Get the latest inventory management insights and tools direct to your inbox

multi channel sales, Fridays with The Fashion Darling

Which Sales Channel is Most Profitable for your Brand?

BY Dee Sarma 9 Oct, "15

The Fashion Darling returns this week with insights on sales channels and tips on selecting the ideal channel or channels for your fashion brand.

A sales channel is where you provide your product to the consumer. Choosing the right sales channel (or channels) is important for any business, but it’s crucial for fashion start ups.

Choose the wrong channel and sales can be slow, and the business can be a drain your resources. Choose the right sales channel mix and you can grow your business and brand beyond what you thought was possible.

These are the main sales channels you can utilise. Consider which channel is the best fit for you, or perhaps your business is ready for a multichannel approach?

  1. Online
  2. Retail
  3. Wholesale

Let's jump right in!

1.Online

This sales channel has relatively low barrier to entry, meaning it’s now easier to get started online. Setting up your online store can be done in numerous ways – via an agency, a freelance designer/developer or you can do it yourself using eCommerce website solutions such as Shopify, WooCommerce, BigCommerce, Magento etc.

When you sell online you have two options – you can order the stock you will sell on your website so you have inventory in your office/warehouse to ship as orders come through, or you can utilise Pre-orders so that you can take orders then get production made.

Either way, online can be profitable because you collect 100% of the income, as you sell at the retail price.

For fashion start ups it’s advisable to start online, get sales for a season or two and then go into other sales channels. You need to iron out the kinks in your systems before you launch into a channel that involves more risk, for example retail, or where you have one chance to make a good impression, for example wholesale.

online store

Consider: Drop Shipping

Drop Shipping is a sales method often used by businesses in the Apparel & Accessories industry. This involves your goods being sold online via an online store which is not your own. Your goods are shown on that store, the customer buys from that store, then the store sends you the order and you fulfil it by sending the goods to the customer from your warehouse. Usually you split the sale 50-50 but this can depend on the dropshipping site you sell through.

2. Retail

Retail comes with large expenses - fitout, rent, staff, overheads – but it provides an opportunity for you to showcase your brand and fashion line in a controlled environment, giving the consumer an opportunity to experience your brand the way you imagined.

Retail is a great opportunity for you to see who is actually buying your products – often designers imagine their customer in a specific way but it’s not until they spend some time on the retail floor that they see who their customer really is.

Retail provides you with a direct link to your customer and it offers a platform for your brand to gather feedback on styles, fitting, pricing and your range.

Consider: Pop-up shops and Pop-in shops

If your business isn’t quite ready for retail, consider the pop-up or pop-in shop option. These are retail environments where you can get in front of the end-consumer and get their feedback, over a limited time period.

Pop-up shops are stores where you take over an empty retail space and you create your own store. Pop-in shops are stores inside a shop –you could set up a pop-in shop inside the store that is interested in stocking you, so they can see how well your product does before they pick you up.

These are relatively low-cost activities and in the case of the pop-up shop you can split the costs if you invite other designers to join you in your store.

pop up shop

3. Wholesale

Wholesale is a B2B (business to business) channel – you sell your goods into stores, to other businesses. Wholesale is a great opportunity to expand your sales and to reach a wider audience. In most fashion brands this is the backbone of their sales strategy.

You can wholesale yourself, showing your ranges to stores (stockists) or you can get an agent or distributor.

An agent can take anywhere from 10-15% commission on sales, and a distributor could take up to 30% (the distributor will pay out your full order cost to you and they take on the financial risk so they ask a higher %).

Either way, an agent or distributor has relationships with stores and buyers, and are more likely to get you better sales since they already have these relationships.

For wholesale you have to:

  • sell in line with buying seasons
  • you have to have your production processes stabilised with delivery taking no more than 3 months from order
  • you have to have a lookbook, linesheet, swatch cards and order form ready
  • you have to have room in your pricing to allow at least a x2 markup for the retailer

B2B wholesale

Consider: Trade shows

Tradeshows can be a great way to get in front of buyers in an environment that truly represents your brand. Through tradeshows like MAGIC, you could meet buyers who then stock your label in their store.

With tradeshows you need to have:

  • a great booth / display
  • a changing room in case buyers wish to try your garments on
  • a clear outline of the ordering process
  • clear delivery dates
  • sales staff who can SELL
  • pricing that allows for a good cut for the buyer
  • a signup platform – like an ipad on a stand or a printed out form so you can collect email addresses

Now that you know more about what selling on each channel entails, consider answering these questions for your fashion brand:

  • Which sales channel do you currently utilise?

  • Which channel can you expand into next year?

  • Which channel isn’t right for you and why?

-

About the author

Vanja Stace The Fashion Darling School of Business

Vanja Stace is the founder and principle of The Fashion Darling School of Business.

The Fashion Darling was founded in 2015 and has helped many international designers. In July 2015 we won the Fashion Edupreneur 2015 Award, which recognises excellence in the delivery of educational programs in the fashion industry.

The Fashion Darling will be back next friday with tips for your fashion line. In the meantime, if you have any questions for Vanja, reach out to her on www.thefashiondarling.com.

See also:

3 ways to price your fashion line for profit
Is your brand unique? Ask the Fashion Darling!

newsletter-subscription

Subscribe for insights into building world-class eCommerce companies