Tuesday, June 26, 2012

Does E-Commerce work for emerging designers?

I'm going to continue discussing solutions to the problems facing emerging designers that I raised yesterday, http://designmattersmore.blogspot.com/2012/06/problem-identified.html. One of the saviors for emerging designers was supposed to be E-Commerce. Just about the time that the world economy crumbled the investors and venture capitalists of the world began to throw a great deal of money at fashion E-Commerce. Since those early days the market has performed it's usual ruthless executions on flawed models and sites and we're left with the exceptionally well funded mega corps; My Habit, Gilt, Moda Operandi, (which while I deeply respect Aslaug Magnusdottir I don't understand some core aspects of their business model), Yoox, Net-a-Porter, Shop Bop etc... There are also some very interesting smaller to medium sized players such as La Garconne, Ssense, Matches and the like. And finally there are a handful of promising start ups who feature new talent; Not Just A Label, Wondermode, I Like What Your Wearing and a few others, (Full disclosure, I write an unpaid column for ILWYW.) For emerging designers the latter and in a few cases the medium sized sites are the only option. 
Phillip Lim Fall '12
 I want to focus solely on what the designers must understand about the sites and most critically what the sites must understand about the designers. The only useful way for designers to categorize e-commerce sites is by how they will get paid. Sites that buy outright should be at the top of every emerging designers target list. Designers must realize though because we're realistically talking about small to medium size sites that it will be just the same as being picked up by a small boutique. You will get a small order most likely of three styles or less and in runs of sizes 2-4-6-8. All of the standard rules of retail will apply, you will have a ship date that you must meet flawlessly, you must sell through at likely 85% or higher and you may be asked to be subject to buy backs or penalties for mark down rounds. On the plus side many of theses sites will do a fair amount of PR and co-branding for you. These sites are often major social media broadcasters and can really help amplify your brand. If you receive an offer from one of these sites you should accept it. 
Alexander Wang Fall '12
Other than pure wholesale sales opportunities the relative value of other e-commerce models gets a bit murky. It very much depends on the label and their financial status and production capacity. If you have little or no money then a few seasons on a commission based site are worthwhile. Put simply it's couture. You sell a piece, make it and ship it. Then the site takes between 30 & 40% and you keep the rest. This activity can keep a small but steady flow of income coming in. You must be aware though that it can become a challenge if you're trying to create a seasonal collection at the same time, (more about whether an emerging designer should be doing that in tomorrow's post). If you have both a bit of money and means of production the newer variant of online capsule collections might be worth a look. The model works like this; the designer is asked to create an entire capsule collection in size runs for a site to sell. Then when the pieces sell they receive a percentage of each sale. If the site is willing to take a lower percentage and also do a fair amount of co-branding and promotion then this arrangement can work out quite well for the designer. It will operate exactly like a practice run for what it takes to function as a working designer with a successful label. You will also receive a larger amount of money and in a lump sum just as if it was a normal seasonal retail order. You should also be rewarded with a larger reorder the next season.
Nanette Lepore Fall '12
What the E-Commerce sites must understand about the emerging designers are the following critical truths. Many of these designers do not have the money to produce the first few substantial orders they will receive. You should be willing to advance them a percentage of the order to get the clothes made in exchange for a modest discount on your order. If you're not willing to do that go buy Marc by Marc Jacobs. You must pay on time in full. The designer's fabric buy and production of their next season's samples depends on it. If you screw around with payment you will put the designer out of business. If you're okay with that you belong in jail, period. Lastly, your feedback, (notes), are critical to helping these young talents improve and prosper. Take five minutes out of your day to explain to them why you bought one style over another. Long term success is about relationship building Remember Roberto Cavalli and Nanette Lepore where once nobody, but you wouldn't have wanted to had them drop you because you mistreated them, would you?

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