For 15 years of my career, I worked for large-scale retailers who could easily produce large quantities. We were able to source and produce overseas with partners that had top-of-the-line facilities and machinery for a much lower cost than producing domestically. In order to offer mass-retailer opening price points, it was necessary to source products and services where material and labor costs were as low as possible.
Usually launching brands are not in a position to fund a large unit assortment. Nor do they want to invest in that much inventory if they do not yet have consumer selling data to strategically plan their assortment. Starting lean offers you the least risk but can also make it hard to develop a profitable business model.
The good news is that international sourcing is now accessible for launching brands. With the emergence of the start-up market for launching brands, international suppliers and manufacturers are adjusting their business models. Many now offer opportunities for smaller quantities. Here are some ways for launching and scaling brands to best utilize international sourcing:
Production Sourcing
One of the largest product costs is obviously production or cut-and-sew cost. This is the cost it takes to assemble and complete the product. Manufacturing in the US can provide you the opportunity of small-batch production and even production without minimums. Although US manufacturers can produce small quantities, the cost of producing these low quantities is very high. This is often unsustainable for a profitable business model.
While international manufacturers do not usually offer production without minimums, there are many partners I work with that offer production minimums starting at 50 to 100 units. This is surprising to many people as the common perception is that the minimum quantity would need to be over 1,000 units to produce overseas.
The international production landscape is changing. Production partners are now utilizing their large sample rooms to take on these smaller quantities. Just as with domestic production, the international production cost goes down as you increase your quantity and they are able to move the production onto the normal factory floors. The cost of producing in these international sample rooms is much lower than producing domestically. This is true even after factoring in shipping and importing costs.
Fabric Sourcing
After production, fabric cost is usually the next highest cost that goes into making a fashion product. My clients struggle to meet their profit goals with fabric bought from domestic fabric importers who add their commission to the cost of the materials. Sourcing and importing fabric yourself can be a way to significantly lower your total units cost and build profitability.
Custom weaving and dying minimums for overseas fabric suppliers are still a hurdle that launching brands need to consider. The minimums are usually 1,000 yards if you want to order fabric in a specific colorway. However, similar to international production being offered for small quantities, international suppliers are starting to offer sourcing alternatives for smaller brands. Some fabric suppliers we work with offer lower custom yardage orders but will charge you a one-time low-minimum custom order fee. These charges vary by supplier but a typical fee is an additional $0.50 per yard.
Launching brands can also consider importing greige or Prepared For Print (PFP) fabric. If you have a core fabric that is used across multiple styles, this is a great way to purchase a higher quantity of fabric to bring your fabric cost down for the whole assortment. There are many US resources you can use to dye or print your fabric to fit into a smaller collection of styles. Before ordering the fabric from an international supplier, make sure the US fabric printer or dying resource you find works with the fiber content within your fabric. Some fibers are easier to dye than others. Also, be sure to inquire about wash instructions on dyed or printed fabric. Make sure the dye or print will adhere to the fabric correctly. It should not wash out or bleed after just a few washes.
Manufacturing Technology
In specific product categories, production machinery and technology overseas surpass the abilities of what most US resources can do. In other categories, US resources do quite well and the only difference in sourcing overseas would be the lower cost. One of the most common categories that I recommend producing overseas is highly technical sports or athletic wear. If you want to have high-end finishing like Nike™, for example, using elements like placed perforation, bonded or heat taped hems and laser-cut finishes, overseas partners will be able to execute this with higher quality and for a lower cost. They have the machinery and technology to more easily achieve this look and functionality.
While you can find US factories that produce this type of highly technical product, be sure to ask how they achieve these finishes. Most factories will almost always say they can produce something if they want your business. To confirm their abilities, ask them to show you examples of the production process you are looking for. Ask them if they are doing the processes in-house or if they are contracting it out. This increases costs, limits their ability to control quality and lengthens the production lead time.
International Sourcing Summary
International sourcing for your launching brand offers you the ability to be strategic. This is a great way to achieve a margin structure to support a sustainable and profitable business. I always suggest that brands have manufacturing and supplier vendor partners in both the US and overseas. Domestic manufacturing may make sense now while international sourcing may align better as you grow or scale. Even when brands get larger and grow overseas, they still utilize domestic partners. This is especially helpful for testing new products and quickly producing sold-out, best-selling styles.
There are so many ways to effectively source and produce. Keep your options open. As overseas partners adapt to the fashion start-up trend, they will continue to find ways to partner with you. You can then leverage their price points and expertise to launch and sustain your fashion brand successfully.
Guest Post:
A fashion industry leader, Alice James founded her own advising and project management firm assisting emerging fashion, accessories and home brands. Her firm specializes in helping ambitious entrepreneurs navigate domestic and international production and source and produce effectively while staying focused on maximizing revenue for long-term success. You can find her at alicejamesglobal.com.