All designer-makers would love to have their own famous chain of stores like Hermès or Louis Vuitton, but the amount of work and money needed is exorbitant.
Starting with positioning the brand: all the advertising, attracting the rich and famous, be featured in all the relevant magazines, establishing a reputation, choosing the locations to build every single shop around the world and then having to hire and train hundreds of employees to fill the positions in those shops feels like an insurmountable task, and that is actually true.
Expanding your business requires a lot of commitment, a lot of passion, a lot of guts, lots of time and a lot of money, but nowadays there are other ways to reach that level without having to invest a single pound or to hire a single person (I have to say that the commitment, the passion and the guts are still required).
There is a very easy way to open new branches for your handmade products: Digital Marketplaces.
Digital marketplaces are the shopping centres of the modern era and they will help put your products in the hands of new customers around the world, and in doing so you will not break your bank. Some of them will only take a sales commission for all the design, investment, development and advertising of your shop, which is not bad considering that you will only have to put your products inside.
Some marketplaces charge you a monthly rent, a commission or a combination of both:
- Some charge you a subscription fee and commission (£199 + 25% at Not On The High Street, £100 + 25% at Seekd)
- Some others charge you a listing fee per piece and commission (£0.19 per piece + 5% at Etsy, £0.80 per piece + 15% at Amazon Individual Sellers Account)
- Some charge you a monthly rent and commission (£35 per month + 15% on Amazon Pro-Merchant Account, £0 to £9 monthly rent + 12% with us at Luxecellence)
- Others charge you a monthly rent (£7 monthly rent at Numonday)
It is like having many stockists at the same time, most of them with their own teams of marketing experts working for your products. Go to the marketplaces and use them all. From Amazon to the latest you can find. Some are cheaper and some are more expensive but they have to deal with all the digital advertisement processes that you don’t understand so you don’t have to spend on advertising yourself (Advertising is very expensive).
The rent you pay in any marketplace is nothing compared with what you will pay for a brick and mortar shop, and you only have to focus on checking how your products behave to understand what the customers like.
Even if you go for the marketplaces that charge 25%, it is still a good deal, and this is why:
- If you rent a physical shop, your overheads are going to be very high. Rent and rates will be a major cost and on top of that you have to pay utilities, insurance, employees and the product itself. If you rent a place that is £3000 per month you will need to sell over £7000 before you start making some profit. And your costs will be over 80% of your takings.
- If you wholesale to a shop you will have to give them between 50% and 60% discount of your recommended retail price if you want them to buy from you.
- If you wholesale to a shop you will have to give them the products in sale or return condition (before you could find a shop that will pay for your product upfront or with a 30 days delay but in the actual circumstances that will be very difficult). Most shops are closed or near closing because of lack of sales, and those that are not closing are asking for conditions that are very difficult to manage by the designer-makers.
- If you sell in a retail show the numbers are even more challenging. A show, if it is a good one, will charge something close to £1000 per show (3 to 5 days) depending upon your size and exposure. Apart from that you will have to pay for the time to be there, transport, food etc. If in the show your takings are £5000 (which is very good at this time) your costs are going to be well over 30% (without including the cost of the product).
- If you are in a craft market where you pay £60 per day rent and you pay for your time, food and transport, taking less than £500 in a day will give away over 30% of your takings, so paying 25% in a marketplace doesn’t look that bad at all and you have your day free to keep improving your products and contacts.
In reality, it is not that difficult to see the advantage of the digital marketplaces. Just do your best to get the perfect pictures, the perfect attractive content and the right price so they can do their work in bringing your sales in without having to break your bank or get a loan.
At Luxecellence we have a membership called Bronze, where you can start by having your best 10 products without rent and paying only a commission if you make a sale. If you don’t sell you don’t have to pay. And that is how you can open a branch shop for your handmade business, without money!!!