How to Become a Clothing Distributor: A Business Guide for Startups [2021]

clothing distributor

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Although it takes a lot of effort and perseverance to start a wholesale business, the process is quite straightforward. 

Let’s look at the following steps that you can take to become a wholesale clothing retailer.

Study the Industry

It is important to understand the clothing industry before you start looking into wholesale clothing distribution. As a Private Label Clothing venture, this should come by as your second nature.  The clothing industry offers many opportunities, but it also presents some challenges. This industry requires agility and alertness to keep up with rapid changes.

The clothing industry is dependent on many pop and social trends. For example, one accessory or clothing item may quickly become a hot product. Social media and influencer culture can greatly influence this. For example, a viral photo or video can lead to a spike in demand for clothing.

These trends can change quickly, hence creating a high-risk/high-reward situation. It can be difficult to determine which trends to follow and how much inventory you should purchase. In addition, forecasting demand can be challenging.

Choose a Niche

There are many styles and types of garments available. Naturally, it is impossible to sell all. You must decide what kind of garments your wholesale clothing business will be selling.

It’s not just about choosing the type of clothing you want to sell but also what kind of audience you will be reaching. For example, if you decide to sell t-shirts, identify the retailers you will sell them to. Are you selling to a discount or luxury store? Are you selling to women, men, or children-oriented retailers?

To be more specific, you could narrow down your market and position yourself to appeal to a particular audience. This could be related to the type of clothing or how it is made. Sustainable fashion, for example, is trendy right now. This kind of edge will help you connect better with your audience.

It is crucial to have a clear understanding of what product you want to sell and who your ideal customer is. This will allow you to create a business plan and market your garments.

Create a Business Plan

There are many moving parts to wholesale clothing distribution. It is vital to have a plan in place before you start your business. It is essential to outline your business goals, how you plan to achieve them, and what they will cost.

As you go through starting a wholesale clothing business, a plan will help you stay on track. There are many templates available for business plans from different organizations, including the SBA. However, you don’t need to create anything formal unless it is being presented for funding.

Let’s now take a look at some things you should include in your business plan.

Build an Identity

If you are looking to start a wholesale clothing business, you must choose a niche. But you need to go further than that and find out precisely what it is you offer.

Your business details should be laid out, such as what product you will sell and whom. Next, determine the most effective method of reaching your target audience. You can follow this up by creating an ideal client avatar (ICA). Finally, identify the best way to attract your target audience.

Prepare Your Finances and Budget

To make money, you need money. To get things moving, you will need to make several initial investments. First, you will need to make a list of all the expenses you have to start and how much money you will need to continue operations monthly. What amount of money is required to break even? How many sales would this require?

These expenses can be compared to the amount of money you have. Are you able to fund your business on your own, or do you need financial help? Will you have to borrow money from investors?

Create a Team

It is essential to build a team that can work together for the success of your business. Some executives will be needed to manage sales, supply, distribution, and other operations.

To run the operation, you will need workers. You will need skilled workers for jobs such as order fulfillment, inventory management, and customer service.

Identify the roles you are looking for and write descriptions to help you recruit the right talent and pool of trained professionals.

Document Internal Processes

It is a must to have consistent processes that are optimized for your business and your customers. Therefore, you should document the fundamental processes that make your business work, including daily tasks, employee onboarding, lead generation strategies, order fulfillment, and marketing strategies.

This is how you create clear instructions that anyone can follow to run your business if you are unable to be there.

Documenting your processes will help you keep your operations consistent and see areas where you can make improvements.

Secure Licenses and Permits

There are different legal requirements for starting and operating a business. Your business must be registered as an entity regardless of whether it is a corporation, LLC, or partnership. This allows you to be protected as an individual, as it separates the legal and financial implications.

We recommend that you look into the local restrictions and guidelines to determine what you should do. This is done to protect your business and make tax filings easier. Then, get assistance from a local business lawyer and tax professional.

Ask about taxes as you go through the ordering process. Calculate the sales tax you will need to charge and what fees you’ll have to pay if your business is transborder.

We encourage you to consult with local experts in exporting to create the proper infrastructure if it interests you. This will ensure that you are fully informed about all legal aspects of international transactions.

Set Up Your Physical Location

A physical location is essential for your business. For example, you will need a warehouse or factory depending on whether your business is manufacturing clothing.

Although clothing manufacturing is an independent process, it is worth mentioning as it can play a significant role in your wholesale clothing business. You have two options as a wholesaler of clothing: you can either manufacture your clothing at home or purchase from another manufacturer. It takes capital to open a factory, but this could lead you to make more money in the future through cost-effective measures.

You will have to decide whether you rent or buy. Renting allows you to begin small and grow your business. Renting is not a way to build equity. However, buying real estate requires more flexibility and higher down payment. But, as long as your mortgage is paid, you can build equity.

Determine Your Prices

It is important to set prices when you want to become a wholesale clothing distributor. However, it is important not to set prices that are too high or low. It is better to find a middle ground.

First, determine how much each unit will cost you. This is true regardless of whether you are manufacturing it yourself or purchasing it from a third-party manufacturer. 

This is the lowest price you can go, without losing any money. Next, compare the prices of your competitors and the demand for your product. What are the selling equivalent units worth? What are the spending limits for retailers?

With this in mind, let’s take a look at various pricing strategies.

There are five main types of pricing: absorption pricing, bundle pricing; market-based pricing; value-based pricing; and differentiated pricing. You can find more information about each strategy in our guide to wholesale price calculation.

Once you have chosen your strategy, you can use the basic formula to calculate wholesale prices.

Wholesale price = Average cost of goods + profit margin

This will give you an estimate of the unit price and allow you to create packages. Prices can be negotiated in wholesaling. If you need to reduce expenses but not compromise your profit margin, add padding to the pricing.

Set Up an Online Storefront

It would help if you had an online storefront to sell your products online. There are two options. Either you create a storefront in an e-commerce marketplace for B2B, or you can make your propriety website.

Both are good ideas. Why? An e-commerce storefront will bring more visitors to your product listings. The most popular e-commerce marketplaces double up as search engines, so they show your products to potential buyers searching for them. However, you can have complete control over branding and the user experience on your site.

For more information about setting up an online shop, please visit our guide on where to sell online.

Create Your Product Listings

You need to make sure your listings appeal to the right buyer, regardless of where they’re posted. It’s a good idea to use high-quality photos of your product from various angles. Videos of garments are valuable as they provide potential buyers with a better understanding of the material’s quality.

Optimizing product listings for e-commerce platforms require that you keep search engine optimization in mind. Use keywords that are searched for by your target audience in product titles and descriptions.

If you are selling women’s shirts, for example, be specific about what you sell. Likewise, if the blouses are for sale, be specific. Use descriptive words to describe the fabric, colors, fit, and other details.

It is a good idea to present your products as solutions to problems. For example, women’s leggings can be seen through if they are cheaply made. Let people know if your leggings are of higher quality and have full coverage.

Be creative in your listing but remember to keep the buyer in mind.

Start Selling

It’s time to sell once you have your product listings and storefront set up. Depending on the way you have set up your storefront, it is time to start selling.

It is crucial to allocate resources to sales. You can improve your sales skills if you own a small wholesale clothing distributor business. You will learn how to build relationships and optimize your sales funnel. 

If you have the funds, consider investing in a team or individual who is highly skilled and can take over all the selling responsibilities. It will be hard to sell enough to sustain your business without a sales team.

Summary

To sum up, becoming a distributor is not an easy task. But, if you use the steps above to get started, your business will run smoothly. You can do it! If you’re committed and have the right short-term and long-term strategy, you can accomplish almost anything.

Author Bio

Tom Brady currently works as the Senior Editor at zegaapparel. This is where private labels can acquire the best clothing manufacturer services. During his free time, he likes to meditate and practice mindful yoga

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