Polo Puzzle: What Goes Into a $155 Price Tag?(online.wsj.com) |
Polo Puzzle: What Goes Into a $155 Price Tag?(online.wsj.com) |
What I find fascinating, is how we get from $29 to $155 at the store, or $2 to $30 for a cheaper shirt. The vast majority of the cost of a clothing item comes from putting it on a shelf in a well-staffed store.
I think this highlights why we have made a shift from a manufacturing economy to a service economy in the US. The kid who waits on you in an American mall costs much more on a per shirt basis to employ than the arguably more skilled seamstress, even when the seamstress is in the US.
More and more people I know are finding themselves shopping online instead. There's a whole host of advantages:
1. The selection is way better, while the retail shop often has none of the styles you want, forcing you to go to specialty stores. Of course, online, "going to a specialty store" doesn't require driving.
2. Even though many people love browsing, the shopping experience is often just terrible. Online, searching for a particular type of clothing or style takes basically O(1) time, thanks to search, while in a retail establishment, you have to cart yourself across the store repeatedly. And online stores typically have images of models wearing the clothes, giving you a better sense of how it would actually look.
3. Some sites online offer actual, specific measurements for all their clothing instead of vague sizes like "6" or "10", whose meaning isn't even constant for a given manufacturer. I've never seen anything like this in a physical store.
4. It makes impulse buying easier, since you don't have to drive anywhere.
(and much more)
If Amazon can put the pinch on retail books and electronics, can sites like Milanoo put the pinch on retail clothes and cut out the middleman? I think there's still a lot of room in the online fashion space, and the margins surely have to be better. This is a harder problem than those approached by the typical HN startup, due to the problems of dealing with physical goods, but there's nevertheless been a lot of successful companies in that space lately.
But at a store you can simply look the item, and if it looks like it should fit try it on to see if it actually does fit. The actual size printed on the item isn't that important in those cases.
The other aspect is that stuff like stitching, button holes, collar construction, and general feel and quality of the material used is incredibly hard to judge online, while trivial to judge in person. Stuff like this simply doesn't matter when it comes to books and electronics.
Of course all these problems are solvable, but it is a much much harder problem than selling books online.
The real opportunity to lower markups is in manufacturers selling direct.
This sounds interesting, can you shine some more light on it?
It's basically Electronic Data Interchange through which they make orders, track shipments etc.
Here is how a typical one looks like:
http://www.nordstromsupplier.com/Content/sc_manual/FLS%20810...
Are there any journalists or PR folk here who can comment? Or entrepreneurs who have had coverage like this for your own company(s)? How can other founders accomplish something similar?
I did not use a PR company.
There isnt a secret. Just meet lots of people, ask them to suggest other people to meet and dont expect a story from everyone. I find that for every 10-15 journalists I have met, I have got coverage.
In my experience, after meeting a journalist they will often email to clarify points. Dont overload them with data here. Dont send them a pdf file. Give them well worded answers and maybe a few extra points that you wish to reinforce.
Luck also helps!
Another one on $550 chinos: http://www.nytimes.com/2010/04/29/fashion/29ROW.html
Also, anyone else find this "killer app" notion in clothing to be funny? It's like Bonobos claiming they've solved the "saggy butt problem" with a "curved waistband." Genius!
While manufacturing your own clothing is much more involved and logistically complicated, its relatively easier to become an online retailer and buy clothing at wholesale from existing brands and sell that. That also helps me mitigate my risks (my domain knowledge is technology and not apparel manufacturing/sourcing).
On a side note, I am currently looking for co-founders. I have a technical background and have almost completed coding the site. If you are interested, my email is in the profile
Also, a lot of times, retailers will have 30-60 day payment terms, which is basically the time you have to turn over the inventory. Also, if you do not sell (in fashion) it becomes stale quick and then you have to sell at discounted prices.
I am around to help if you need any advice etc. Have a decent amount of knowledge in this area.
Fine, but they're shipping them out of their living-room.
The article would have been greatly improved if it gave a typical breakdown for those prices as well.
Did you know my shirt was made in America and came in an Eco-friendly laundry bag? Oh don't worry darling, the Chinese peasant did a perfectly adequate job on stitching yours.
$65 is a lot more reasonable that $155 and I'd buy twice as many at that price ;)
Etsy comes close but a startup that focused on a niche and curating quality could be a fun and profitable challenge.
You can use the profit to create an umbrella brand and increase production. The extra items from the increased production (from the extra profit) can be sold at a different price under a different brand so to let people who can afford to pay more, pay more, and get to feel special.
Note: I think the OP was just trying to say if it costed less, he would shop more. He might not have meant he'll buy exactly double.
1) they use top-loading washing machines
2) they use dryers
or even worse washing-drying combinated.
While I don't doubt that Polo chooses good cloth, it's standard here in Uruguay for clothes to last that long. I've inherited a lot of clothes from my father, and have tons of clothes to give away that are in reasonably good condition.
The reason is that they've been either hand-washed, or washed in a front-loading machine at a low temperature, and then dried in a clothesline (I've never owned a clothes dryer).
For example, this article claims that clothes washed on a front-loading washing machine last longer:
http://www.networx.com/article/choosing-a-washing-machine-to...
Edit: U$ 500 for the cheapest front-loaders? I bought mine for U$ 200 (not in the U.S. obviously, but with the humungous Uruguayan import taxes).
If you hand wash and line dry, suppose that's 5 minutes of labor per wearing. If you wear the shirt every week for 10 years, that's 43 hours of labor on washing for 10 years worth of shirt. It would only take 25 hours of labor (compare to 48) to buy a new shirt every 2 years.
And this also assumes your time is equally valuable to the time of the guy making the shirt - I consider my time to be worth far more than $5-15/day.
The only point I'm trying to make is that durability and preservation of material goods is often overrated, and replacing things every few years isn't necessarily a bad thing.
And Uruguayans are used to earning very little compared to the U.S., plus brand clothes are MUCH more expensive here.