When you do business, any business, you are in a learning curve.
You start a business to make money and you end up learning something instead. That’s how it is at the beginning at least. My personal opinion is that one should look at starting a business as an investment similar to paying to learn in university.
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What you are about to read here will unfortunately not change this universal rule. We learn through failure. However this article and the real life experience we are sharing here will hopefully make a difference in the way you handle your t-shirt business online.
This is the first of a serie of articles dedicated to selling t-shirts online. I believe that the concepts discussed here can apply to other many types of business.
Draft banner of www.wholesale-clothing-supplier.com
ECM has been dealing with e-commerce in the past. This article shows simplified but true numbers that you can rely on.
I remember the early days of the company when we we were selling fashion accessories online in France. Here is the simple problem we encountered: No gain. In this article, we intend to share our experience and the lesson we’ve gained from it. We won’t hide anything and we hope that our transparency will earn your attention.
Profit (or loss) by the numbers. Sale price and various costs – This is what was going on:
Average retail price for a t-shirt: usd 20 (that was about 15 euros in 2005). That was the market price for this type of product. We have tried increasing this price but the mrket would not follow. That meant that usd 20 was the right price at that time and in that place.
Cost of the T-shirts.
The company was getting the t-shirts at about usd 7,50 (production + shipping to France). At that time, we were only making and selling around 200 tees per month.
That is nowadays still a very reasonable price given the quantity we were dealing with.
Cost of shipping a t-shirt to the client.
Shipping one t-shirt to one client would cost around usd 7,50 using the popular 48 hours shipping to anywhere in France.
Cost of getting the client on our shopping platform: usd 5!! Total cost: usd 20. Profit: none!!!
We found out later on that the cost of production and shipping were perfectly in line with our competitors.
If you are running a t-shirt line or planning to do so, and if you have got quotations from t-shirt manufacturers, then you will certainly agree that all of the numbers above make perfect sense.
The problem we had was the (huge) cost of getting the client to buy. We were using Google Adwords to bring internet users on our website, and that was a costly solution.
How could we possibly end up with a cost of sale of usd 5?
That money was supposed to stay in our pocket!
The cost of making the sale for a t-shirt (through google adwords) was around usd 0,10 per visitor. It would take around 100 visitors to make two sales. Therefore the cost of advertising would be around usd 10 to make 2 sales which means a cost of sales of usd 5 per t-shirt.
It is a tight market:
T-shirt factories are all practicing the same low price based on the cost of coton and the labor cost in Asia. Unless ordering much bigger quantity, it is impossible to deal with lower prices without impacting on the quality. In 2005, we were starting our clothing line and we were working with the minimum order.
Sewing is nothing if you are not into selling. How to sell T-shirts online?
We built our first team of sewers in Vietnam to gain in reactivity, not on the prices. One of the business partners had family in Vietnam, so it made sense to start our factory over there.
Clients in our market had access to cool t-shirts at an already established retail price of usd 20. So there was no chance to sell at a higher price. The only clothing brands who could do this were selling in brick and mortar shops because they had the capital to do so, we could not (or at least we were not ready for this).
What have we learnt from this experience?
In this case study, the advertising company is making the profit. And it’s ok because it has the power to bring clients in the shop, or not.
At that time our company was not adding value. In fact we were dreaming that we would make this business work without doing anything by ourselves: We were not producing, not shipping, not bringing people to our shop, not delivering our products. We were simply paying others to do all of this for us.
To make money one need to add value.
It is for instance possible to add value to the t-shirt brand by having a famous person to wear the brand in public. Looking for such a candidate a finding that person would be hard work and a great way to add value to the brand. We will get back to that topic in a future article.
Today I would like to discuss first the possibility of bringing clients to the shop without paying for a costly advertising campaign.
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