Success Conditions and Profit Models of Designer Brands at Different Stages of Development

Christine Tsui Fashion Community

Success Conditions and Profit Models of Designer Brands at Different Stages of Development

Fang Qi et al.

International Economics and Trade student. Loves fashion design and everything related to the expression of attitude and beauty. Used to work as an intern editor at Haibao and aspired to become a fashion designer.

FOREWORD

At the initial stage when the brand is established, the fund is limited, the team is small, supply chains are inadequate, operating experience is insufficient, sales channels are limited, and promotion efforts is inefficient. Given the limited resources in all aspects, which ones should designer brands focus on? To avoid excessive trial and error costs, what else should be avoided?

Success Cases of Independent Designers

Designer Studio (preferably with OEM capability.  Those without OEM production capacity can only sell patterns, which makes life not easy).

As far as I know, many domestic fast fashion brands in the third and fourth tier markets are willing to cooperate with design studios. As long as the products they design are marketable and trendy, and the taste is also a little higher than that of the general market, it will be very popular.

If the price from the designer can meet the customer’s price system, it is also possible for customers to place an order containing up to several tens of thousands of pieces. For example, although many design studios in Guangzhou are not famous, they are operating well based on this model. Such a studio often only requires a few people. The starting capital of 300,000-400,000 yuan would be enough, and it is normal for the profit to be a few million yuan a year. Certainly, it requires the designer to have a good understanding of the market to achieve this.

Open the Stall

I have a friend– a girl from Hubei, who has three or four years of design experience, but the performance in the company is average. A few years ago, she went to Shahe Market alone with 100,000 yuan to get a small stall for sweater wholesale. Through her own efforts, she has earned more than 2 million in two years, and the inventory is very small! Her method of operation is different from that of unprofessional small stall owners. Through her own vision and design ability, she has differentiated her product from that of the market product while remaining marketable. Although she started from imitation, she has gradually found her own style from it.

For your reference, the two ways above are what I see to be profitable as an independent designer.  As for the designers’ insistence on their own aesthetics, as long as they have a certain profitability, dreams will be relatively easy to achieve.

What Issues Should Designers Face When Their Brands Are Founded?

Supply Chain 

Designers should firstly position their own style and customer base. Apply the experimental model of multiple styles with a small amount– but this also requires supply chain support. Put profit before development and leave ideals aside at first. Nowadays, many designers are too idealistic.

From the perspective of channels, if feedbacks can be obtained online, thereby orders can be generated as soon as possible, and orders can be issued in the fastest fashion, then it is always mostly accepted among the consumer groups. If the market feedback is good, extra orders should be immediately placed to the factory, which is an operation model with the lowest cost.

Production volume and minimal fabric order are the pain points of most Chinese designers in the production supply chain. The designer Ban Xiaoxue once said, “Most of the high-quality factories in China are of large scale that require large volume as support, which is a very realistic problem. We also encountered this difficulty in the early stages. The solution It is to reduce the colors of clothing or design multiple styles with the same fabric. ” Therefore, reducing the colors of clothing or designing multiple styles with the same fabric is one method.

For most designer brands, it is more realistic to not cooperate with large factories at first, but with small processing factories and workshops instead. Factories in Shenzhen Nanyou accept orders of dozens or twenties, and it is also possible to achieve long-term cooperation. However, to ensure quality, designers should go to the scene to supervise. For designer brands, production is not a fatal problem. Many workshop-type processing plants around China Textile University are shipping quickly, which can meet the demand of multiple styles in small amounts. However, in the early stage, factory workmanship is a bit tricky. For example, running-in stage is sometimes unavoidable when it comes to the cooperation with printing and embroidery factories, due to the difficulty of the process. This situation can be improved after the smooth cooperation in the later stage.It is more important for designer brands to pay attention to the penetration into sales channels. If you only do online promotion, it is likely to be buried in the sea of Taobao, therefore, offline customers are still needed. Promotion is very important.

Sales Channels

As a relatively successful domestic designer brand, Ban Xiaoxue initially relied on buyer channels, but accepted investment over a period of time. The pre-investor is a shareholder of a domestic market-oriented design brand.

Will designers still choose online platforms if there is no capital injection? If we start from scratch, what is the better way to lay out the brand’s first channel? The answer given by most people in the industry may be unexpected: designers should start with the wholesale market first (if there is a lack of funds). The wholesale market runs faster in terms of quantity, has an advantage in location, and can also be quickly seen by more wholesale customers, which is conducive to rapid dissemination, hence a larger chance of survival and faster return of funds at the early stage.

In terms of domestic wholesale market distribution, the primary markets are in Shenzhen and Guangzhou. The secondary wholesale markets are mainly Hangzhou, Beijing, and other provincial capitals, such as Shenyang and Chengdu. Then there are markets in other cities and physical retail stores available for sale. The wholesale market is also hierarchical. For designer brands, if the product quality and positioning are not low, it is required to choose a more unique and personalized wholesale stall. Otherwise, stalls with poor quality or severely homogenized products will make the products prone to be drown in the market. Most of the designer brands in the wholesale market cooperate with wholesale stalls of a certain quality. Some designers just go to wholesale stalls with their own products and ask the owners, “I have this in stock. How should we separate the profit if we sell it in your store?”

Therefore, in the early stage, brands can also dig the first bucket of gold through wholesale markets, and then operate the brand. It is unnecessary to settle everything all in one step. For start-up brands, it is difficult to promote without money; we can develop the styles we are good at when there is money. If products are not sold, the brand may not survive the early stages. Each period, some designer brands will “die”, and some will transform successfully. There are also many brands in the market that started out in the wholesale market and then transformed, such as MO & CO and Girdear. This approach is worth trying for brands with little fund in the early stage.

But many people are doubtful with regards to designer brands taking the wholesale market channel. Is it difficult for brands starting with wholesale market to develop into high-end in the future? Is it difficult for designers selling products at wholesale market to transform in the future? Many people believe that in this case, there is a greater possibility of transformation even if it starts from Taobao–after all, it is “small and beautiful”. Indeed, there might be no advantage for some designer brands to go for the wholesale market—due to the small volume, the fabrics they get are the most expensive ones, and at the same time, the processing fees are expensive as well. In addition to the design cost, for a small batch of clothes, 30 pieces of basic dresses cost at least 150 yuan per piece, let alone other more complicated designs. Therefore, designer brands with high prices and positioning will definitely not be able to go for the wholesale market, unless they can expand volume from the beginning. But for most start-up brands, whether to choose the wholesale market depends on the brand’s development goals (does the brand have stronger commercial attributes, or more emphasis on design attributes?). Wholesale is more oriented towards commercial development and focuses on the market. At this stage, brand design and brand philosophy can hardly become the focus of development. If it is a new brand with medium or high price, it is better to go for brand collection store and showroom from the beginning.

In addition, in terms of offline, we can also open our own wholesale outlets, or cooperate with platforms such as Showroom, both of which are currently channels with large volume. Start-up brands can find more opportunities for cooperation by participating in exhibitions and markets. In addition, based on the characteristics of the category, such as women’s clothing, we can also choose malls with high mobility to test the water.

As a designer brand, first of all, the product has to hold water– starting from one customer, accumulate it slowly, and then look at developments. Designer brands also have to go through a process of cocooning. Certainly, it should be easier if we have this kind of customer base in the beginning, which is actually true for all brands. In addition, the association of designer brands and wholesale stalls is a good way to both reduce the price of fabrics and allow us for free cash flow. Joint operation with stalls can be achieved through the combination of our own designs and combinatorial products.

How to solve the initial funding problem?

The initial funding mostly comes from the following three sources:

  1. Internal funds (accumulation or family support);
  2. Raised funds from yourself and partners;
  3. Investors. These three sources have different requirements for designers themselves. Investors in the market rarely invest in pure designs; they are usually more interested in new designs.

But due to the large market, currently, design entrepreneurs can barely succeed without investors. The clothing industry is a field that can only generate returns when there is investment. But investors usually don’t like to invest in the clothing industry, which is normal because the industry’s relative returns are low. What investors like are brands with multiple returns or those that can be harvested. If there is no investment in the initial period, then invest yourself and start with small volume. There are also brands that start with a small amount of 20 pieces and manage their own business step by step.

If you can find investment, still remain cautious– most investors only aim at making money, which tends to generalize the brand. Designer brands need to be selective, and as a designer brand, determination and adherence to their own brand core and design philosophy is a must. Since most investors want faster returns, in order to pursue some profits, they naturally abandon some of the brand’s originalities, resulting in an altered brand taste. In lots of cases, investment does not rely on the design itself, but rather the business models and channels, as well as the overall team and philosophy. The way we look at the clothing industry is sometimes too erratic; in fact, the biggest “investor” is the development based on the known and unknown needs of customers. In general, in order for a designer brand to find proper investment, its product must have a soul and attractiveness before someone invests.

 How to Serve Customers Well If You Own a Physical Store Yourself?

Consumer preferences for physical stores depend on the focus of their preferences. The preferences of people from different regions, ages, education backgrounds, and genders may differ. Some consumers pay attention to the furnishings in the store and like to visit those that provide collocations for different occasions. Some consumers, on the other hand, prefer a more open and autonomous environment. Rather than being followed by shop assistants, they expect a higher degree of freedom in stores. If the customer has an inquiry, shop assistants can also respond in time, or provide professional matching references on request.

As a designer brand, in order to be differentiated from ordinary clothing stores, there should be matching accessories, bags, etc. at the shopping area. Bookstores and homewares can be added to stores that reflect lifestyle. If customers can feel a sense of home through the scene, decoration, and products of the store, the concept that the store wants to convey can be better reflected.

With the increasing spending power of the post-90s generations, modern and fashionable shops have gradually become popular with consumers. But shops should be plentiful without being cluttered. In recent years, more and more malls and shops have also applied the concept of exhibitions for the display and decoration of shops, which is more artistic and is popular among many avant-garde consumers.

As for the student group, they may prefer seasonal shopping, and generally give priority to the seasonal items between the price range of 100-500 yuan. For example, sweaters in spring with prices between 100-300 yuan, and windbreaker or baseball shirt between 300- 600 yuan are acceptable, most of which are fast fashion brands. But many a time, if they find that the quality of the clothes is not good, they may turn to the Internet based on style. Therefore, when student is the main consumer group, the position of the store should not be remote—they will only go there for shopping when the surroundings are popular. However, the style positioning of the store should have its own characteristics, and it is best to have category divisions in the store.

Finally, a very open question– what kind of designer brand do you think is successful?

This question is important for all designer brands. What kind of brand can be called a successful designer brand?

We can view it from several different perspectives:

  1. The design is based on the designer’s root self (about the designer’s happiness).
  2. Profitable and able to achieve sustainable development.
  3. There is a stable pursuit group.

It is necessary that brands achieve profitability. As a designer brand, it needs to balance the relationship between design and the market, develop its own characteristics, and build its own circle and community from niche consumers, so as to gain more recognition. Every designer’s understanding of success may be different, but maintaining their own personality and style while getting positive feedback in the market is actually a success of the brand. If you can convey your own brand attitude to consumers, it is one step further. Fundamentally, adhering to the core and original heart of the brand while meeting consumer needs and having its own consumer group is creating value; in addition, realizing self-worth and achieving a balance between profitability and design can manifest that the designer’s philosophy is accepted by the market, and the brand has succeeded.

Case: Entrepreneurship Shared by Designer Alex

@ 1995nyc-New York-Designer:

I started a business while I was in college, and the brand started more than half a year. The main distribution channels are the online official website in USA, STYLEWE, Taobao Linglong in China, WeChat Moments, and two offline shoppers. In the early stage, there was limited fund which was just enough to make one series, and we had to borrow money. The current situation is that the income can maintain the next collection of small batches of products and samples without personal income. There is no investment at present, because I haven’t met like-minded investors–most domestic investors are eager to make profits, and while they want a large proportion, they are unwilling to invest a lot.

Problems Encountered in Brand Startup Development:

  1. Without large funds, it is difficult to find promotors in China for online promotion, making it difficult to be recognized.
  2. The cost of communication with domestic factories and transportation is higher when you are abroad.
  3. Due to absence domestically, I haven’t found a wholesale platform with long-term cooperation and direct order.

Aspirations for the Future:

  1. Make profits first.
  2. Establish a flagship store—I would like to forge a space with brand features and landmark. Instead of merely providing shopping places, it is more like an art museum.
  3. Support emerging artists and make exciting cross-border collections. In fact, we are working hard on it now–we have already made a short fashion movie, and we are planning the next movie now.
  4. Develop new fabrics with current technology.

In my personal experience, at the early stage of development, it is easier for people to remember the brand when it has a distinctive design. Our sweaters feature very bright color patchwork instead of basic models, so they are very popular.

Wang Tianmo, a domestic designer brand, is very strategic. She makes full use of social media platforms to share her daily life and design,  and she publicizes her WeChat account to allow her fans to be closer to her, rather than being superior and aloof. In fact, it is not top-notch in terms of its design style and products, but the market strategies are good. This is what designers should pay attention to when developing a brand—learning to market. Some designers think that designer brands should follow the high-end line, but in my opinion, this form of Wechat Moments can also be taken. Maybe some people feel that the form of Wechat advertising will be annoying, which is what I never do as well. I would usually share some comments and feelings about the recent exhibitions, movies, books, and costumes on Wechat Moments. When sharing articles, I summarize and talk about my views. This will give an impression that as an independent individual, my existence is valuable, and then from time to time, if there are pretty buyer shows and photos, I would post them. I improve the quality of pictures, so people often comment that they would buy them. Therefore, there are different methods with regards to distinct channels. Instead of to adhering rigidly to one of them, all profitable methods are worth trying.

Whether it is a brand that has already emerged in the industry or a designer struggling in the early stages of entrepreneurship, to become a relatively successful designer brand, it is necessary to have a sincere love for design, a strong belief in the dream of building a brand, as well as years of accumulation and persistence in this industry. Words like “dream” and “passion” sound very far away, but they are indeed the oringin of everything.

Everyone may have their own definitions of “success” for a designer brand. As a friend in the group said: “Everyone has his or her own idealism.” I personally believe that a successful designer brand requires more than satisfying these conditions— to put it another way, although important, they are not the priority. What is more important for successful designer brands is that the designers should constantly express their attitude, manifest the spirit, and narrate their souls through their work. In this process, reveal observations and ideas about the world through works to resonate with consumers and the market. Obtaining a group of loyal consumers who can understand its spiritual connotation and endorse its brand culture through these is the most essential success for designer brands.

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