What It Takes to Launch a Successful Online Clothing Brand in 2020
June 30, 2020 5 min read
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Per usual, clothing brands like Nike, Zara, Adidas, Hermes and H&M were some of the most popular in 2019. What about 2020, though? In spite of new, obvious obstacles, with the right business plan and brand, a new online clothing company could rise to the top of the pack this decade.
Start with a sound business plan
If you look on pretty much any site that offers new business advice, one of the top suggestions listed is to create a business plan. Making a plan may sound uninteresting, but it’s one of the most necessary aspects of launching a successful ecommerce clothing brand.
A well-written business plan is essential, especially if you need to find investors and lenders. It’s also necessary for you to understand your short- and long-term goals and make sure you stay on track.
You’ll need a well-designed pricing structure
First things first, figure out your cost per unit (CPU). You’ll also want to look at the other fixed costs of running your business, like website maintenance and employee expenses.
After you’ve done the math, aim for your prices to be about 50 percent higher than your expenses. You might be able to get by with a profit that’s 30 percent above your expenses, but one of the worst things you can do is diminish your profits unnecessarily.
Before you officially set up any pricing, look at your competitors’ prices. That only accounts for a part of your customers’ perceptions, but it is a significant part.
If there is a difference between your costs and their prices, you might need to do some adjusting. If your price is lower, you might want to increase yours slightly to be closer to the competition.
In the event your products are more expensive, you need to clearly describe to your customers what they’re getting when they buy your clothes and justify the extra expense. The appearance and quality of your clothing can greatly enhance a customer’s perceived value of your brand.
Invest heavily in your online presence
As an ecommerce clothing brand, your website is your storefront. You need to draw customers in and provide them with a positive experience from the second they enter your site to the moment they leave — hopefully through the checkout process.
Your web design should embody your brand. Within a few seconds of visiting, make sure a viewer is hooked and has a decent understanding of your voice and persona.
Strike a balance between art and business
Yes, starting a clothing line is an art, but it’s also a business. Without creativity and design, you won’t succeed. You also need to have a strong foundation in business and finance to make your clothing ecommerce business the full package.
Generally, it’s hard to be an expert in many things at one time, so if you err more on the side of design and creativity, hire someone to handle the business aspects of the company. Alternatively, if you thrive in building a business, you’ll want to make sure to hire creatives who can manage the more right-brained side of your operations.
Seek an understanding of supply emphasis
One big mistake new ecommerce clothing businesses make is picking the wrong kind of clothing-creation process. Although there are many different models, new brands often choose between on-demand creation, private label, custom and wholesale creation.
In an on-demand model, a third party creates and ships garments to your customers. With this model, you have no inventory to manage. That said, the third party takes a significant chunk of your profit because they are creating and fulfilling orders for you.
Private label occurs when companies design their own clothing and then have it manufactured. In this model, you’re responsible to find the fabrics and materials to make your garments. You will also be required to manage your inventory and fulfill your orders in this system.
Custom clothing creation is another option, but it’s expensive and very niche. In this organizational scheme, each garment is made specifically for each client. This process is costly, time-consuming and difficult to do well.
Due to these high costs, only specific customers are interested in these products, limiting your customer base. That said, with such a high average order value, this model can be financially viable.
Wholesale is another common clothing-creation avenue. Here, you pay for your materials and labor upfront and then a manufacturer creates your products. This requires you manage the orders, inventory and shipments. Overall, this is similar to the first model listed, but it’s different in the sense that the third party doesn’t take nearly as big of a cut.
Why wait? Now’s the time to get to work!
This decade is a great time to start an online clothing business. If you have the right drive, know-how and positioning, you can start a business that will do well for years to come.