2008
Troubles of Deadbeat Retailers for the Startup Clothing Line
Posted by: Fashion06 in Business, Starting your own line |
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I know that statistics say the top reasons for startup failures is knowledgeable business planning, and capital, but I believe in the fashion industry retailers play a big part of the failure rate. If you think about the above statement it kind of contradicts itself because if your being suckered by retailers then most likely they noticed your lack of knowledge or you didn’t take the necessary time to research the company’s you’re working with (planning), but that’s not always the case.
I found out from talking to many designer entrepreneurs that we all face the same similar problems from retailers just plain wasting your time or stiffing you on the payment. Don from Eklectik and I spoke on this matter in our meeting the other day and how he is still owed over $300,000 from stores that have failed to pay.
I think every up and coming brands should take steps to avoid as many losses as possible especially on the financial or inventory side of the playing field, because your operating on such a small level and budget any significant loss can put you out of business.
Consignment
I know how good it sounds when your trying to get in a store…but by any means avoid consignment you can read more about it in this article. Consignment probably has killed plenty of up and coming brands because the temptation of wanting to get your brand in any store. Hold out if they want to work with you they will have no problem with paying for the goods.
Extended payment terms
There is nothing wrong with setting up net payments with reputable clients, but for the most part when starting out you will be working with small mom and pop operations so their credibility is slim to none. Payment terms should be kept for reputable clients and stores you have worked with over a couple of seasons and have gained your business trust and it is a good sign that you appreciate there business.
These were just some quick tips I wanted to speak on because it was on my mind from some earlier discussions and many young entrepreneurs put their trust in retailers without any prior knowledge of how they operate or treated similar clients.
What steps are you taking to avoid being stiffed by retailers? Have you already been a victim of a deadbeat retailer?
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March 28th, 2008 at 3:03 pm
I read a previous article on this and we are researching each company that we do bizz with look into BBB(better business bureau) see if there are any complaints against them also i go into the store and look and the other startup brands see if they will tell u if they pay or not
March 28th, 2008 at 4:14 pm
What are some other techniques that a clothing company can use to check the store’s reputation? Other than the obvious being a personal relationship with the company.
March 28th, 2008 at 4:48 pm
After lessons learned the hard way, I’ve set up the following payment methods:
1) Factor approved
2) Credit Card
3) Cash (Check or Money Order, cleared prior to shipment)
4) C.O.D (with a deposit prior to shipping, to cover shipping and handling, in case the customer refuses to accept. which does happen.
5) Terms are accepted for retailers who have established their credit worthiness with us, through repeat business over time.
In some cases, if our rep suggests that the account is golden, then we will gladly give them terms. Otherwise, if the customer really wants to do business, they will use a credit card atleast, which still gives them the grace period as terms.
March 30th, 2008 at 12:41 pm
The Better Business Bureau is a shadow of what it once was. It doesn’t hold any power anymore and the bad guys don’t flinch when you mention them.
Don above gives you a good guideline. I think anyone shipping to new stores for the first time should take precautions.
One website that can also help with deadbeat retailers is http://www.retaildish.com. This site is run by reps who have experienced problems with some of these deadbeat retailers and explains the problems that were encountered.
April 2nd, 2008 at 4:04 pm
And of course there is the obvious….use a service that can research your customers, advise you of their prior payment history and assist you in the collection of your money if they go bad.
Where can you find such a service? Keystone Recovery of course. I have been writing about this exact issue since I joined back in January.
Keystone Recovery Service works exclusively with designers to ensure that their sales are qualified and secure. No need to pay a factor a percentage of your sales. Especially when you are relying on every dollar you make in the early stages.
Keystone will review your sales orders to ensure that they are bullet proof, provide a complete credit history of your buyer along with a detailed analysis of the report as well as securing payment in advance from those that may not meet our strict guidelines. And should one of your accounts fail to pay, we already have all of the information we need to step in to the picture and recover your moeny quickly, efficiently and with complete professionalism.
We do not charge any upfront fees and work on a contingency basis on the delinquent accounts only.
For more inormation email Ken Boland at kboland@savit.com or call toll free (877)416-3700 ext 354.
We welcome all types of designers, no matter what your sales volume or delinquency volume may be. Call for a no hassle introduction to our services.
Sincerely,
Kenneth Boland
Keystone Recovery Service