Dropshipping; what is it and how how does it affect you?
Recently, Karolina Laskowska announced she was giving up wholesale, and cited the number of requests for dropshipping as a large part of the reason. But what the hell even is that, and why is it a problem?
This is the face of a woman who is fed up of wholesale and dropshipping. And also has a new collection coming out here.
What is dropshipping?
In traditional fashion retail, stores order products 6-12 months in advance from a supplier, often paying a deposit to smaller brands (otherwise it's hard for indies to finance getting anything made). Suppliers deliver the products to their store in batches, then you see them and buy them from the store.
Dropshipping comes from online retail; stores put up images and product info, but the stock is actually still with the supplier. You order it from the retailer, they let the supplier know, the supplier sends it out direct to the customer.
Though if we'd always waited for stores to order, the args would never have been made.
Why do many indie brands hate it so much?
Small brands like us used to reply on advance sales to either get the cash to get things made or to show the bank we were like, totally good for it, honest, if they would finance us getting things made. Dropshipping means we just have to get things made and hope - it pushes the financial investment and risk all over to the supplier side.
There's a general sense that people who haven't invested much in a product don't then push it or promote it much, whilst claiming that it's great "exposure" for small brands. I can't speak for other people's experience but I would say out of all the people we've done dropship or SOR with, there are maybe two where it's worked out. Both of them have been personal friends as well as colleagues. That's not good odds. I abolutely refuse to do it now.
(What's SOR? Sale or Return - the retailer doesn't pay until after selling the goods. So still no risk to them and even more risk to the supplier, but it avoids customer service and stock control problems).
Many people who request dropshipping still want to take the 50-70% share of the retail price they would expect to get from normal retail, even though the supplier has made all the investment and done the bulk of the work.
"Look, how do you think our factories would respond if we said, can you make all this stuff but can we only pay you once we've sold it, which we don't know when, or even if we ever will?" said one brand owner.
And this is why it is known as "dropshi**ing* in our circles!
Our circles being ones where we do daft stuff at trade shows.
Why do customers get hacked off with it?
It causes unexpectedly late deliveries and unexpected costs; when a US company requests dropship from a UK company, not only will the product arrive more than a week after the customer might reasonably imagine, they will ALSO end up with an unexpected import duty bill.
Ever ordered from a company only to find that they didn't have the product in stock? Sometimes that's a stock control error - but sometimes you've ordered from a site that doesn't actually hold anything in stock, and they have to order it for you. Imagine how many things can go wrong then, especially when you have lots of size and/or colour variations. If you buy technical products you've probably had this happen to you repeatedly as for some reason it's rife in the land of photography, computers, etc.
Bad customer service? The retailer cannot give detailed feedback on a product easily because they can't just go find one and check. So you have to hope they at least went to the trade shows or met the supplier and saw the products, because otherwise they are trying to help you get more information than they wrote, about a product they've only read about and seen a picture of - exactly the same information you have access too.
The company have no idea where your order is? Something's gone wrong between them and the supplier. If the retailer doesn't hold the stock, there can be several layers of people between you and where your product is actually coming from.
On a bigger level, dropshipping works best for brands doing core basic products repeatedly that they hold lots of stock of - so if dropship is the norm, unusual and small brands get pushed out. If you're bored by what's on offer at the moment, dropship is one of the dynamics behind the scenes that's driving the homogenisation of the market.
So why do retailers do it?
Well, because they don't have to hold stock and can massively expand their product range without much risk. It's potentially brilliant for retailers if you can make it work.
And why do brands do it?
If you're holding lots of stock (like, if you're a really big brand and have lots of continuity products, that's when it works best) then its much better to have it out and a chance of shifting than to hoarde it like some sort of bra obsessed dragon.
Because if that's the only deal you can get it's better than no deal.
Because sometimes, just sometimes, it works out well, and there's nothing better to reinforce behaviour than the occasional major reward (that's why slot machines are addictive!).
Because if you set it up right, it can actually work well. Charge a premium for it, be super organised about holding stock and making sure its mostly continuity lines, make sure the retailers know the products, refuse to accept returns - these are all ways to make it work profitably.
Rago use a dropship agent in the UK for their products - which are based around a handful of styles with few changes.
Wait, hang on - you've always been crtical of dropshipping, but aren't you doing it?
Yes we are. We don't supply on a dropship basis, but some of our pop-ups have been done in a way that resemble dropshipping, and often involve sale or return. I'm also about to bring in some US brands using a company that pretty much just do dropship.
Well aren't you a giant hypocrite?
Probably a bit, yes. I have to say we don't always practise things in the way I'd like. Here's what I do to mitigate the problems:
We tell our suppliers our real numbers - visitors to the sites, people on the maiing list, open rates, how many people updates get seen by, all of that. So they can judge for themselves whether they really will get "exposure" and if its enough to be worth it for them.
We do publicise the hell out of guest brands pop-ups and suppliers. Generally it seems to work - most of them seem to get something out of it and for some people it's been key; Karolina once told me that KMD are one of her biggest referrers of customers, even though her style is totally different to ours.
We normally pay more than the usual wholesale price, so that people taking more of the risk get more of the money.
It's usually done as part of an ongoing relationship with the other brands; the world of smalls is indeed small and so people who guest brand are usually people I see or contact regularly; we know the products and the people behind them.
And in an ideal world we hold the stock, because seriously, that whole customer service thing is a right pain otherwise. Though the US brands we won't, largely because the appeal is their enormous size range, and I just can't afford to buy in 40 bra sizes and 8 dress sizes. I will, however, be telling customers in the USA and Canada that there is no point at all them buying this stock from us, because it would e much cheaper and quicker in your own country!
Amoralle are our current guest brand.
If there's big disagreements between retailers and suppliers at the moment, where will that lead?
I don't know. It feels to me like something is shifting big time for everyone; Karolina isn't the first person to stop wholesale, and she won't be the last. Though I suspect if Amazon have their way we'll all just end up with storefronts on there instead!
So did you know what dropship was? Do you think you've ever been sent a product by dropship, and did it work out well or badly? Let us know in the comments!
10 things to know about our new guest brand, Amoralle
1) Amoralle are, like us, a small independent brand. Unlike us, they mostly focus on robes, gowns and bodies, which regularly feature on bloggers lust lists. You might recognise a few of them!
2) Inese and her team are based in Latvia, the other side of Europe from us. So where our export markets are the USA, Australia, Canada and various bit of the EU - theirs is primarily Russia. We can't export to Russia for toffee, it's almost impossible to navigate the practical issues! Working together makes sense under these circumstances, especially at a time when retailers don't want to take risks on new brands.
3) Speaking of risks, as Lydia will attest, I was convinced that meeting Amoralle was pointless because why on earth would they trust us enough to leave thousands of pounds of stock with us and trust us to look after it and pay? I lost over £4000 of stock that way with a Benelux sales agent/retailer two years ago. But in fact once they knew we used Radius, who have a proper secured, insured warehouse - they were fine. And I can see their point - there's no-one better than you KMD fans for spreading the word about the best lingerie fashion!
Also you will wear the hell out of these things. I just know it :)
4) Countries in Europe vary wildly in lingerie manufacturing skills. The base in the UK is almost totally decimated. But Eastern European countries still have a choice of factories - so many that the Latvian government actually invites UK brands over to meet them (now there's a government working to maintain its industries, create jobs and promote export!). Amoralle capitalises on those skills to make everything in house in small quantities.
5) They started life as SockBox, which is an illustrative story in why you should research your brand name carefully - I noticed them back then because of their glorious stockings - but that name could get you sued for trademark infringement in some countries, and didn't play well in the UK. (Don't ever ask me about how badly Kiss Me Deadly works in some countries, it makes me cry).
6) Apparently, whilst in Western Europe luxury is pure silk, over in Latvia, practically minded types disapprove of such a high maintenance fabric. As someone who can barely hold an iron and hates steaming, I am SO down with this. Amoralle use silk/elastane/synthetic mixes instead - all the lustre and softness, none of the time consuming labour for you! This also means that you can get a billowing gown or flowing full lenth robe for £100-£200, rather than the £300-£600 you might expect for full silk these days.
7) Some of the garments use Leavers Lace - the closest machine-made lace to hand-made, designed it to be as close as possible to oriinal lace designs, using antique machinery that means you have to handclip and finish the lace. Have you ever seen how lace was originally made? It's insanely complicated!
8) I dislike even hints of beige. I am slightly bigger than the L. I shouldn't really wear bodies. Annd yet, still I yearn for this garment. Such is the power of Amoralle!
9) Speaking of sizing, we're going to be working on getting more product specific tips in regards to that, but also, Amoralle would very much like your feedback as they know, like we do, that different groups of people have different sizing needs. If you're wondering why the size range is limited, well, that's to do with the economics of tiny businesses again. Like us and pretty much everyone we speak to, they find that most of their customers can wear one of 3 sizes, whilst the rest are spread out over twice that many, Thus, it makes more sense to do multiple ranges in a limited size range than to do just a few in a larger size range. But they are happy to look at doing at least one extra size for us if there's demand.
10) LACE GLOVES. I seem to recall a few of you lusting after such a thing when Dita Von Teese released them. So there you go :)
This isn't exactly a job advert, as I'm having to work out what's feasible and also cost things out carefully; but part of working it out is seeing if there's anyone out there with the skills we need. Plus you'd need to be happy to work in central Sheffield, as that's where the sewing machines are living!
Who knew they need this many screwdrivers.
In an ideal world, I'd like to find someone who can work part time in Sheffield following our existing patterns to make small amounts in different fabrics, and sampling new styles.
It might be a good role for a Contour graduate, or someone looking to return to work but needing flexibility around parenting duties or similar.
You'd be working without much direct supervision so you'd need to be good at staying motivated and using your initiative.
You can see the sorts of things we make and fabrics we use on the site, and these are the stitch types we use at the moment: Zzig zag, 3 step zig zag, 5 mm TN Ls, TN cover stitch 4mm, 8mm TN LS, Bartack (not essential), 4T OL, 2N coverstitch and flatlock (not essential).
Does this person exist? If you think you fit the bill then drop me an email on email@example.com.
The story so far: regular readers may recall that historically, we've mostly sold our stuff to shops and websites who then sell it on to customers. Traditionally, that means developing styles a year in advance, selling as much of them as possible to the stores using tradeshows, and collecting a deposit to finance getting them made. This is helpful if you're a small brand who are bootstrapping (that is, you have no-one with a bunch of cash backing you).
Over the last few years sales to stores have been falling as a percentage of the business, and have shifted to being items that are in stock. Thus we have a new mission; to explore strange new methods of getting knickers made, seek out new manufacturing schedules and new tactics, boldly going where mostly tech start-ups have gone before!
In this episode, we worked on kickstarting for a swimwear collection. Swimwear is a small but growing part of what we do, there were some fairly offbrand (read: surprisingly cheerful and therefore risky) designs mixed in, and if I made a complete mess of it it's not crucial to the business, so it was a good test. Think of it like a proof-of-concept!
We went with Kickstarter rather than other crowdfunding places because it's the dominant site, so I thought we might find some new deadlies, and you set a minimum level, which was important for me as I didn't want to take the P*** too much with our factories generous offer to lower their minimum order quantities for this project.
You all helped us make it to just under 70% of the funding target - not enough to get it to go forward now, but way more than about 80% kickstarters who never make it past 20% of their goals. This is especially true of fashion; it's music and films that get the funding on kickstarter as that's where it started, really.
So now we're going to do a music video ;)
The important thing to say is that this doesn't mean I scrap all the work on the swimwear. I've been collecting data and looking at other options - and KMD designs don't go out of fashion, being not based on trends, so it's not an issue to rethink them next year. DO NOT DESPAIR, SWIMWEAR LOVERS.
From both the process, comments and the feedback collected from people who backed it, here's the list of changes, issues, and just some hopefully entertaining facts!
First, the big one; if and when we do another it will be ONE BIG ONE. The biggest issue was not being able to make staggered rewards between £1 ( a thank you) and £69 (a swimsuit). Basically that's because the only way to do a swim product for less than that would be to make something like a triangle bikini out of poor quality swim fabric, and that would be rubbish.
A few people asked why we didn't do vouchers or current products as part of it. That's against kickstarter rules - they are pretty strict and they do check projects - we can't do anything that makes a project more like a shop and we can't do financial incentives (vouchers and discount codes would count).
75% of people pledged for a product, and 25% because they just think we're funny/good/awesome. Bless you all :)
Very few people came new to it from kickstarter - massively below average! So the get-new-deadlies-from-kickstarter thing doesn't seem to work. one person hepfully said they thought the video appealed to current folk more than people new to the brand, so Lydia and I are currently plotting how to better introduce the brand and products and make as many viral-worthy moments as possible!
Unlike most kickstarters we also had pledges from people in their 50's. Deadlies are clearly forward-thinking!
Some people were disappointed the discount wasn't more. Here's why: Kickstarter take 5%, and their card processors take another 5%. The UK government take another 18% in VAT, not to mention 20% if by some miracle we make a profit, and possibly more if we did digital products (it's a complicated VAT issue that makes me cry). Postage for our garments can end up at £20, because of the weight and bulk of retro styles, so between the fees, taxes and free post worldwide, the numbers were pretty tight. Next time, what I would most likely do is sort out actual postage figures for each country and then offer a bigger discount.
Similarly, someone requested a "bread and butter line", i.e. a cheap basics option. This might sound a bit brutal, but this already exists and it's called the UK high street. I can't compete with that - the economies of scale involved are not available to small brands like us, and to get down to that price we'd have to do rubbish quality, which I wouldn't be OK with.
Things we're thinking about as none-product rewards, for people who wants to keep pledges small and not get hit up for international postage; none-shark based exclusive digital artwork
Speaking of which, apparently people hadn't realised that a) the drawing was a Goblin Shark and that b) Gobline sharks are actually quite pink-ish. And also that I get bored of pin-up art and would like to subvert the medium. Sorry about that :)
Facebook; in spite of massively decreasing our ability to speak to you on facebook (we have about 65,000 fans, but can only speak to 1-2000 of them on each update generally), facebook was still competing with our site and mailing list in sending people who pledged. Baffling.
In general next time Lydia and I would be posting more content more of the time to all our social media sites; but we'll endeavour to make it varied. Tell us what you'd like to see in the comments!
Timing issues. Firstly, can we extend a kickstarter - no, they won't let us. Secondly, can we make sure it matches your payday and/or when each of you has some money - er, probably not. I can try and get it to end at the end of a month next time, will that help? Thirdly, can we reduce the time between ordering and delivery - not really. I deliberately over-estimated it, because it's better to delight than disappoint, but realistically a 3-6 month lead time is pretty normal for small brands with small orders. Though we could kickstart to start our own small factory?! Lastly, timing of delivery of swimwear - yes, delivery in Summer would be better, but that would mean Kickstarting in January, which I suspect would cause fiscal sulking. Basically the timing of swimwear is a bit of a pain!
Do more press. For various reasons, Lydia and I didn't push press on this occasion. As and when we do another, both of us will be talking to anyone and everyone we can! You might have noticed us asking you about fashion blogs and so on in recent months, since lingerie blogs themselves, bar The Lingerie Addict, have fairly minimal traffic.
If I can get anything made this year, it'll be this bikini by the way - it was a fight between that and the leopard swimsuit for top favourite place, but the bikini is more possible to make. The swimsuit involves underwires and they need special skills and equipment.
Did I miss anything? Let me know in the comments!
As many of you have noticed, we haven't had a Vargas or Van Doren delivery since Autumn 2014, and then most of it went to retailers. It's been frustrating, I know. It's hard to explain why this has happened, partly because in all honesty I am still very unclear as to what was going on with the UK factory that makes these styles for us. It seems like they made a few people redundant in Summer 14, subsequently losing production capacity, which caused problems when we returned to them in Autumn with quite large orders. I moved the silk Cherie away from the factory to help, but that still left them unable to fulfill the orders placed for pre-Christmas 2014 delivery. Sadly, this wasn't clear at the time.
The subsequent row/fight/cashflow tangle has taken months to sort out, culminating in a) a full and frank set of emails threatening legal action on both sides (ridiculous for various practical reasons) and b) the discovery that the factory thought I was making the styles we used them for elsewhere! Happily for them I wasn't, so now we've sorted things out and the goods are starting to flow again, as it turned out they had been sitting on KMD stock as well as holding some of our fabric hostage. Phew!
But, there are some changes that affect you.
1) We'll be getting stock in throughout this month of Vargas and Van Doren styles at the same price as usual.
2) After this month there will be a 10% price hike. That's because the cost of elastics, fabrics, suspender clips and well, everything, has been going up. Yeah, it sucks. But both the factory and us have been swallowing price hikes from suppliers for the last 3 years or so and the accountants aren't happy.
3) The factory were refusing to make any new styles until the fight was sorted out but are now happy - so, the first new thing we'll make will be the much delayed Virgin Ouvert Pantygirdle. Thank you to everyone who has been patiently waiting on this!
4) After that we'll start on other suspenders and girdles that have been held up, like the photographed-but-never-made Miss Mandalay items, Champagne pantygirdles, and so on - and the styles I have fabric for but no sample, like a Jacquotte suspender belt!
5) That means there will be a gap between this batch of Vargas and Van Doren stock and the next while we catch up on overdue limited editions. So if you've been waiting on it, GET IT NOW. Because there will be a wait for the next lot AND you will pay slightly more!
6)And lastly - they are delivering two limited editions this month - the pinstripe girdle and leopard suspender belts. These are the last ones in these fabrics!
Deadly Underwear as Outerwear Competition
There's some familiar faces and plenty of new ones; I'm mostly excited about umbrellas, how about you? :)
Over in Canada, Karen shot this day-to-night set of how to style the Violet Divine Bra as a top.
I'm not always a fan of pale pink shades, but I enjoyed seeing Lea's mix of candy pink ruffles with the Wine Demi-Corset and some black ankle boots.
Amanda went to the courthouse for her photo. Because well, why wouldn't you? Another Divine Bra - customised, I think, for a fuller bust - with the Lingerie Skirt. Should you ever end up in court, don't wear this outfit. If you get the wrong judge they could either keel over from a heart attack or take agin you because sheer panels are SO outrageous!
I'm not sure what Jo's skirt is made from - latex, maybe? But she's wearing the Divine with matching stockings. And much more sensible boots than I would wear.
Pamela sent us her favourite wedding outfit, which includes the Ariadne corset that went with the Divine. Basically, unless your outfit comes with matching umbrella (which makes perfect sense in the UK), you need to level up ;)
This is possibly the most conventional Amaryllis has ever been for KMD! That's the Blue Alouette waist cincher.
Avigayil has one our retro harnesses, and created three outfits with it. I think I like the "office wear gone a bit wrong" one the most, how about you?
Chloe has both the corselette and the bra in the Divine, and reminded me that she had previously sent us a brilliant picture of her Black Milk dress with the Vargas longline girdle.
Logan might be a familiar face to you; here's her embellished Divine bra from last years competition, followed by the Silk Cherie Teddy with a Karolina Laskowksa harness, a Black Tempest corset that was made specially for her with the Emerald DeVille bra, and my favourite, the same corset but over the Betty Blue babydoll. It's such a fine mesh that it fits underneath and creates a peplum.
Jade wears her Van Doren bralet and 8 strap suspender belt.
Kelsey figured out a way to make a colour block belt effect from her Jacquotte Girdle. I think it's the first time I've seen anyone use the KMD girdles that way, I like it.