You buy the fabric, typically you'll double the price when selling to customers. Then you take off additional postage fees/packaging (note the flat fees on postage), payment fees (3-4%), discounts, returns, shopify monthly fees, accounting software etc.
You'll spend about 50% of your day cutting & packing orders, taking them to the post office etc. (or you can employ someone to help) and the rest of the time taking shots for instagram, sourcing new suppliers, working on SEO/blogging and doing admin.
If you're good at marketing you can shift quite a lot of fabric, but it will take you about a year to get your stock levels up to a sustainable amount to pay yourself a wage. If you want a real shop front you will generate most of your profit from running classes as the costs for a high street store are significantly higher than shopify and you gain little in terms of footfall vs online traffic.
This isn't a get rich quick model but over time it works well and is replicable at scale.
I'm in the UK - I don't think our market can support higher margins (cost to import fabrics is relatively high), so just curious.
The reason for this is that by just summing your costs you louse sight of how various areas are performing, and you also lose the ability to compare. If you become a better buyer your gross margin improves, but by employing a picker it stays the same, however type warehousing costs do increase.
So in essence when most people say 'margin' they mean a simple sales-minus-cost-of-goods-sold.
Disclosure: I'm in finance at a retailer/wholesaler who is doing around 5x what the article is doing on ecommerce, it's smallest channel (about 1/20th of the company, but growing)
Context: trying to understand the design market.
The flat rate shipping under $45 in this example is probably because it costs nearly the same to ship half a yard or five yards; shipping 20 will cost a good deal more, but not be anything like 20 times the cost of shipping one yard. So there's no way to bake in a price that doesn't end up generating absurd results either for you, your customer, or both.
But, you can do that if it doesn't fly too much in the face of customer expectation. In some industries, like printing, it's common. In fabric I think there's a strong expectation of a single price per length unit, though I suppose you could challenge it.
I don't think lots of price tiers is a good customer experience, so I decided against it as a long-term customer satisfaction strategy. I do wonder if it's costing me sales. Maybe I should set up an alternate brand that does tiered pricing and free shipping.
For me marketing is always the toughest part .
How do you do your marketing ?
What tips can you offer us that save the most time and money spent ?
I never respected sales,
Until I tried it.
- Get to know potential customers. This means talking to them, making friends with (some of) them, getting involved in the community around your product etc.
- Build up a solid blog, instagram etc. for inbound and discovery marketing
- Giveaways / discounts can give you a temporary boost
- Tell your story well, if you're a small business people love to buy from you, and they even accept slower delivery and issues if you personalize your support
- Go to relevant events / shows, try to get featured on podcasts etc.
- Work on SEO
- Pay for ads directly to bloggers, vloggers and relevant content sites
- Send free samples to targeted influencers
- Use but don't abuse your mailing list
What doesn't work for me is buying traffic from google/facebook, they just tend to send junk through with an appalling bounce rate.
Imagine a bizdev person saying, "for me, programming is always the toughest part, any tips?" and the response being, "Oh, you should definitely sign up for Stack Overflow. Simplifies things quite a bit." This may reflect a conceit on the part of programmers that it's soooo much more complicated and important, and the business side is full of chads and beckys who talk too loud on speakerphone (yes these people are a cancer, but that's beside my point).
Biz/Mark has its own, shall we say, "Data Structures and Algorithms" to it, there's just no one set of books that everyone (...) agrees on. Even so, people have been selling fabric for thousands of years, there's not much that the internet changes about that, or many if not most other business categories.
The Independent Consulting Manual is a good place to start, then go down the list of authors and read their other stuff.
They often do a christmas sale too.
Follow Patio11 on twitter, read his stuff. Follow Amy Hoy, do 30x500.
Then spread out from there.
If you’re funded, great! All the same advice applies, you just have more gasoline to pour on the fire. Try things faster.
Patio11 taught me how to raise my salary in my full time job.
Amy Hoy got me off the couch and start building products (that user wants).
Not to forget advice from Rob Wailing, Kai Davis etc too.
Simple straightforward and so insightfull !
I think if you get really good at streamlining your marketing (Instagram photos and landing pages) as well as your pick/pack/ship operations (i.e running a warehouse), then you can expand into multiple niches. Fabrics, clothes, prints, whatever is super niche and high margin and can't be found on the shelves of a big box store.
Ultimately I think you need to actually be passionate about the product you're selling and embrace the community around it.
Find a problem. Build a solution. Market it. Listen to your customers. It is fairly standard advice, but it works well.
I'd love to host you on a podcast series I've started specifically focused on bootstrapped founders, starting side-hustles, and their stories of the early days.
Even though your post answers most of them, hearing them from you would be fantastic.
let me know if that'd be of interest.
Sending lots of good vibes, and telling my north-of-the-border -mom-friends about FridaysOff!
Personally as a sole operator i'd prefer 10k revenue and 5k a month in profits over 100k in revenue and 2k in profits. However the last is more preferable for expansion.
To expand if you have 2M in gross revenue and only 2k in net profits this surely means that there is demand for whatever you are selling and some sort of optimization/innovation would bring you greater profits.
If you have billions in revenues then profits matter even less as long as the company keeps getting external financing from the markets and there is perceived need/potential for company products. Look up on how AMD, MU etc has been operating for 30+ years.
Revenue alone is not a valid metric.
Citation needed. Because everyone else would be doing it if that were true. It’s certainly possible, but not by any means “easy.”
(also it helps I do the tech side of things and there is so much open source, free or cheap stuff available tech-wise)
What does that mean?
Alternatively, she could have had a wrong account type (personal instead of business), but my charitable assumption is that GP took care of that.
That makes no sense.
I think a more sensible take is that PayPal's AML/KYC process is a little too coarse-grained and poorly implemented.
This doesn't sound good, basically kickstarting a company on another company's money.
1) All your competitors have to follow the law too, so it's just another cost of doing business.
2) Women are having children later, generally, so employers will see a 25-year-old and think "eh, I probably have 5 years at least".
3) Men are starting to take more parental leave, and the law is mostly gender-neutral (there is some amount of leave specifically for mothers who have given birth, but most can be taken by either parent). In fact, both parents can take the leave and have their jobs protected, although you can't double-dip on the paid benefits. I took three weeks off at my daughter's birth and 3 months when she was ~9 months old.
4) Maternity leave coverage is a great way to try out an employee for a year - hire Jim to cover for Jane, if you like him keep him on after the year, if not he disappears. (Part of this is Canada is more resistant to the contractor/employee trend than the US).
5) The people doing the hiring are likely to either have children or will in the future, so they feel like it's a reasonable/good policy.
Nothing blows my mind as much as hearing Americans talking about maternity benefit. I was listening to a podcast and one person said "we were lucky to have such good maternity benefits, I didn't have to go back to work for 6 weeks" and I was floored.
Here in Belgium maternity leave is actually quite short, but you have the option to extend it for many months albeit at a reduced pay (provided by the govt). Not everyone can afford to extend it. Dads can also get paternity leave, up until the kid is 12yrs old.
Gender roles are changing a lot, paradoxically me as the father / chauffeur of the family is the one who has to leave by 5:30PM every day to get to day care on time while my partner doesn't have that limitation on her working hours.
It’s a very regressive funding model paid by a flat income and payroll “tax” on earnings between $3500 and $50000.
Last I heard, it takes in billions more than it pays out.
I'm criticising the system for enabling such action while punishing the employer.
Can I work on my startup idea when I take 2 weeks vacation in the summer? What's the difference?
-Vacation time is not paid time while maternity leave is time the employer has to pay for.
-If working does accumulate vacation time (meaning it is paid) it's a fixed perk that the employer can take into account and knows when hiring you
-You must still always negotiate when you are going to take that vacation, you can't just start at a new job and instantly take paid vacation time.
-2 Weeks != Maternity leave
Not in Canada. Maternity leave is funded through the federal Employment Insurance program. The only obligation the employer has is to hold the job for a certain period of time.
I wonder how many of them doing such businesses, and how many could engage in such businesses, and if they do not want to do it - why.
At least where I live there's rules against making money when home with kid (government pay you to be home with kid).
Usually you lose a dollar in benefits for every dollar you earn.
But if your business turns losses in the first year...
Given the choice I know which country I'd rather have a career in.
Promotion of your blog should be clear to readers.
Also, “Show HN” is specifically for products we can play with after clicking the link. Please do not pollute Show HN with blogposts; I will flag them and I’m sure others will too.
I spend a lot of time on it and it provides a lot of value to a lot of people. Maybe the content is not super relevant to you and that's fine. You don't have to read it.
Why are you leaving so many comments about this?
If you read more into the many interviews I've done - you can find many founders talking about profits/margin.
I don't think this necessarily follows.
I believe he has lots of accounts to upvote, otherwise this would be hidden.
What seems to work for me is getting the write keywords in my meta description
There were some people a few years ago that managed to sell off a few hundred Hawaiian shirts that were most likely drop shipped from China by using some well targeted FB (and probably Instagram) advertising, and giving the shirts funny names (named after local alcoholic drinks). They were probably making $20 or $30 per shirt.
An interesting take on the Aliexpress game is theive.co . It's basically a curated list of stuff on Aliexpress with referral links. Since I last looked at the website they've apparently launched a product aimed at drop shippers, where you can get market insights. Morally it's murky, but it's clever.
No offense, but this is the kind of thinking that holds back people from succeeding in business. I see it a lot from non-biz engineering types.
There is nothing, nothing “morally wrong” with dropshipping. The main value you provide is discoverability; if the customer finds a product through you that they would not have found otherwise, then you added value. Also, you provide customer service and return policies that the supplier may not. Finally, you also provide value to the supplier by selling their merchandise in channels they are unable or unwilling to reach.
In fact, all that really matters is that the customer made a voluntary decision to purchase a product from you, and was not misinformed about the terms of purchase or shipping.
You are under no obligation to inform the customer of your suppliers. If you disagree morally with that, then feel free to link them to a site where they can buy your product from someone else.
The idea that there is something “wrong” with selling a product for more than you pay for it is ridiculous, at best. That is literally what business has meant since the dawn of civilization.
On the other hand, there are some complaints you can level at the industry. One is that they're exploiting an information asymmetry between the buyer and the seller; buyers as of yet haven't realized just how cheap and available things are on Aliexpress, and the sellers do their best to hide the source of goods. I think this will resolve itself over time as buyers get more savvy.
There are also some questionable practices. "Free, you just pay [$10+] shipping" seems aimed at some sort of psychological defect in the part of the human brain that calculates value. And digital marketers often are often rather indifferent to IP rights.
I guess my biggest complaint is that there are an awful lot of online marketers that really just don't seem to care all that much about the customer. They're often selling one-time impulse buys which are priced too low to be worth the trouble to return and they don't expect a repeat customer, ever. They've never even seen the products they're selling. I guess I want a little more value-add from my vendors - I've gone back to buying things offline where I can.
(I'm sure the article author is in a very different category of seller, which is heartwarming!)
I used to work for a company that was intending on selling all their user data to third parties (anonymised, of course) as an extra revenue stream. It definitely made me uncomfortable, my boss fully intended to sell as much of the data as legally possible. It was one of the reasons I left the company, especially considering the nature of the data we held.
Now, back to dropshipping. Falsely representing your product as "normally $80, now free if you just pay $10 for shipping" like in the linked podcast is false advertising. It's also probably illegal, you can't put product costs into shipping costs. It's a pump and dump scam. It's like the classic fake watch scam run on street corners all over the world, except you're now wheeling and dealing on the internet instead.
Selling a bunch of drop shipped Hawaiian shirts by using clever marketing, that's fine. The shop I mentioned made no misrepresentations, they didn't claim they were bespoke shirts made in some little village on a Pacific Island. They didn't claim that they were offering a massive discount.
But if you claimed that you were some bespoke Hawaiian shirt manufacturer who's just started up, and you're giving away shirts if you just pay shipping and tag your mates in the post. That's sort of sketchy isn't it? You can see the moral difference here? Maybe you buy some likes and followers on Facebook or Instagram to make you look more legitimate. Put a couple of stock photos of your "employees" in some remote village in the Solomon Islands. Maybe claim that your shirts are ethically sourced. Are we getting into morally wrong territory here?
In this case you're entering the supply chain of a product (cut fabric), which end customers cannot do for themselves and wholesalers cannot scale.
Wayfair is a 9.7B company, that dropships. They found a way to make it profitable.
I do have to disagree on this. This is them trying to increase the "social proof", proof that you are making a solid choice in buying this item. Nike doesnt need to do this because everybody knows nike, and feels that they are good shoes worth their money.
Showing proof of other purchases increases that proof, and you are more inclined to buy it. Of course this all assumes legit "soAndSo bought it too" messages
And this is why I would never trust such messages. It's way too easy to fake it, and too much work to make it real, and there's no way for customers to verify it's real anyway.