is at least half of your retail price. That means that if your dress retails for $200, you sell that same dress to a retailer for $100 or under. The reason is retailers need room to resale that same dress to the customer for $200, which is your retail price. So, if you were to sell 6 dresses to customers at $1200 and 12 dresses to a retailer at $1200, you end up making the same amount of money. The only difference is the number of dresses you sold. That is why this statement can sometimes be true or false. However, imagine getting a 20,000 unit purchase order from Target for $7 per unit. That equals to $150,000, which is a sale that’s appealing to any designer!

You don’t have to worry about selling to customers.

Once it’s out of your hands, it’s up to the retailer to make sure it sells, right? WRONG! It’s in your best interest to make sure that your merchandise sells so that the retailer will place future orders. That’s why brands help retail stores promote their merchandise.

You don’t have to create a store to sell merchandise.

This is a huge expense that retailers take off a designer’s hands – the cost of creating a store, managing a store, hiring and managing employees, training employees to provide customer service, the cost of supplies, and the overhead cost of renting a store. Even if you opt for an e-commerce site, you still have to build and maintain that website and hire people to fulfill and ship out orders.

Selling to department stores and retailers is completely different from selling to customers!

You cannot sell to retailers the same as a customer. Why? Because customers shop for themselves. Retailers shop for their customers so that means that there are several factors that they consider before placing an order:

    • Will it sell? Retail buyers buy based on the assumption that the product will sell. And a product sells if it matches their customers taste in style and budget.
    • Do they need inventory? Retail buyers won’t buy merchandise if they already have a healthy amount of inventory. That’s why it’s crucial to catch them during times when you know they need product. Buyers usually do most of their buying for the Fall/Winter month during February/March and Spring/Summer months during August/September months. However, since fast fashion has taken the world by storm, it isn’t uncommon for many retailers to be looking for product all year long.
    • Are they open to buy, meaning do they have the money to buy product? This all boils down to whether or not the retail buyer has a budget to spend on more inventory. Even if the buyer loves your collection, she will not buy if it’s not in her budget.
  • Will it have a place in the store? This refers to how the merchandise will be displayed on the sales floor. Will it be hung, folded? Does it need a lot of floor space? Does it need special merchandising needs? Sometimes, buyers won’t order because a product doesn’t have hanger appeal. Yes, the merchandise must look good when worn by the customer, but most importantly, it must look fabulous hung or folded on the sales floor.

 

It takes money.

Selling to department stores and boutiques requires serious infrastructure. You’ll want to build a sales team, get an order and inventory tracking system, and eventually have a budget for tradeshows and market weeks. You’ll even need special ordering software that big retailers require you to have for them to even send you an order in the first place. This software is called EDI. Without it, you can’t even receive an order to fulfill. But most all, you’ll need capital to go into production. Retailers, especially big chains and department stores, don’t pay right away so you’ll need to secure the capital to fund those orders into production. Brands usually work with factors, who are lenders who loan them money to pay for their production costs.

It takes practice.

This statement is true for designers who want to sell their collection on their own. If you don’t have sales experience, then getting the hand of selling to a retailer will take some time and practice. That’s why I recommend that you do some rehearsals. Recruit a friend to act as a buyer and have him ask you a list of questions that buyers will typically ask brands. Practice will help prepare you, which is a great way to build up your confidence for the real sales meeting with the retailer.

It’s time consuming.

Selling to department stores and boutiques is a lengthy process, especially for designers who want to do it on their own. You have to get in contact with the buyer, peak their interest, schedule the sales meeting, conduct the sales meeting, follow-up, follow-up some more, and then maybe, you get the order. This process is even longer when dealing with big retail chains because of the corporate red tape and chain of commands. So, don’t expect to get an order right away. But once an order has been placed and the merchandise sells well, you can expect to get more orders in the future for even bigger unit buys.

You don’t get paid right away, like you usually do from customers, especially with the big department stores and chains.

It’s typical to wait anywhere from 30-90 days after you’ve shipped the merchandise to the retailer. That means you have to have enough capital to sustain the lack of cash flow in your business. But once you do get paid, it’s a nice hefty sum! It definitely beats one-off sales that you get from direct to consumer transactions.

It can be amazing for PR.

Imagine having your collection at Barney’s or Neiman’s. You’ve made it! That is great for your brand’s overall public image – not to mention the possibility of a celebrity purchasing your merchandise!

You get added brand recognition.

Being in stores allows you to be seen by people who would have never even heard about your brand. This gives you the advantage of reaching more people, which expands your brand’s market reach. More eyeballs means more potential customers, which means more potential for sales!

Those are the truths about selling to department stores and boutiques. Now you may be thinking, what do I do now? Now, is where you take action. Use this knowledge to decide whether or not this route is right for your fashion company. If it is, then begin taking steps towards building your wholesale business. Yes, it can look challenging and overwhelming but you don’t have to do it alone! Enrico and I built FAB Counsel so that fashion entrepreneurs like you, don’t have to take this long, hard, and worthwhile journey all by yourselves.
FAB School

We’ve got online courses, tools, and coaching programs specifically designed to teach you:

  • retail math
  • merchandise pricing
  • designing best-sellers
  • the art of negotiation
  • selling with confidence
  • pitching your line to any buyer in under 20 seconds
  • securing a sales meeting
  • questions buyers ask
  • how to put a retailer’s mind at ease
  • margins, mark-ups, and profit
  • department stores vs. boutiques
  • tradeshows and market weeks
  • and a whole lot more

 

The online training for you is our 7 STEPS TO GET YOUR FASHION LINE INTO RETAIL STORES!

You’ll walk away knowing:

  • how to prep your line for wholesale
  • how to price your merchandise that will entice a buyer
  • how to pitch, sell and believe in your product
  • how to select the right stores to sell to
  • how to get in contact with a buyer
  • what to know, say and bring to a sales meeting
  • how to get your first order

 

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