Custom Production vs. Pre-Stocked Inventory: Which Approach Aligns with Your Business?
In the ever-evolving world of fashion, emerging designers often face a common question: should they create upfront inventory or manufacture garments once orders are received through made-to-order production? The answer depends on the sales channel chosen, as each has its unique advantages and challenges.
Online Sales Online sales benefit from real-time inventory control using advanced inventory management systems. Made-to-order can reduce upfront inventory costs and obsolete stock, but may increase lead times, potentially affecting customer satisfaction. Upfront inventory supports faster shipping, a competitive advantage online, but risks overstock if demand is overestimated. Integration with ecommerce platforms allows multichannel inventory tracking, preventing overselling and backorders.
Brick-and-Mortar Sales Physical stores require immediate availability of products for in-store purchase, favouring upfront inventory production. Made-to-order models may not perform well unless supported by quick local manufacturing or drop-shipping. Holding inventory in-store or at nearby warehousing adds carrying costs and requires careful planning to avoid stockouts or overstock.
Wholesale Wholesale typically deals with larger quantities sold to retailers, requiring upfront inventory to meet bulk order demands promptly. Inventory management for wholesale benefits from integration with ecommerce and wholesale marketplaces, which enable syncing stock across multiple channels to prevent overselling. In wholesale, buyer quality and relationship management are crucial, and policies such as minimum advertised pricing protect brand image and may affect inventory strategy choices.
When considering your brand, factors to consider include demand forecasting accuracy, customer expectations, inventory holding costs, channel complexity, brand protection, and operational agility. A balanced approach often involves partial upfront inventory for fast-moving items and made-to-order for customized or low-demand SKUs.
The Wholesale Advantage Wholesale offers budgetary clarity, as the designer knows exactly how many units of each style they'll be selling before manufacturing, thanks to minimum order quantities and set cost prices. The designer doesn't have to deal with markdowns or overstock, as the retailer takes on this risk. In the trunk show scenario, the designer splits the income with the store or boutique, typically 50/50, while hosting a trunk show allows for pre-orders of new collections without the need for upfront inventory.
Online Sales Pros Online sales provide the advantage of receiving money at the moment of order, keeping 100% of the income, and seeing customer responses in real time. In the drop-shipping scenario, inventory must be ready to go the minute an order is received, as there is little one-on-one contact with the customer.
Brick-and-Mortar Sales In brick-and-mortar sales, the designer gets their money upfront but must make an investment in inventory before knowing how well it will sell. For commodity-type items like yoga wear or athleisure, customers typically have a "buy now, wear now" mindset and won't wait for made-to-order garments.
Ultimately, the decision will depend on the product type, brand positioning, and operational capacity to manage real-time inventory and customer expectations across sales channels. There is no one-size-fits-all answer, and it's essential for designers to carefully consider their options to make the best choice for their brand and customers.
- Emerging fashion designers often ponder whether to produce inventory upfront or use made-to-order production, a decision influenced by the sales channel chosen.
- Made-to-order production in online sales can reduce upfront costs and obsolete stock, but it might increase lead times and affect customer satisfaction.
- In the case of wholesale, upfront inventory is necessary to meet bulk order demands promptly, offering budgetary clarity over packaged quantity and set cost prices.
- In brick-and-mortar sales, designers get their money upfront but may face risks with inventory investment and customer preferences for instant gratification, especially with commodity-type items.
- Product-reviews, finance, and small-business aspects can play a crucial role in a designer's career, as they help shape inventory strategies, manage customer expectations, and establish brand positioning in the fast-paced and ever-evolving fashion industry.
