Foundation: Finances & Cash Flow

 

Foundation Cash Flow

It can be awfully frustrating to project expenses for your company within the first 3 years of launching. There are lots of unexpected costs and if you are self funding you might be unsure about what is essential to succeed and what is the extra mile. I’m going to share with you a couple essential areas of your business you need to budget for.


 

  1. Digital Marketing. As you pick your channels to drive traffic to your ecommerce site choose ones that have a paid advertising component. Set aside at least $300 a month on advertising for one platform.

 

  1. Photography. This is a critical part of your branding. Don’t skimp out on this. Your wholesale buyers and online customers rely on photographs to make critical decisions about your brand. A decent photographer will start at $500 a day. If you are shooting lifestyle and stills two times a year plan to budget $2,000.

 

  1. Samples. As you are developing your collection and looking at different manufacturers it can be an expensive process. While I can’t tell you how much to allocate for your particular collection, I will say take whatever you estimate and double it. Sample makers get things wrong and you may need to try different manufacturers.

 

  1. Professional Fees. Chances are you will need to hire a lawyer, maybe a production consultant, retail consultant, bookkeeper, and tax accountant. Get a quote on all these services and plan on these costs yearly.

 

  1. Office Expenses & Printing Costs. These can sneak up on you. Plan these out in advance and don’t over buy. Yes, business cards do depreciate in value over time. A famous Syama quote “if you don’t have a place to hand out your business cards, don’t print them”. Think of all your branded assets: postcards, packaging, notecards, stickers etc. and plan for it. Do some shopping around before to get some quotes before you need to buy.

 

There are many aspects of finances and cash flow to consider. How often are you producing your collection? What resources do you have access to for free? Projecting your sales and developing an accurate flow of sales channels in relation to marketing. Understanding your gross margins and properly building out your company cash flow versus your product sales projections are essential. Launch My Brand has a class specifically on finances and cash flow. In fact, the very first class we go over a financial projection template and discuss how to build out custom projections for your brand. Learn more about Launch My Brand at our FREE webinar 2/16/16. Sign up here!

5 Tips to Grow Your Email List

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Why is email acquisition so tough? Especially on an ecommerce site. There are few tricks in the bag. Everyone has a newsletter pop up and how many coupon codes can you really send to friends and family. Here are a couple of tips that really work, so read on an implement.
1. Create a product giveaway. Everyone loves something free, contests are great too. Drive traffic to your new email acquiring landing page or pop up with paid advertising on Google, Bing, Facebook or Instagram.
2. Create compelling content and syndicate it. If your content is good then they will want to subscribe to get more. If you have built up your brands YouTube channel ask them directly to come to your site and subscribe. Ask your Instagram following to sign up for your “new” newsletter. Hey, no one knows that its not new 😉

 

 

3. Create fun and catchy opt-ins. I love what Pura Vida does for their brand. If your brand isn’t taking a casual attitude, find a style that does the same trick.

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4. Referral marketing. Sign up for a platform like Referral Candy, there are lots like them, and start implementing referral marketing with the people who are already customers. They refer a friend to the site, and they get 20% off their next purchase. Clean and easy. Let your customers do the work for you.

 

5. We talk a lot about driving traffic through digital means, but what about in person. Your customers deserve a 360° brand experience. If you do a pop-up shop, sell at a flea market or do any time of selling that is live bring your iPad and incentivize your captive audience to sign up on your email list.

Good luck on your journey of growing your email list! Its not easy, takes time, but is well worth it. Email is golden.

What is the difference between Drop Shipping & Cross Shipping?

 

 

KEEPING ON TRACKNew business models are the wave of the future and understanding how to work with these new types of retailers will help you maximize those relationships and, of course, make more money!

 

Here is what you need to know.

 

Drop-Shipping

 

What it is: The online retailers sells your product on their platform. Once the customer places the order with the retailer, they contact you and you ship it to the customer. The retailer pays you the cost price plus shipping.

 

Pro’s:

1. If you are just starting out and you don’t have a lot of distribution working with drop-shipping companies will allow you to add stockists to your list.

 

2. Drop-shipping sites are usually early stage businesses, this gives you the advantage to ask for more. Things you can ask for: social media blasts, newsletter features, homepage features.

 

3. Testing out products and price points. If you aren’t ready to launch your own ecommerce and want to test market your products, this is a great way to do so.

 

4. Better payment terms & margins. You have the upper hand in negotiations on wholesale price. I suggest a 60/40 split in your favor and 14 day or 30 day payment terms.

 

5. Packaging is a great way to take that customer all for yourself. Make sure you add postcards or special content that will drive that customer back to your site. Though you may need to use the retailers packaging, definitely double-check.

 

Con’s:

1. You have to hold the inventory. If you don’t have products already in stock you will need to get the inventory.

 

2. You have to do the shipping. If you don’t have a local USPS, or aren’t  set up with UPS or FEDEX, whichever is preferred by the retailer, you will need to do so.

 

3. Sales will be tough to get. Especially on newer ecommerce sites that use drop shipping. They are spending their time marketing and getting traffic to the site, but its tough to say what will be the best sellers and if your products will work. Don’t go into drop-shipping thinking you will get business right away. It will take time.

 

Cross-Shipping

 

What it is: Similar to drop-shipping, the online retailer sells your product on their site. Once the order gets processed the retailer contacts you and you ship to the retailer. Then the retailer re-packages the product and sends to the customer.

 

 

Now why would the retailer want to do this? Branding. Its better for the retailer to have the outgoing packages be branded from them even if they are not holding the inventory. This also costs more for them. They pay for shipping to them and shipping from them to the customer.

 

 

Pro’s and Con’s are similar to that of drop-shipping. Though under this scenario you wouldn’t be able to take advantage of adding in your branded assets to the package that gets sent to the customer.

 

 

These two forms of online business models are more common than you think. New startups will often implement them to test market their brand before moving into a wholesale model. These models aren’t good or bad but need to be factored into a global sales strategy for your band. If you are interested in learning more about new business models sign up for our Selling Webinar: How to Sell to Barneys & Boutiques. If you want more in-depth strategy and guidance contact us at hello@scalingretail.com

 

Here is to your success!

 

Syama’s Favorite Apps for iPhone + More!

Over at Scaling Retail we love our Apps.

Here are a few that I use on a regular basis:

Boomerang: Great for scheduling emails- stay on top of multiple time zones.

Boomerang adds scheduled sending and the easiest, most integrated email reminders to Gmail, helping you reach Inbox Zero.

Streak: A simple CRM platform and way to automate emails!

Manage customers directly inside gmail No more back and forth between your inbox and other tools

Mailchimp: Great for iPhone! Allows me to check on emails away from my computer.

iDashboard Analytics: iPhone App, Great for keeping eye on Google Analytics

CamScanner: So I can send my signature digitally from my phone!

Turn your phone and tablet into scanner for intelligent document management. CamScanner is an intelligent document management solution.

Switch: iPhone App: To manage our corporate phone anywhere – on my laptop or on my phone

Hootsuite: iPhone App: To stay on top of social analytics

I hope these work for you!

Best,

Syama

[video] Creating Product Pages That Sell Your Products- Fashion Ecommerce

Transcript!

Hi I’m Syama, CEO of Scalling Retail.

 

I’m so happy you get to join me today. We are going to talk about some really important information that’s really going to help drive sales to your eCommerce platform. In particular, we are going to be taking some tips from Chapter Four of my latest book, “Creating Fashion Websites That Sell: The Fashion Designers’ Guide.”

 

Chapter Four is all about creating pages, product pages that are really going to drive sales. Absolutely, it’s going to be so important that you take some great notes. We are going over some really critical steps so that you can actually make these changes and make these things happen to your website, but ultimately, the most important thing in this process is going to be to get deep with your website.

 

Step one, is get familiar with your platform. Start to understand the terminology, Google it. You are going to see things like meta tagging, coming up with short descriptions for your website, making sure each of your product pages have the right descriptions on the back end. That’s very different than the right descriptions on the front end, which is what your customer is ultimately going to see. So step one, let’s get familiar.

 

Step two, it’s time to start getting creative about what it is you’re going to be selling. Obviously, it’s important to take a look online, start to do some key search terms. That means really start to take a look at some of the keywords that you’re going to be trying to sell on your page. See what’s ranking and see how people are actually responding to that. There are some great platforms online, like Moz, and some other ones, that actually allow you to do search rankings for keywords. Taking a look and doing some search rankings, figuring out what are the keywords that you are actually going to be optimizing for. While that all might sound very technical, it’s really going to help you with this next step of writing it.

 

Writing a product page is extremely, extremely important for what someone is actually going to buy. Too often I see people who are trying to sell $500 items on a website, and all they’ve really told me is one or two sentences about why I should buy it. To be honest, if I don’t know your brand, and you don’t have any brand value, or perceived value from a social standpoint, and I haven’t read about you in any press, you really need to sell me on why it is I am going to spend $500 on your product. Even still, if I’m going to spend $50 on your product, your goal is going to be to sell me, in the most romantic way possible, why it is that I need to own what it is that you are selling. You’re going to need to do it in a way that optimizes for keywords, and you are going to need to do it in a way that optimizes for the voice that you are trying to get across to your customer.

 

In other tips and tricks we’ve gone over developing your customer voice and understanding that, so it’s important to take all of that information and research that you’ve done in terms of demographics, et cetera, and translate those words into your description pages. You’re going to want to come up with a very descriptive title. Of course, if what you’re selling is green high heels, I sure hope you tell me what shade of green it is. I sure hope that you’re going to tell me what style of pump it is. Perhaps you are going to put something really catchy and interesting in there. If you had some press, “As seen in” is always a really interesting thing to put in your titles. That’s just the beginning.

 

Don’t make your prod descriptions too long. You certainly want to make sure that there is a couple sentences that talk about, maybe, the inspiration, where it was made, why you made it, what’s the reasoning behind it, maybe where someone else could see it, any type of press that that item has received. Then you want to go into some basic functional details.

 

These are things that you might say to yourself “Of course, I’ve already thought about it,” but too often are people overlooking the very basic fundamentals that get a customer to convert, and what are those? The first one is writing down your fabric content. People want to know a way in which a product is going to fit. They are going to want to know the way in which it’s going to look on them. Of course, having size information is going to be really critical, as well as having…If your product was on a model, or if it’s being shown to scale in any capacity, which it should, from images, you are going to definitely have on there the size that the model is wearing. I want to know, as a customer, how it is I’m going to be able to figure out if that item is actually going to look good on me. Anything that you can tell me about the way your product fits is going to help me trust that purchase, and ultimately, when I do make that buy, I’m not going to end up returning it because you actually sold me on wrong information. Make your product description fundamental details, make those really as clear as possible.

 

From a visual standpoint, there are a couple of different ways in which I really suggest formatting all of this content. We’re going to really think about having everything above the fold. As a customer, if I have to continuously scroll down to see everything, you’re probably going to end up losing me. When it comes to taking a look at product images, you’re going to want to have your one hero image. My favorite thing to do is have your thumbnails over to the side of it, to the left side of the page, so I can easily see what other alternate images you have. If you have product videos, great place to put them. If you have images of people on the street, customers, any press placements of people in those products, you’re product page is where you are going to want to double or triple expose those images. When it comes to everything being above the fold, make sure your thumbnails are above the fold, make sure your product descriptions, if you have any relevant shipping information, things that are really going to help me buy.

 

If you are selling something and it’s $50, and you have a shipping promo going on and it’s free shipping over $100, make sure that I see that on your product page because I want to know why it is I should buy it from you, and what are all the trigger points that are available to me. Secondly, making sure that your descriptions are both romantic and in the voice of your customer. Third, making sure all of your information is above the fold. Fourthly, you want to make sure you have product images that are professional. You want to make sure that there are to scale shots. You want to make sure you have lifestyle shots, and then, of course, any other type of extra social shots, press or social media. All of those things are really going to help tell the story.

 

Before you press live on your product page, I highly suggest you take a look and double check on a couple things. One, the product images that you’ve been uploading, have you been changing the names on the product images? I sure hope you’re not loading something and the title of it is DSC_12345. That’s not going to optimize that image, right? You want to make sure that all of the images on that product page are actually having their own unique product description, again, further ways of optimizing your brand. The best format that I have found is to actually use the name of our company in the formatting of the title, as well as the product description. The key highlighted subject titles of that, so, green high heel, maybe it’s kelly green, maybe it’s forest green, but things like that that are really going to be super descriptive. Images are going to be the one place you really want to double check.

 

Second thing to double check before you press live, make sure that you have everything on the back end set up in terms of all meta descriptions and tagging. It’s so easy when we’re uploading products to quickly overlook all these things. You might have done all the research, but you may not have necessarily translated that to the website. Make sure, number two, that you double check everything on the back end, grammar, spelling check. Please don’t push live unless you know it’s for certain.

 

Then, number three, make sure that below the fold is where you can actually have other areas of content that you might want to be pushing forward. Maybe you want to have other products, as far as linking sites, linking other product pages. If you want to do some cross selling or upselling, the bottom of the page is the greatest place you can do that.

 

Remember, you’ve done so much work to get your customer to this product page. If you fail them now, they will probably not return, right? It is super important, about 80%…

Demystifying High Fashion: The Pricing Strategy with Syama Meagher

scaling retailI sat down today to talk with Syama Meagher, a luxury fashion vet, to pick her brain on the most mystifying questions in the high end fashion industry. In the first of a 2 part series, Syama goes into depth on how to develop a pricing strategy around your two biggest markets, and the best way to deal with surplus inventory using a proper markdown strategy.

Q1: Hi Syama. So we know you’ve had over a decade worth of experience working in the high end fashion industry, formerly working as a buyer for Gucci and holding various eCommerce positions at Barney’s New York. How would you explain your collective experience working in the high end sector, and how has it shaped your understanding of the industry?

SM: The high end sector of retail is one of the areas where most people get attracted to, but it’s very seldom talked about the ugly side of being in high fashion retail. Most people come to the perspective that working at a place like Gucci or Barney’s, that the offices are really beautiful, it’s really nice, everyone’s really well taken care of, but in actuality we had rat infestation problems just like any other company.

Fundamentally off the bat most people think that high fashion means glamour and excitement, and yes it is exciting, but from the employee perspective it wasn’t what most people think.

From a retail perspective, understanding how the business works from the inside out is actually really interesting. So Gucci is vertically owned, which means they manage all of their production and manufacturing, so they can set their own pricing.

A lot of Gucci’s business is primarily coming out of their flagship and eCommerce locations, so for them selling wholesale to Saks or Neiman’s, isn’t really a primary form of their business which means they have a lot more control over their pricing and distribution model. So when people think about high end it’s important to distinguish between the vertical models (the actual brands) and the department stores like Barney’s, who have to negotiate their prices with brands like Gucci. Same goes for these other high end brands, they hold the keys to their own capital, whereas department stores are almost at the behest of these brands, but also are providing a gateway to another type of customer.  

Q2: We know that the luxury fashion industry is fairly price elastic; so what factors are at play when deciding on the final price of a good?

SM: Yea so it’s really interesting here, when it comes to the pricing strategy we had a really cool opportunity at Gucci to go to Italy and visit the factories, see how everything was made, and what’s really fascinating is that there actually is this artisan element and craftsmanship that goes into the production of a lot of these high end products. But these shows are reserved for the high end artisan products, so if you go into a company like Gucci, you’re going to see two different types of pricing.

Entry level pricing for Gucci, which is between $800-$1,000, and then the higher tier pricing, between $10,000-$20,000, and I mean that respectively for hand bags. Those products that are made in the second, higher tier range involve a lot of craftsmanship, so when you’re buying that product you’re really buying something that was made by an artisan. But when you’re buying in the entry level range, you’re not really buying the product for the craftsmanship since it’s machine made. It’s really when you get into the higher end products within these brands, that the less logo driven you get and more craftsman based it becomes. So when it comes to the pricing of these products, we’re really looking at 2 different markets that we’re pricing for.

 Q3: Wow, so there is quite a large disparity between the price and quality of the two tiers. Could you elaborate a little further on these 2 markets?

SM: Well one is the aspirational Gucci customer, they’re really interested in how many G’s are on the Gucci handbag, and in the size and wear ability of it because they want people to see that they’re carrying it. The other type of customer is really interested in the high end, exclusive products, and are concerned with not carrying something everyone else has.

They’re the ones that are going to be interested that it took 2 weeks to make a particular hand bag, or buying something in the new seasonal color, they’re the ones who are interested in the story. So there are 2 different markets that are at play within the luxury sphere, and when it comes to the mark up it’s much easier to determine that of a entry level price point product. So while I say they don’t give us visibility as far as seeing what their cost price is versus what they’re suggested whole sale price is, I can still tell you that the mark up is outstanding.

But they don’t actually give us hard numbers to reflect the cost price, and that’s actually the big mystery of high fashion, the cost price remains relatively mysterious for even people working in the office. When you’re buying luxury you’re not necessarily buying manufacturing, you’re buying the brand, so at that point the cost price has become somewhat irrelevant.

It becomes more about the demand of the market for your product, as opposed to a smaller luxury brand who’s really selling their brand based on the quality and craftsmanship of their products, so it’s easier to justify their price, whereas these bigger, established brands don’t really need to justify anything.

scaling retail

Q4: A rather hush-hush conversation in the industry is deciding on a mark down strategy. How should a high end brand go about this without alienating their core clientele?

SM: So when it comes to having a mark down strategy as a luxury brand, there are a few ways to go about it. If you’re a start-up luxury brand and you’re in different retailers, it’s very hard to have any control over mark downs.

If I’m a luxury brand and I’m selling at Barney’s, and I really don’t want my products to go on mark down, I would say to myself as a new brand, would it actually behoove me to buy back the mark down items and funnel them through my own sample sale process, or do I really want Barney’s to carry all this excess inventory of mine, and how would I want to develop that relationship. Buying back inventory means that you need to be in a fiscally healthy position in order to do so, and if you are in that position, I think it’s actually wonderful to be able to own that supply chain of your products.

Now for a company like Gucci, what we would often times do is have a secondary off price market where we could go and sell those products, by this I’m referring to the outlet stores. So by creating your own off price channel, it allows you to funnel through your own sales mark down.

There’s the perceived brand experience that customers feel when something goes on mark down, so as long as you have new products coming in, your core clientele or those who are brand loyal are really only going to be interested in the new stuff. Your brand loyal customers really don’t care what’s on sale, they’re probably just waiting for the new products because they’ve already seen the mark down products.

So as a luxury brand owner if I have the ability to buy back inventory, I would do that and funnel it through my own channels. I’d also say that going through certain off price places like, GuiltGroup, would be a good place to offload some excess inventory. I’m personally not a fan of publishing huge sales online when you’re starting off, because you really need to make sure if you are putting things on sale you also have new inventory so it doesn’t signal to your clientele that you’re going out of business.

scaling retail

Q5: So I know a big trend among high end outlets is offering outlet exclusives that look slightly different from the retail originals. Can you further elaborate on this practice?

SM: So companies like Gucci do make outlet exclusives, as do other brands like Prada. Looking into the outlet arena was my territory at the time and I noticed some of Prada’s outlet exclusives were manufactured in China, and what’s actually terrifying is that customers were going into the Prada outlet and walking away thinking they’ve bought a genuine Prada item when in reality it was made in China.

There are no laws in place when it comes to this sort of practice, but in reality it’s deceptive to customers who are buying a brand so heavily synonymous with Italy. Other brands, like Bottega Venetta and Gucci, would manufacture their outlet exclusives in their country of origin but would tweak the design or use less expensive materials.

Q6: Got it! Well thank you so much for sharing your exclusive insights on this elusive industry. Do you have any final tips or information you’d like share?

Yea, so this is more for people who are looking to launch a high end brand, my suggestion is to really figure out who your customer is, do your competitive matrix and your market research. Test your products by holding private events, have small group cocktail parties where you can start to build your brand and figure out what’s going to work.

In luxury, as you start to define your brand and begin to put things out there, remember that you can only launch once, so it’s really important you nail it. You’ve got to know what the brand is going to be known for, what you’re going to be known for, the brand identity and the overall image. All of this is really important.

Please contact Syama Meagher at Scaling Retail to learn more on how her decade worth of experience can help you grow your budding luxury brand into a successful venture. And as always, don’t forget to stay connected on: Instagram, Twitter, Facebook and LinkedIn!