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That doesn't really mean much - most online fashion retail has similar markups, and nobody else is making money. Edit: In the case of the 2nd piece, Nasty Gal
by rdouble 14y ago
That doesn't really mean much - most online fashion retail has similar markups, and nobody else is making money.
Edit: In the case of the 2nd piece, Nasty Gal probably isn't making much money on it at all. It's made in the USA (which is usually a higher cost item), and the direct from manufacturer price is 63 dollars. Thus, it's probably a drop ship item with a razor thin margin.
- possibilistic 14y agoHow are they not making any money with the large margins they see? Could you elaborate?
- rdouble 14y agoSites like these have huge expenses. In addition to having to pay staff ranging from programmers to models, they take on a lot of risk when they buy and warehouse the products. Consumers are fickle. If the site buys the wrong stuff, they are perpetually losing money on it as it takes up space in the warehouse. The business model for online fashion retail is for the founders to extract as much cash as they can for themselves while it's hot and leave investors holding the bag when it's not. I would take any article about such a company with grain of salt. One thing these companies do well is PR. Getting media placement often comes easy for them as employees of magazines, newspapers and blogs are often into fashion themselves and are eager to run a story about something they are personally interested in.
- mazumdar 14y agoyou seem to know about the costs associated with fashion retail. I would love some advice for my own start-up. Can we chat? My email is in my profile.
- Axsuul 14y agoNasty Gal initially started out by selling vintage clothes which happen to have huge margins. One piece she purchased for $8 sold for $1000. So I'm sure the margins are still there now that Nasty Gal is trying to become more of a brand. It wouldn't make business sense to abandon a profitable strategy only to shift and scale to a non-profitable one.
- rdouble 14y agoThat is how most of the fashion sites start out. There's some point in time where they find a desperate luxury goods manufacturer willing to give them a deal, or meet a guy who inherited his family's shirt factory and wants to try out something new, or they get lucky selling a few pieces of vintage clothing. Then for a while, the site does very well. Eventually they run out of high margin stuff to sell, because they literally run out of the stuff (in the case of vintage clothing) or their suppliers start raising their prices. Then they need to sell more stuff, which requires more employees, and bigger warehouses, which continues to eat at the margins. There's also many copy cat fashion sites, since between 2009-present "fashion internet" seems to have been a trend for fresh MBA grads. I'm not really sure how they get started, but I'm pretty confident they also don't make any money.
- OGinparadise 14y agoNasty Gal initially started out by selling vintage clothes which happen to have huge margins. One piece she purchased for $8 sold for $1000. what about the other 100 she purchased at $150 and still are not sold? I made the numbers up but you cannot use an extreme case and assume the same applies to all.
- gamblor956 14y agoNo retailer pays manufacturer-direct prices. Retailers pay wholesale prices, which are usually 1/2 to 1/3 (or even less!) of the manufacturer-direct price. The substantial discount reflects that the retailer takes on the bulk of the risk associated with marketing and actually selling the apparel.
- rdouble 14y agoExcept the discount for drop ship is far less than if the retailer actually bought the goods and is shipping out of their own warehouse.