A profitable online business starts with a good supplier
Wondering where to start with your new fashion business? Here's how to find the right supplier to create a profitable online business.
So you’ve decided to take the plunge and open your online fashion store. The question you’re now asking yourself is: “How do I find the right suppliers?”
There are a few different routes you can take but (for mine), the best place to start is to determine this: can you find a supplier that produces the clothes you want to sell? Or will you need to design and manufacture them yourself.
Answering this is going to take some research and thought.
Let me take you through how I’d go about this. For the purposes of this article, I’m going to pretend I want to start an online business selling Plus Size Street Wear. First I would do some market research, both to source possible suppliers, and also to find out more about my competition. Here are some ideas to get started:
"The good news is that by putting in the hard yards up front and being ruthless in your supplier selection, you’ll hopefully reap the benefits for years to come."
1. Talk to people
- To help solidify my thoughts on my niche and my potential business idea I’d talk to people who represent my target consumer, and also people who are already doing business in a similar field. I could also go to networking events, ask in the Flying Solo forums, or set up a stall at an appropriate market/event offering something to passer-bys in exchange for their time answering my marketing questions.
- I could also try to get in touch with inspiring small businesses in a similar field and catch up for coffee to run my idea past them and get their thoughts.
2. Research who’s out there already
- I’d check out the other Plus Size Stores in Australia and note what kind of stock they have, what sizes they carry, and how they market their products. I’d also look into Street Wear Stores separately to see what sizes they go up to. Finally, I’d Google “Plus Size Street Wear” to see who is already operating in my niche. All of the results should be documented into my business plan as part of my competitor research. All this Googling will allow me to get a clearer idea of my niche, and what my points of differentiation might be.
- While looking at the inventory in these online stores, I’d also be taking note of the designers I like, so I can research them separately.
- I’d also do a worldwide search for the above and have a look at online boutiques in the industry overseas to get ideas and identify possible suppliers.
3. Research designers and wholesalers
- I’d then use the list of designers or brands I’ve compiled through my online research and check out each one separately, looking into their business, and their environmental policies. I could also search for “Plus Size Street Wear Wholesale” and variants of this phrase to see if anything useful comes up.
- If there are designers or brands that fit my niche (even if they don’t produce exactly the items, either styles or sizes, I’m looking for), I’d then contact them and ask for further information to help me make a decision about whether I want to work with them. (See my suggested questions below for actually selecting your suppliers.)
- If there are designers I like who don’t produce exactly what I’m looking for, I could also contact them and enquire about whether they are open to producing certain styles in different sizes, or even collaborating with me to produce my designs under their brand that I could have exclusive rights to in my geographical location (e.g. Australia and New Zealand). This may require minimum order quantities, such as 1,000 per style to justify the production. It would be worth producing my own samples that I could test on potential consumers.
- Finally, I’d get on the telephone (or better yet, meet in person), to talk to potential suppliers or designers as this will really help me understand how the industry works. If the people I’m talking to don’t manufacture the items I’m after, they may be able to recommend someone I’ve never heard of before; someone who is a perfect match for my business.
What if I can’t find a designer/wholesaler I want to work with?
Then the next best thing is to manufacture my products myself. Going down this route is much more time intensive and requires more capital. It’s also more risky. Because I’m not a fashion designer, I’ll probably need to engage a professional who can help with fabric selection, design and a detailed brief for manufacture (at a minimum). This does have upsides however: if I end up with a good product that I market well, the payoff can be much better as my margins will be much bigger. I’ll also be producing something unique which creates an opportunity to wholesale my products to other stockists!
Things to keep in mind:
- Manufacturing clothes in Australia is often quite expensive, depending on what you’re making. If you find someone that you want to work with, do your best to price out what your investment will be, and what your end cost per garment is. You want to be able to sell them for at least 2x or 2.5x the manufacturing cost, so you can cover your other costs of operation and marketing. Once you know what the end cost per garment is, you can work out whether the sale price (2x – 2.5x cost) is a competitive price, and whether your target market will pay it.
- Manufacturing overseas carries more risks and if you don’t have experience in this, or recommendations from someone else doing this kind of business then I would always recommend hiring an agent to help guide you through the legalities and selection process. This can help avoid issues with end product quality, differing expectations of timeframes, costs, and operating practices.
- A lower risk option may be to approach an existing designer and collaborate with them, as discussed above.
Whenever you are approaching a potential supplier or manufacturer, some of the questions to consider include:
- Pricing information – this may be wholesale pricing, or distributer pricing
- Shipping information – do they ship items to you (and if so how or through who), or is it your responsibility to organise shipping? You also need to establish when you take ownership of the goods? Is it when it leaves their factory, or when it lands in Australia, or upon successful delivery?
- Payment terms – is full payment required upon placement of the order? Or is a percentage deposit needed to secure your order with the remainder due prior to delivery? Or is payment requested after delivery?
- Manufacturing policies – including how they source fabrics, what kind of dyes or chemicals they use in manufacture and whether there any guarantees over the sustainability of environmental standards they adhere to. In addition, what kind of certification their factory abides by – is it WRAP certified? If they are a supplier, do they provide any guarantees over socially responsible manufacture? Can you visit the factories?
- Quality guarantees – Remember if you are importing the products then for the purposes of insurance, YOU are deemed to be the manufacturer, and liable for any damage claims. This may include claims such as dermatitis caused by chemicals in the clothes. In my experience, insurers are particularly cautious about clothes sourced from China. Check what guarantees the supplier provides over the quality of their clothes. Will they indemnify you for any claims brought against you, or for defects discovered? In some cases, manufacturers may give you a period of time to inspect the stock to claim defects. If you order $20,000 worth of stock, will you be able to inspect every t-shirt for defects within the timeframe given? Is this realistic?
So there you go! This has been a pretty epic post, but ‘How do I find suppliers’ is a pretty epic question!
The good news is that by putting in the hard yards up front and being ruthless in your supplier or manufacture selection, you’ll hopefully reap the benefits for years to come by establishing strong and productive relationships with suppliers that are perfect for your business.
What experiences have you had in selecting suppliers or manufacturers? Have you created a profitable online business?