The 2 Most Important Themes for a New Fashion Business: What do I Sell and for How Much?

Fashion!  It is the never ending story of new trends, stylish people, and really really nice things that I love own and in my case love to do business with.

I always feel extremely lucky to be working in a field where I am genuinely enjoying the beautiful pieces I’m working with.  Being positioned between New York and Europe I get the vibe of the fashion trends on both sides of the ocean.

But this blog post is not about my attraction to handbags, watches or sunglasses; it’s about helping entrepreneurs be successful in their business in this industry.

I want to point out few do’s and do not’s that every fashion business person should be aware of:

1) Beware of New Brands

Sometimes I really want to buy something new, unique, not mainstream, something that is like a diamond in the rough.  At this point I go and shop the small streets of Barcelona or Paris or why not even go into a small shop in Manhattan with a brand that no one has heard of…

While this experience is exciting when you shop for yourself, it could be a dangerous trap for your business.  New brands are usually new, because no one has heard of them.  If you have a few million to invest in developing the brand that you own at least partly yourself it could be a plausible exercise, but if you are a smaller entrepreneur without such marketing dollars, there is a big risk that this merchandise will stay in your inventory for a very long time as its brand has no value, and the worst thing that can happen is to eventually realize that this merchandise will actually be yours forever.  Thus my first lesson is don’t be in the brand making business unless it is your own brand and you have big money to spend.

2) High Margin or High Volume

This is like choosing great shoes or an amazing bag.  Of course the best case scenario is to have both 🙂  But usually it is one or the other so how should you think about it?

If one item is making you 4% gross margin, and you sell one per day, or you make 80% gross margin but you sell only one every month. What is better?

The answer lies in probably the most important consideration in business – Return on Investment (ROI).  Let’s say both items cost $1000, and that you get your money immediately and you can buy as many as you want of each item.  In the first case for an investment of $1000, you get only $40 each sold item, however since you have 30 items sold, your profit in the end of the month is 1200 over your investment of $1000, delivering a ROI of 120% which is better than the $800 or 80% ROI delivers over this same month.

So, the lesson here is that through return on investment, you can make an educated choice between high margins and high volumes – the answer is to choose whichever brings you a higher Return on Investment.

Sarinas makes this easy for you – , highly sought after luxury goods and competitive pricing mean you will always make a profit, and since the product speaks for itself, you’ve got great turnover potential too.

Ok, is it clear? Coffee and Vogue time for me to seek out new fashion trends I would love to work with and own 😉 Next time I will share my views on terms of trade – it is important my fashion entrepreneur friends!

 

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