forecast

Selling hill-tribe childrenswear in Chiang Mai, Thailand

Easy Distribution Strategy

With social media giants Facebook and  Pinterest moving to retail products through gift feeds and online shops, this opens other sales channels for social designers and makers. This must, surely, be good news for small fashion and creative businesses? After all, as much as you love making and designing, you want (and need) people and stockists to buy them. Where and how you will sell is basically your distribution strategy, and that’s what we will look at in this blog post…

Sales, sales, sales

Often, small creative and fashion businesses are understandably desperate to recoup costs, or (wrongly) feel surprised and grateful that somewhere would want to stock or present their offer! Retailer or stockist opportunities are grabbed and rejoiced – perhaps they are local to you, perhaps online, or perhaps overseas. Negotiations begin, price points and margins are squeezed, and deals are (sometimes reluctantly) struck. And then on to find the next stockist… However, many times a scatter-gun approach can start to appear. Your range might be sold cheaper in a tourist stockist, part in a small, unfrequented gallery, some (marked down) at sales events. I think it is fantastic to get sales – and any sales! – it is a sign that your product is working. But this can negatively impact on your ‘brand’.

You do need sales to survive as a business, but your brand positioning – how your consumers perceive you in relation to other brands – needs to remain intact. Too many sales and discounts online or in-store and it dilutes a higher-priced, high-end brand, as does selling in the wrong place. You need an approach to follow and stick to so that you ensure consistency in your brand positioning and customers’ eyes.

Some distribution questions

In my last post, The Right Strategy For Your Business, we explored your strategic approach and I explained that most small, creative and fashion brands I work with are differentiated – they offer something additional of value that customers will pay extra for. Sometimes, the product offer is niche – exploiting a new and narrow gap in the market, bringing an innovation to customers. David Jobber, in Principles and Practices of Marketing]i[, proposes that there are two types of distribution strategy – direct and indirect, and three main types of distribution approach – intensive, selective and exclusive distribution. But before we explore this, Jobber poses the following questions which I suggest you answer:

  1. Who is the consumer? Where are they? How much will they pay? Do they want delivery or to browse and buy?
  2. How will costs/time/brand position be affected? Does brand want volume sales or exclusive positioning?
  3. Will channels be mixed? How can these be integrated and managed…?

What is distribution?

Now you can answer the above questions, let’s review distribution. Direct distribution is where you sell directly, through one or more channels, to reach your consumer. So, you sell from your own website, own store, or market stall or a mixture of these, There are no middlemen and associated costs, and you are fully in charge of how your products – and brand – are portrayed and retailed to the customer, including your price points and how and when you mark down. This is, perhaps, more work, more monitoring and pushing of sales, dealing with returns etc. But here you also have the benefit of knowing and having a direct relationship with your customer – you can gather data for newsletters and social media to encourage repeat custom. Your control is greater.

Alternately, you can sell indirectly, through retailers, or through a wholesaler who then sells to retailers. Either way, if this is a wholesale arrangement, you get paid for the entire order – this clears your inventory and secures you payment earlier rather than waiting for the individual sales to come in. However, the more links in the chain between you and your customer, the less control you have over how your brand is priced, perceived and even displayed. Also, you don’t know or work with the end customer to exploit opportunities.

In the end, you may have a mixture of direct, and indirect – many of the small fashion and creative businesses and start ups I work with do this. Invariably, they build up varying distribution channels and after two or three years need to review how and where they sell as there are some channels less cost effective and time consuming. But that is really common, almost a rite of passage for a new business. And it’s actually positive, it shows business has been good…

Intensive, selective and exclusive distribution

Upon deciding whether you will go direct or indirect, let’s consider the approach. First of all, intensive distribution is where your pieces are, literally, everywhere – you produce a higher volume of cheaper priced products that is retailed in a wide number and variety of stockists and this risks over-exposure. This is also known as saturation coverage. For this, you need a high production capacity to churn through these and meet orders. This means you are more mass-market in your offer, and often your product is more standardised and quick to produce. One example of this might be stationary or interiors products or small gift items where you outsource the production, perhaps overseas, and secure deals with several high street retailers, plus online (your own website and others’), and you may also sell to trade e.g. interior designers and through events.

In a selective approach, you are more choosy with where you sell (yes, you can be choosy!).  The considerations here are how many different outlets, what type of outlet, and how much of your range you sell. This way, you are not over-exposed, running the risk of customers losing interest in you, and you retain a more exclusive brand positioning AND price point. You are producing less, and charging more so this needs to be suited to, and reflected in, your product design and brand. Here, you might be a jeweller or menswear designer and you stock your range in a selection of mid-high end galleries, concessions in upmarket department stores, or independent boutiques. In addition, you will retail on your own website (without visible mark-downs – instead think ‘VIP sales events’) and carefully selected platforms alongside similar level of brands where you will be visible.

Lastly, you might secure an exclusive deal with one stockist. This one stockist is your only stockist and they love your work and want to sell it – perfect! Here, despite the fact that they should be trying to win your sole custom, as a new brand you can often be squeezed on your margin so you need negotiation skills par excellence! This common occurrence is well described in Porter’s ‘power of the buyer’.  So, if it isn’t working out – the sales aren’t good from a smallish order, the margin is too low, the relationship is bad, etc – then you are tied to them alone for the duration which is risky. For guidance and information on navigating this, I recommend Toby Meadow’s How to Set Up and Run a Fashion Label[ii] –not just for fashion brands, but all higher end designer-makers.

Some considerations

Within these considerations are further issues. As I mentioned previously, you need to be realistic about your production capacity and also your desired cashflow and sales – The Design Trust have done a great blog on how to forecast this for the first time, so do read their pointers. You need to think about where you want to be seen, and who else is stocked alongside you; if you are selling on different online host platforms you need to ensure visibility from searches and also consider the commissions you will be charged.

Another consideration is the type of sales arrangement – perhaps wholesale, where your products are bought and paid for upfront – what, you might think, could be better than this! However, the risk here is that you have less control over what end price the products are retailing at and when products are marked down – both of these can affect brand positioning.

Or perhaps it will be a sale-or-return arrangement where you end up with stock that isn’t selling and is returned to you after a period of time when, by this point, you might also struggle to sell it. Both of these have pluses and minuses… So, in summary, the key word here is strategy – think strategically about how and where you want to sell. Think beyond the need for short term sales and covering costs. Expect to learn the hard way, to have disappointments and unexpected triumphs, for relationships to become less desirable. And remember, you have great products that will be in demand so you can be choosy!

Happy selling!

Next time, in Creative Planning – Next Steps 5: Easy Marketing Strategy we will be exploring your marketing and I will suggest some simple tips for you to follow. If you have any questions after reading this, or would like me to work with you on your creative business, then feel free to email me on hallandco@outlook.com, or drop a comment on the blog


[i] Jobber, D. (2012) Principles and Practices of Marketing, 6th Edition, McGraw-Hill
[ii] Meadows, T. (2009) How To Set Up And Run A Fashion Label, 2nd Edition, Laurence King

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Liliana K stall in Whistable, England

Reality: Your business now, your more profitable customers, and your cashflow

“Have you got a Business Plan?” is not a question that brings joy to the heart of early-stage creative micro-businesses. Visions of Excel spreadsheets, Word documents, and alien, small-printed jargon arise; hours, days wasted, lost in unfiled paperwork only to create more unfiled (and unread) paperwork. Sound familiar?

Many of the fashion and creative start-ups I work with don’t have a business plan (it’s all in their heads), don’t do planning (ditto), and run their business like a freelancer. And why not? That way you can focus on the day-to-day must-dos, the making/constructing/designing, and the creative energy.

But planning your direction – whether it is building a strategy, a business plan, or identifying your goals for the next year or three – can be a creative process in itself. And like everything creative, planning is developmental and organic, it isn’t set in stone and can be adapted and improved, scrapped or redone. It starts with the first steps – and that’s what this and my series of Creative Planning Basics blog posts will explore.

These posts will help you focus everything that you already know or have dreamed about your work down into some kind of visual map. This will help stop the chaotic ‘washing-machine’ thinking and instead bring some colour-coded clarity.

Save your Business Plans and Strategy Documents for the bank and investors – you will get to this when you need to – and instead just begin now with how you want your creative business, and life, to be. So, with your old-school paper, Post-It notes, pens, pencils and camera at the ready, read on…

So, decide what time period – one year, two years etc – you want to focus on. Grab different coloured Post-It notes and find some wall space, or A1 paper, and pens and pencils.

This exercise will help you identify:

  1. Where your business is now.
  2. How to divide up your creative business into different customer bases for each strand.
  3. What work to spend more time on to generate more profitable leads and relationships.
  4. And start to recognise when the income is likely to come in and when your outgoings for the work are likely to go out = cashflow.

First, think about how many different aspects to your business you may have. For example, you might be an architect that does residential, commercial and the occasional profile-raising pop-up or collaborative work. You might be a jeweller that provides setting services for trade but are now branching into your own designer collections and bespoke commissions. Or a ceramicist beginning to get interior design wall commissions. Whichever way, you will have different strands of your business, different customer bases, and, importantly, different levels of income from each.

Using your Post-It notes, pens and pencils, colour-code each strand and divide it by income. So, if you are deep down someone who dreams of having their own pottery and shop, and meanwhile is beginning to do one-off wall commissions for interior designers at 15K a pop, but also hope to sell ceramics to high-street chains, plus take part in craft fairs with jewellery, picture frames, and general knick-knacks with your surplus materials, you would give a colour for each of these. Stick each coloured set on the wall, or paper, with a different sticky for each range or piece within it – and write down everything you produce within these strands that you do, or could, sell.

By now, you know how much each of these costs to produce, and you know, I hope, how much you might be likely to sell each piece of work at from your provisional market, customer, and competitor research (more on this in another post). So by totting this all up, it will visually indicate your more profitable income stream. How many of a, b and c are you likely to sell within the next six or twelve months? What if you only sell one 15K commission but get several of high-street orders for ceramic pieces? However, what if you already have one such commission lined up but are still just at the design/thinking stage on your retailer ceramics? Assess what is realistic to you for the chosen time period, factoring in how much work or progression you can realistically make in that time.

Earlier this year, I attended an event at the British Library Business and Intellectual Property centre – The Design Trust’s ‘More Than Making: Grow Your Creative Business’ – where entrepreneur Paul Sturrock[i] outlined a very simple business approach based on Osterwalder and Pigneur’s Business Model Canvas.[ii] Part of this discussion was identifying how much you need, or would like, to live on with a salary and all costs covered – 25K, 50K, 100K? Then you break that sum down into how many of each business strand you would need to sell to reach your goal.

So, let’s say you want to live off an income of 50K for salary and costs. If your wall commission is now looking (from Post-It note heaven) like your main income stream, you could find three commissions – one for each quarter – totalling 45K, plus another 5K of ceramic orders and craft fair takings to reach 50K. This additional 5K might be ten retail orders of £500.00. That would be almost one order a month, which is perhaps not realistic for this stage of your business. So re-adjust that to five orders of £500.00, then you can push the craft fair takings seasonally around Christmas gifts (yes, you will be busy!) to pull in the remaining £2.5K.

However, is this do-able for your workload at this stage? Could you bridge the income gap initially with a part-time job, or some freelance work using your other skills? Could you also sell some of your smaller pieces on online platforms such as Etsy.com, Notonthehighstreet.com etc? Do you have local shops, boutiques and galleries that might take some pieces on sale-or-return? Do you need to live off 50K? Could you manage on less for now? This is your creative business and life, so design it how you want it to be.

And finally… take a photo(s) of your hard work – don’t worry if you need to do this exercise in stages- and file or print for future reference (and to refer to for my next blog post).

So, what this exercise has helped you with is:

Where your business is now.

Maybe you have no contacts as yet with retail buyers, but do have several conversations regarding wall commissions, one of which is definite. You may really enjoy the buzz, banter and trading with your customers at craft fairs, but this can be a lot of work and time (even if it is in front of the telly of an evening) for a potentially lower return.

How to divide up your creative business into different customer bases for each strand.

You may have clients who are hotel groups commissioning you for wall pieces, or it may be an interior design small business with high-end clients, or a bigger design group. You might be aiming to target the highly competitive nationwide high-street chains for higher volume retail ceramic sales. This means you can identify additional interior designers for further commissions, or perhaps target smaller boutique interior stores with a good clientele who are willing to pay more for distinctive ceramics. A later post will look at how you find and promote to your different customers.

What you can spend more time on (yes, you can be efficient in time management!) to generate more profitable leads and relationships.

By now, you will know that it isn’t just the product or service itself that you spend time on, but also the research, the networking and the promotion (leg work) of it. So it makes sense to spend less time and earn more!

When the income is likely to come in and when your outgoings for the work are likely to go out = cashflow.

So if you break your year down into quarters, you are then already starting to build a loose cashflow projection. Try breaking income and outgoing down further into months throughout the year. This will hopefully help you manage your finances and lessen the sting of overdraft charges.

But perhaps you really do still dream of that pottery and shop, and your business is to help you work your way towards that – maybe you don’t want to be the new darling of the retail ceramics or interior design world. Then these planning steps will help you maximise your income from less time giving more time to you to continue to do the making, creating and designing you love.

Any questions, feel free to email me on hallandco@outlook.com, or drop a comment on the blog.

Next post: Creative Planning Basics 2: Starting to research your market, your customer and your competitors. Really, it’s just chatting, and having a nosey around with a camera.


[i] Paul Sturrock – about.me/paulsturrock

[ii] Osterwalder, A, and Pigneur, Y, (2010), Business Model Canvas, John Wiley & Sons. Also, www.businessmodelgeneration.com