You have your products, so now you’re thinking, “Where do I sell my fashion?”
Channels of distribution are SO important, especially understanding which ones are the easiest, the hardest, costs the most, and takes the most amount of time. You really want to think about this before you get started.
Channels of Distributions
So, one of the first questions I ask all of my newbie startup designers when I’m talking to them is, what is your channels of distribution? What will be how you plan to sell your line? Meaning, how are you selling and whom are you actually selling to? Distribution is the key to winning in any type of business. Now for fashion brands, you’ve got two main options, and you’ve heard me talk about this – especially if you have taken the Fashion Startup Intensive. You got wholesale options and retail options.
Retail VS Wholesale
Let’s define the two just so that everyone is clear. Wholesale is the sale to another business, so it’s business to business (B-B) or you are basically selling to stores. The flipside of that is retail which is the sales to customers, otherwise known as B to C, or direct to consumer or D to C. Now you can do both of these options and I typically do recommend trying to do both of these options because again the more channels of distribution you have, the more likely your stuff is going to get out there. You’re going to make more money, but you can also go the route of just doing one. 30 days ago, the only option as a designer was to only do wholesale, there was no real retail option. Now, you don’t solely have to rely on retail stores to buy your stuff and can choose other platforms. So, let’s talk about all the different retail options.
The first is having your own brick-and-mortar store. Now the cost for this is probably the highest of all the channels of distribution. You have to acquire a store and then pay monthly rent, electricity, Internet, a phone system, water, and insurance. Then all the furniture and the decor that you need to put inside of the store, you have to hire employees, have a POS system, and you need to have your computers and IT support. The list literally goes on and on and on, so it’s very costly which is why most people choose not to go that route. It’s also the level of difficulty, I would say it’s pretty hard, especially if you have no experience running a retail store and you have no experience negotiating a commercial lease. As far as the amount of time, it’s also probably the longest amount of time. It’s is going to take you a good at least 6 to 9 months to just find a location, to scout out a location, then you have to go through the purchasing process, then you have to build out the store and then it could take you another 6 to 9 months just to get the word out that you’re actually here and that your store exists to get people to actually come into the store. The only advantage I would say is that you now have a physical location where people can actually try on stuff, have the potential for passerby to actually pop in who wouldn’t normally notice your brand, and come into your store or seek out your clothing. I typically don’t recommend having your own brick-and-mortar store, for certain brands it works but for most people they just don’t have the time and the capital to get started with that sort of thing.
On the flipside is the next channel of distribution which is having your own ecommerce store. The cost is probably the lowest out of all the options because you can build a Shopify website for about $800 and then pay anywhere from $30 to $100 a month just to maintain it. Therefore, it’s a pretty low startup cost, then level of difficulty is pretty easy. Anyone can kind of learn what’s needed to build a successful ecommerce shop and make sure that you’re ready to get sales. The amount of time is relatively little, it’s not going to take you very long. The actual building of the site could be 2 to 4 months but keep in mind that building your online presence and doing digital marketing can take a while – unless you’re ready to spend lots of money to hire people to do this. Thus it’s a relatively short amount of time to get your website up and running but keep in mind there will be some time needed to really build an online presence and drive traffic there. Of course the advantage is all you need is one thing to go viral and you’re pretty much set. Somebody sees your stuff on some Instagram or social media and boom it goes viral, everybody flocks over to your page and you’re good to go for life – that’s the dream for everyone. So, for that reason most people do go the route of having an ecommerce shop and I do highly recommend having your own personal ecommerce shop regardless of whether you’re also going to sell on third-party ecommerce shops.
Pop-ups and Markets
This can also be a good channel distribution. The cost I would say is somewhere in the middle and it kind of depends. You could do some of these local markets depending on what area and where you live for maybe $200 a day, then of course you could do the Grand Central Holiday Market, which is a six week long period of time that literally cost $28,000 - but trust me it's worth it. The amount of traffic that you get from those markets and stuff, especially at Grand Central, is ridiculous and I know a designer that does very well at those markets. Thus, the cost can be as low as $200 a day to as high as $28,000 for six weeks, so it depends on where you are and what the space is. Level of difficulty, I would say it’s kind of in the middle. It's not too hard to kind of set up your own little pop-up shop or do a little market, especially if you're not building out a store space in order to do it. However keep in mind you need to be good at sales because you're going to be the one in the pop-up or in the market selling and if you're not good at sales, it doesn't matter how good the location is or what you have that you're selling because you're not going to get any sales that day. You need to be good at sales and drive people over to your table because they are going to be looking all around and they might not even know where you are or what you are offering. The amount of time needed I would say is also kind of in the middle. It might take you a few weeks to scout out a good location for your pop-up, might take you a few weeks to market it, then it might take you a couple of days to prepare all your materials and prepare all your items for sales purposes. Then of course the whole setup of the pop-up, working in the actual pop-up or the market, you might be there for a full day or you might be there for a whole weekend and of course breaking down the pop-up when you are done, so it definitely takes a little bit of time here. The advantage of doing these pop-ups and markets is obviously real-time customer feedback on your product which is huge, because at the end of the day whatever the customer wants is what you want to give them. So, if your idea isn't flying, you need to find out what it is that they need and what it is that they want, what they're willing to pay for and give it to them, and that's basically how you'll win at anything in life.
Some people might not think of social media as a channel of distribution, but I say that it is and the reason I say that is. Now there's actually apps that are available that allow you to sell directly on Facebook and Instagram without having the customer actually leave the social media site to go to your website to buy and so this makes it really convenient for people to buy because they're not having to actually leave the social media site to go to your website to buy. They can buy it right there on the website, so this is a great channel of distribution. You can also use Facebook ads as a tool of marketing or pay influencers to wear your stuff. Thus the cost for this I consider it to be pretty low, you can get started for as little as $60 to maybe a couple of thousand for Facebook ads and Instagram promotions if you do it yourself. Now, there are agencies out there you can hire, but that's definitely going to cost a lot more and then of course influencers they can charge anywhere from $500 and up depending on how big of an influencer they really are. Level of difficulty I would say is pretty low, especially if you're working with me because I can definitely show you how to set up your Facebook ads to really have results for a little amount of money. Additionally when reaching out to influencers, knowing what questions to ask them, knowing what to look for, it's not all about the number of followers that they have, so keep in mind there's a lot that goes into searching out for the right influencer and I’m here to help. The amount of time I'll say is relatively low, you might spend a few days searching for the right influencers and then reaching out to them, might spend a few hours setting up your Facebook ads, definitely if you're working with me it is going to be a quicker process. If you try to teach yourself on your own which you can do, there's definitely a lot of videos on Facebook blueprint to show you how to set up Facebook ads, but it's going to take you a long amount of time because there are a ton of videos. However you can do it yourself and the advantage is obviously an increase in sales and your social media following at the same time, which is a double win, so for this reason I highly recommend social media as a channel of distribution.
Crowdfunding is this idea that you get a lot of people to donate a little and adds up to a lot of money and people are donating in exchange for rewards, typically items from your actual line. So, the idea is that you're pre-selling your line, collecting all of the money, and that money is then going to help you fund your production and start your next collection which is quite honestly in my opinion the easiest and best way to go about starting your line and the best channel of distribution you should do. I recommend almost everyone do it no matter how expensive your price point is, you can still win at crowdfunding. I just had a client of mine reach over $20,000 and he basically didn't even do everything! So, the cost is relatively low. All you really need is a really great campaign video and a good photoshoot of all your products which shouldn’t really cost you more than $4,000. Level of difficulty is also pretty low especially if you take our Cracking The Crowdfunding Code online course. This gives you all the information needed to start a super successful campaign, how to prepare for the campaign, what to do during the campaign, and what to do after the campaign to really make sure you are maximizing your profits. If you're not familiar with doing crowdfunding campaigns, it's definitely going to take you a little bit more time to figure things out, you might make some mistakes along the way and so on and so forth. The amount of time I would say it’s kind of in the middle, you are definitely going to spend a few months preparing for the campaign and then of course shooting the video, doing your photoshoot, that's all going to take a long amount of time. Then during the campaign that's going to be a really big push for at least 30 days if not longer to raise money and then there's things you have to do after the campaign, so it is kind of a long amount of time, but the payoff is so big. The advantages are you are going to make a ton of money, you are going to get great customer feedback like you would with the markets and the pop-ups, and you're going to get all that feedback before you have even done your production. Therefore if you need to make changes, you can make them before you do your production and you can even get some really good press around your business.
Presale, Presale, Presale
Keep in mind with all of these channels of distribution that we just went over - with the exception of the crowdfunding - there's another huge factor that you kind of have to take into consideration. That is, are you going to presell or are you going to have inventory? And if you decide to have inventory ahead of time, keep in mind you're going to need to front the money for your production, which could cost you anywhere from $20,000 to $80,000. You can easily do presales on your own ecommerce website, markets and pop-ups, and social media. People are kind of used to that idea of they are going to pay for it now and they are going to get it 4 to 6 months later. So, as long as your timing is good, you can make it work.
Department and Specialty Stores
Now, let’s talk about the wholesale routes of channels of distribution. For wholesale, you have the action of going to department stores and specialty stores. The cost is very high because these guys typically don't spend the time to look at newbie designers and in order to really grab their attention, you might need to start doing tradeshows which cost a minimum of $10,000. You might have to participate in showrooms which have a really high fee. You might have to hire some sales reps to help you out which have a really high fees. Therefore, there can be a lot of fees involved to get these guys to really notice you. Level of difficulty is also pretty high, it's not easy and most of them keep in mind have really complex vendor compliance manuals and will issue you tons of chargebacks if you do not comply with everything in that manual and those manuals can be 300 pages long. Thus I highly-recommend not going this route, I don't like to work with the department stores, especially because of the chargebacks. I have seen businesses literally go out of business! So, the amount of time to go after these big-box department stores and specialty stores, it can take you years to gain attention from them. It's not something that's usually a very quick process. Of course the advantages you get to say that you are in that store and it does help with your manufacturing minimums because they will typically order a bigger quantity from you rather than getting one-off orders from direct customers.
The last channel of distribution is small boutiques, which I do highly recommend all new designers go after and supplement their ecommerce sales with small boutiques. Small boutiques are great because cost is relatively medium to low. You need to have obviously a few marketing materials, you might have to pay for some flights to fly out to some cities to check out some stores but it's relatively inexpensive. Level of difficulty is medium to high, it's definitely not easy to pitch these buyers but we make it a lot easier for you, especially if you take our Successful Sales Secrets – How to Pitch Buyers and More online course which I teach a very specific twelve-step process on how to pitch buyers, what exactly you should be saying to them, how to specifically write your emails to them, what you should be mailing to them, what to say in person to them, how to prepare for your buyer meeting, once you do actually get a meeting with them – all of that stuff is included in the course, so that’s going to help you. If you don't have the course and you're not working with a coach, it's definitely going to be very difficult for you and very frustrating. Additionally, it takes a lot of time. It can take months, sometimes years to really get these buyers to notice you. They might not come to you and buy the first season, they kind of want to see if you're going to last, if you are going to stick around - that sort of thing. It’s a little bit of a test, so it could take a long amount of time. The advantages of course you get to take your orders upfront and typically with small boutiques you're able to collect a 50% deposit, that’s going to help you fund your production, so you are not going to have to front the production cost. Again, you are going to be able to meet your manufacturing minimums a lot better because you have bigger orders from the stores and it kind of doesn’t matter. I mean of course it does matter at the end of the day, but it doesn't really matter if your stuff sells because you've already sold this to the stores, so if the store can’t sell it, they have already taken your merchandise and that's it. Obviously, you want it to sell because the more it sells, the more they are going to come back and reorder from you, but the nice thing is you are kind of guaranteed, so it's a nice way to kind of get started.
Those are all the channels of distribution that I want to talk about today. There are a couple more I didn't mention which I do go over in the Successful Sale Secret online course, so be sure to check that out!
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