Opening an online clothing label can be a daunting task, so it helps to know what you’re getting in to and what decisions will need to be made. 

The world of fashion eCommerce is one that’s constantly—and rapidly—changing. 

One report predicted 2019 would be a year when the industry began to seize some of the opportunities presented by shifts in consumer habits and preferences, including the closure of many physical retail locations. 

While personal spending on fashion may have stagnated in recent years, the report notes that retailers that are “nimble, think digital-first, and achieve ever-faster speed to market” have the highest chance of succeeding. 

Being in that group requires understanding how available resources dictate what choices are available to them. Each one, of course, comes with its own set of pros and cons.

Starting a Clothing Label: Product & Resources

First let’s look at questions around logistics. Assuming you have a good understanding of the product being sold there are three areas that will determine the strategies used.

Inventory - Manufacturing vs Purchasing

Manufacturing your own products

• Pros
• Low cost per unit leads to higher margins
• Freedom to set price point where you want based on production costs
• Maintain quality control and take your business elsewhere if there are problems
• Cons
• Ramping up production may take time you don’t have
• Need to figure out additional logistics such as shipping, warehousing and more
• If a supplier goes out of business, you have to start the process over again

Private labeling products from suppliers

• Pros
• Someone else is responsible for manufacturing, leaving you to focus on eCommerce and marketing
• You get the branding benefit and establish customer connections 
• Cons
• At any point the customer or manufacturer may go around you and connect directly
• Suppliers may impose conditions or fees that eat into profits or hinder marketing

Conclusion: The decision comes down to how much control you want to maintain over the products offered. Manufacturing allows you to decide for yourself what is sold under your name, while purchasing from others takes the burden of production off your shoulders. 

Funding: Self-Funding vs Crowdfunding

Securing funds yourself through loans or other means

• Pros
• You retain control of the company and its direction
• No reporting to others who have their own opinions on how to run the business
• When it’s your money going in, it’s your money coming out as well
• Cons
• By not working with investors or advisors, you miss out on valuable experience and insights
• The potential rewards are high, but it’s also your money being risked

Crowdfunding for capital

• Pros
• People anywhere in the world can contribute, even if it’s somewhere you don’t do business
• Creates an immediate connection between the individual and the brand
• Allows insights into actual customer demand before launch, allowing you to adjust if needed
• Cons
• Can be unreliable and likely not as lucrative as other funding methods
• Contributors may have opinions or preferences that run counter to your initial plan
• Puts significant amount of your brand’s image in the hands of others

Conclusion: Crowdfunding is increasingly popular with fashion retailers big and small as a way to reduce risk around new product lines. But it should only be undertaken by a business owner comfortable with the potential risks, including simply being told a proposed product is unpopular. 

Sales: eCommerce vs Marketplace

Launching a standalone store on an eCommerce platform

• Pros
• You retain control of most all of the user experience and can incorporate preferred messaging and branding 
• You own the customer information that’s received from visitors and shoppers
• Maintain control over pricing, including determining promotions and sales
• Cons
• Requires substantial investments in design and setup
• If the site goes down or has issues, you’re responsible for fixing
• Brand marketing is done from scratch, so you’re starting at the ground floor to build traffic

Selling through an online marketplace

• Pros
• Take advantage of the traffic the marketplace already receives
• Access to the marketplace’s shipping and other inventory logistics
• Outsource technical support to the marketplace owner
• Cons
• You essentially share space with competitors on the same platform
• The marketplace gets much of the branding lift
• Restrictions may be placed on branding as well as what sales and promotions are allowed and when
• Additional fees may be leveraged based on type or volume of products sold

Conclusion: While getting up and running on a marketplace is much easier than setting up your own standalone eCommerce shop, the long-term costs may unacceptably high. Marketplaces are also the modern equivalent of the old-fashioned department store, which runs counter to how over 80 percent of consumers say they plan to purchase from a direct-to-consumer brand.

Marketing and Advertising

Next, it’s time to consider what options are best when it’s time to market and advertise the products being sold.

Establishing your brand, building your customer base and driving traffic to generate sales all take an investment in marketing and advertising. Running an online clothing business on a tight budget means you have to get creative. 

Content marketing: social media, blogging, email and others

• Pros
• There are a few costs, including blog hosting, but it’s still relatively inexpensive
• Scales well, as producing content for 10,000 people isn’t too different from doing so for 100 people
• Has the potential to go “viral” and reach a much larger audience than just those following your profiles
• Increases search footprint and provides ongoing series of touchpoints between customers and your brand
• Cons
• Producing the content does take time and money, as you need to work with writers, designers, photographers and others
• Need to watch metrics to see what content is taking off so you can adjust tactics
• Actual reach may be less than 5 percent of your network size as social networks filter people’s news feeds

Paid advertising, whether online, on social media or in print

• Pros
• Drastically increases reach beyond your organic audience
• Leverages existing consumer behavior - searching, reading popular sites, scrolling social media - instead of trying to create new habits
• Offers good opportunity for special promotions, coupons and other specific calls to action
• Cons
• Achieving that reach can get expensive quickly, especially if you aren’t careful with audience targeting
• Requires close watch of response to the ad to ensure return on investment is positive
• A wrong bet on where, when or to whom means dollars were basically wasted

Owned promotions like flyers, mailers and more

• Pros
• You control the production and distribution of materials as well as their design, format and frequency
• Including promotional codes or coupons in product shipments can help encourage return shoppers
• Cons
• Limited space for messages and branding
• May be forgettable as people are inundated by such promotions daily

Conclusion: It’s not a question of one or another, but a mix of tactics. What that mix looks like will vary from one case to another. There are specific ideas for social media promotions and word of mouth activities, but each needs to be given its own consideration and evaluation to see if it’s something worth engaging in. 

Technology: Building Your Stack

What kind of technology you use to support your business’s operations is among the most essential decisions you will need to make, one that plays a vital role in the future of your fashion business. Given the consumer trends changing the face of the retail fashion world, it pays to do your research before making a choice. 

Points to evaluate include: 

1. Voice search - How are shoppers using smart speakers and voice assistants to begin or aid their shopping experience? 
2. Augmented reality - How are shoppers expecting to use AR to virtually try on clothes before making a purchase? 
3. Behavior tracking - How are you analyzing what people matching your buyer personas are doing online, on mobile and in the real world to better target marketing to them? 
4. Scaling issues - How are your software and hardware choices built for both today’s and tomorrow’s traffic? 

Conclusion: Hiring someone with specialized knowledge in this area can be a tremendous help since the stakes are so high. It’s cheaper to hire someone to do it right today than to fix problems tomorrow. 

Expansion - Adding Channels and Going Global

With a firm foundation laid, you may be looking at opportunities for growth, whether its expansion to new sales or marketing channels or adding global territories to reach more shoppers. 

Adding New Sales Channels

• Pros
• Potentially adds customers
• Diversify income streams as you’re not reliant on a single platform 
• Cons
• Inconsistent shopper experience due to differing rules around promotions, pricing, branding etc
• Inconsistent backend experience, especially regarding inventory management, product descriptions/images and more

Adding New Marketing Channels

• Pros
• Potentially expands audience and customer base
• Each likely offers unique ways to reach the audience 
• Increases search footprint as well as opportunities to connect with current and potential customers
• Cons
• Each channel requires attention and maintenance, increasing workload
• Metrics are different on each one, making cross-channel reporting difficult

Expanding to Global Markets

• Pros
• Substantially increases the pool of potential customers
• Adds cache to the brand to say it’s a “global” company
• Cons
• Costs of ramping up operations can be high
• Additional level of difficulty around logistics like shipping and customer support
• Technical details - site translation, display of local currency, geo-gating select products - can add significant expense and maintenance concerns

Conclusion: Growing your business is a good thing, but no choice should be made lightly. eCommerce is a massive worldwide business, but the decision to add territories, sales channels or marketing outlets should come only after all it’s clear the benefits outweigh the additional responsibilities being taken on.

Anyone considering starting their own online fashion business likely already realizes they are taking on major responsibilities. 

By using the right tools and enlisting the right expertise, they can establish a foundation that allows for growth and success. Knowing when to do so and in what manner means knowing what limitations and opportunities are available because of product type, budget and other factors.  

The points above are just some of the issues they should be weighing the pros and cons of during the initial stages of launching an online clothing label.