As designers from Mercedes-Benz Fashion Week Australia prepare to sell their collections, fashion agent Amy Boers reveals all.
Whether you are considering starting a fashion label or an already established one, there is a question that comes up regularly.
“What makes a successful wholesale fashion label?”
It’s a big question that should be asked at the outset. Then repeated with the introduction of every new product for fashion wholesale.
The answer lies in product evaluation.
My job is to continually evaluate new brands and test product viability in the market. In addition to this, I evaluate my own existing brands each season to make sure the brands we carry are successful.
The core area I look at when evaluating a brand is its product point of difference.
Are the products filling a gap in the current market? Are they competitively priced? What is the brand’s manufacturing quality, delivery reliability and overall profit margin offered to retailers?
As retailers demand higher margin growth, profit margins have become increasingly important. The margin is a contributing factor in the online shopping sector, which as we all know, is expanding rapidly. Let's discuss it here in more detail:
The fierce competition to get the best ‘deal’ is driving the escalation of profit margin demand.
Many buyers are asking for more than what many of us once knew as the “standard wholesale mark-up”, which is usually set at 2X (50% gross profit margin from the retail price).
Many brands can now offer 2.5X - 3X mark-up (60%-66.67% gross profit margin from the retail price), pushing the competition boundaries even higher.
In the crowded fashion market, we are finding new brands are willing to offer high margins and trade discounts, but for many labels this is unsustainable in the long term.
Before you are tempted to make unrealistic offers to buyers and retailers, it’s essential to weigh up production costs and business operating costs carefully.
Careful analysis is vital, because this high profit margin model may not suit all fashion labels.
Although I see margin as an extremely important element of a brand’s offering, I also like to see brands develop sound methods to make their products unique. And for them to demonstrate their label’s point of difference.
This will help win retailers over, while at the same time ensuring market placement longevity.
Point of difference and market demand
This is a key factor in the brands we choose to offer. Products must stand out against those of our competitors and they must meet consumer and target market demand.
It is essential to know where your label sits in the market.
And to compare the product against its many competitors.
Retailers will compare your product on the basis of quality, style, price, supply capability and a readily identifiable point of difference.
When you can easily identify all of the above, then you will have the ability to effectively evaluate your product against those that are already established in the market.
Market research on pricing is an ongoing exercise and must be carried out across all product lines.
By carefully studying competitors’ pricing structures and comparing them to consumer expectations, you will be able to see if your products meet the demands of the target market.
Over the past decade, buyers and consumers have become extremely sophisticated with regard to pricing.
The internet allows them to compare thousands of products, and to make well informed judgements based on price. Your ongoing price analysis must be undertaken diligently.
Regardless of how beautifully designed a product line may be, if the end retail price is too high, and your target market refuses to pay the premium price point for it, you have no option, but to delete non-competitive products from your line.
The questions I always ask when taking on a new fashion label are: do you have a reliable factory to manufacture your products?
Do you have an extremely reliable supply chain in place that guarantees your products are delivered to the retailer on time?
Manufacturing quality is something we all know and understand. If manufacturing quality is poor, buyers and retailers will quickly identify the quality of the end-product does not meet their standards.
This will have a devastating impact on your business because of high return rates, zero repeat orders, and valuable stockists will walk away.
When customers lose trust in a product, the negative flow on effect is swift. And in most cases, the integrity of the label is ruined. Therefore, quality control is vital to your businesses success.
On time delivery is non-negotiable.
Failure to deliver on time can make or break a label. When you, or your agent, write orders you are usually given delivery windows and open and close dates.
Larger retailers are not flexible with delivery dates. If you miss the close window, retailers can refuse to accept your products.
Therefore, it’s imperative to have a reliable manufacturer and a sound supply chain in place that ensures you meet deadlines.
The fact your manufacturer produces amazing quality products, but is consistently late, means you may need to rethink whether they’re the right manufacturer for your business.
Being late with deadlines becomes even more complex when you start exporting your products.
You must meticulously manage the transportation logistics.
Creating effective methods to have your products cleared and accepted by other countries is vital to success.
Products that arrive late will usually result in the intended recipient refusing to accept the order. I can’t over emphasise the negative impact this will have on your business success.