In today’s article, I want to lay out reasons for and mostly against doing trade shows and why for a lot of brands, focusing that energy to a more targeted market is time and money better spent.
When you exhibit at a trade show like Pool(read article), you are faced with a lot of upfront costs. Any attempt in business to put yourself in front of possible new opportunities has risk and often high costs associated. You need to spend money to make money, right? The booth will cost a few thousand dollars, hotels, travel, and all associated costs of being out of town arise and add up. I was lucky enough to have friends to stay with while in Vegas for Pool which helped cut some costs and live close enough to drive instead of worrying about flights and shipping goods. If you have to put out $5-7000 to do an event, when factoring in margins, you realistically will probably have to sell at least twice that to break even on the event and 3x that cost to walk away with any profits. That is a lot of product to move at full wholesale pricing.
There can be big payoffs from large retailers when doing a show, but most of the customers and accounts you will get may be smaller boutiques. My blanket advice is that if you are aiming for large big box retail, then a trade show is probably your best bet to potentially get your product in front of them. As outlined in the selling at Pool article, big box tells you what they will pay with a blind disregard to your wholesale prices. They know what they want to sell it for and what they need to buy it from you for. It’s a take it or leave it situation with not much room for negotiation. When I sold to Urban Outfitters, I was able to negotiate a higher price on the test run, but if we chose to move forward, they wanted a really low price. It’s smart to know your pricing model and costs in depth to be able to know ahead of time if that is even a possibility. When UO offers $6.40 for a printed t-shirt, can you do it and in a way that your labor cost doesn’t completely diminish your profits? Selling to big box can be a trade off for brand exposure and awareness, but the money doesn’t make sense for a lot of small businesses unless your product can be produced in bulk with minimal labor on your end. If you get a $10,000 order and your production costs $7,000, with you having to pack up everything by their guidelines, ship it(producer pays freight) and time spent learning their crazy back end systems, you can end up making barely any money per hour at the end of the job. If you make a widget that is produced overseas, it comes packaged and with a upc on and all you have to do is re-pack it and ship, then its a viable revenue source.
What is the alternative?
It’s time to consider making cold calls and going after the specific stores you really want. If you took the amount of money a booth will cost you and spent that on going out and contacting stores directly, you will probably see a bigger pay off and a direct one. You want to know how I landed UO when I decided I wanted to give it a go? I googled “menswear buyer urban outfitters + linkedin” and a name came up. I then went to the UO corporate site, found a phone number, called and asked to speak to that person. They patched me through, I spoke to him about what I did and asked to send them some samples. A little back and forth and a few months later my test order had been submitted. My total cost to land UO was under $100 in samples and maybe an hour of my time…much cheaper than the $4000 booth.
Focus on the right stores
When I began wholesaling, I was trying to get myself in front of as many stores as possible, thinking that getting in as many boutiques as I could would be my way to growth. What I later found out was that my focus was all wrong. I decided one day to approach my local indie bookstore and present my line to them in hopes of getting into their store. Granted, my clothing line is inspired by literature, but that is the exact reason why a bookstore would get what I do. I set a meeting, brought in samples and within 5 minutes left with a nice sized opening order that was about 2x the size of my average boutique orders. Many boutiques have limited space and a limited budget, so them buying 24 shirts can be a big commitment to space and funds for them. After 3 weeks, I got an email from the bookstore with a new order that was even larger than the first was because my line had sold out quickly. The next thing I did was looked up large independent bookstores across the country, picked up the phone and started calling. By doing that, I landed a large multi-location store in Portland and saw similar results. As I started getting into more bookstores, I was seeing that not only were the initial orders larger, but the reorder rate was almost 3x quicker than my boutique locations. It’s a pretty simple explanation when you stop for a moment and evaluate the reason. I was selling to my exact market and not only did the store buyers get it without having to do a pitch, but their customer understood it instantly. If your brand fits into a niche, you need to explore that niche and use your limited time to go after the right stores. I started with one book store that carried miles to go, and in less than a year, it went to over 100 locations. There are still a few boutiques that carry miles to go, but the growth can be directly attributed to going after the right people. Being in the right stores also led me to getting a call one day from an outside sales rep and I will get into working with reps in a different article.
The overall lesson here is that if your brand falls into any kind of niche, you will see greater results by focusing on that niche then you will by throwing a blanket over the market and praying for results. We all should have a specific target market that goes beyond people 18-30 who like t-shirts. If your brand doesn’t have a specific look or target and you are seeing so-so results, it is most likely because you are not focused enough with your product. It is better to do one thing well than to try and do a lot of things half-assed.
Greg Ker has run Miles to Go since 2007.
Now has helps companies manufacture pins through pingamestrong.com