How to Set-Up a Wholesale Clothing Business
The global economy is slowly moving into the path of recovery. Planning to set-up a wholesale clothing business requires a proper strategy, business plan and of course an investment of time and money.
In layman terms a wholesale company does not sell its merchandise to consumers or the end users but to retailer and sellers. It is a question of supply and demand and ensuring the wholesale distribution network is completely in sync. As a company you will be procuring your merchandise from manufacturers and other distributors. Many business models also operate where the wholesale company is also a manufacturer and therefore you have complete control over the distribution chain. There are several business models which can be followed to meet the financial objectives. Lastly, there is also a huge involvement of technology in terms of software applications that can help in the logistics and the wholesale distribution
The company has to decide on what will be the scale of the operation. At what part will it control in the entire distribution process from the manufacturer to the final customer. It is also important to consider whether the clothing distribution will be only high-end fashion lines, generic clothing or completely niche products. This decision does affect the wholesale clothing distribution.
There are possible more options of resourcing a general clothing or mass market clothing. In the current economic environment you might be looking at clothing from places where the cost of manufacturing is less and your profit margins are therefore higher. You can also look at niche suppliers who do not have access to large markets and this is where a wholesale clothing company can add value. Ensuring a stable resource that can steadily supply the desired merchandise is obviously a huge advantage – therefore having a pool of suppliers ensures that you don’t have all your eggs in one basket. And obviously it helps in negotiating the price
Establishing the Distribution
The wholesale company has to establish a good relationship with retailers of various business capacities. It is the small and mid size businesses that run the economy of country and clothing business is no different. In this area you have to spread out as much as you can. And considering the current economy, it is a better idea to look at lower margins and have a wider connection in terms of buyers.
This entire distribution chain requires a robust technological support that ensures the supply and demand is always maintained. There are several supply chain management applications, depending upon the scale of the business that can be used for this purpose. Then of course there is also the logistics, how will the merchandise reach its destination. For most wholesale companies, this is an area which is a huge cost to the company. The mode of transportation is substantial cost due to buying and maintaining trucks or vans, cost of fuel and of course staffing costs. Therefore logistic management and with the support technology, this cost can be managed in an effective way.
In many cases, the clothing manufacturers may be found in third world countries or maybe in regional areas. But despite the advantages of cost, the quality of the merchandise needs to be checked before distribution. This is especially true if you are dealing with niche products or hi-end fashion. The clothing industry loses billion of dollars due to forgery and imitations. There are ways to secure the quality of the merchandise and they must be strictly followed. If the wholesale company is importing the merchandise internationally then all the required trade licenses and legal permissions have to be completed much before shipment delivery. There are many examples where entire shipments have been stuck which is not only adds cost but the company loses face in front of the retailers.
In the current marketplace of recession recovery, where people are saving money and not spending of expensive items, the wholesale company is also affected. Therefore one of primary set up objectives is to understand the current trends in the marketplace. There is no point of having an entire distribution network when you are supplying merchandise which no one needs. Communicating with your customers regularly and building a relationship very early on, is a key to understanding demand. Even the manufacturers will understand what the requirement is and meet them rather than push for merchandise which is harder to sell.
Finally, the one very important task when you are setting up a wholesale company is to hire the right people. You need highly motivated and experienced people who can manage the tough competitive environment which one faces in current economic conditions. It is the people that makes the business. And hiring someone from within the industry even if the cost is high, is worth it, especially for a start-up