Why the Direct-to-Consumer Model is Right for Princess Awesome

April 14, 2016 1 Comment

Over the past few months, we’ve been thinking a lot about how to move Princess Awesome forward. One of the big decisions we needed to make was whether to pursue wholesale accounts - getting our dresses to hang in small boutiques and department stores.

This was not an easy decision. There are definite benefits to selling wholesale: built-in marketing from a store that clients know and love, exposure to new customers, selling in bulk (which means larger production runs and therefore lower production costs), and the je ne sais quois of knowing that our products are out there hanging in awesome stores all around the country.

But after serious thought and consideration - as well as the clear feedback we received from our recent customer survey - we’ve decided that maintaining a direct-to-consumer business model is the right choice for Princess Awesome. Here’s why:

Four Significant Benefits of Selling Direct-to-Consumer

1) Timeline

Boutiques buy products for their stores 6 - 8 months in advance. That means that stores are buying for fall in January and for spring in October. Selling directly on our website means that we can produce on a timeframe that works for us and our customers. Because of the high cost of new product development, we can more effectively manage our cash flow - something very important for a small business - when creating new products. We can expand or contract our plans quickly rather than being tied to producing a certain number of products far in advance.

 

2) No costly trade shows and sales reps

The two ways to truly grow a wholesale business are to show products at trade shows and to hire a sales rep. And the thing those two things have in common? They’re expensive. Setting up and decorating a booth at a trade show, not to mention the travel costs, can run to many thousands of dollars. And, as we’ve heard from other small businesses who have attended trade shows, there is no guarantee that you’ll see a return on that investment.

There are also many boutiques that only take product pitches seriously from sales reps they’ve worked with before. Since we would have to hire that person as staff, it would be another large expense for our budding business.

By focusing on selling directly to consumers on-line,we can skip these expenses and devote those resources - both time and money - into maintaining excellent customer service and developing new products.

3) Direct customer interaction

I’m not sure if you’ve noticed, but we LOVE hearing from you. We love getting to hear about how the girls in your life are wearing their Princess Awesome dresses and what you and they think of them. We love helping with sizing questions and making sure your gift note appears correctly. Seriously, we love it. And, as a new business, we very much rely on your feedback about sizing and product options as we work on creating new products for you.

We don’t want to give that up. We really love you all.

 

4) Retail pricing models are not ideal for us or you.

This was the most significant consideration for us. We received over a dozen requests for wholesale information from boutiques during our Kickstarter. We thought at the time that we’d love to do wholesale! After the craziness of the campaign died down, we looked into the pricing structure that companies and retailers use for wholesale. Here’s the standard, keystone pricing model:

• Cost of Product (including overhead) x 2 = Wholesale Price
• Wholesale Price x 2 = Retail Price

We realized that with most of our products, there was no way we could hit these price targets and have the final retail price not be completely insane. So we politely declined.

The only product that got even close to matching these targets was the Play Dress. We kept our price for the Play Dress at $48.50 to leave open the option of doing some wholesale orders. We wanted to pound the pavement a bit, talk to local boutique owners, and put more thought into the possibility of wholesale before ruling it out altogether.

We did that. Then we thought about all the considerations above. We sent out a survey and 45% of you thought our prices are just right (particularly those of you who have purchased from us and have seen the quality of the dresses), and 55% thought our prices are too high. (see survey results below)

 

And we thought about that feedback, too.

And we decided that the benefits of selling directly to customers, including being able to lower the prices on the Play Dresses, outweighed the potential benefits of pursuing wholesale accounts at this point in the life of our business.

So our Play Dresses are now $39, instead of $48.50. We feel really good about this decision, and we hope you do, too.

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Appendix A: The Busy Dresses

Throughout all of this, you might be wondering: What about the Busy Dresses? Can you lower the price on those, too?

The answer is that the Busy Dresses are already priced at half of what their standard retail price should be. Just barely hitting wholesale prices.

With 8 - 10 individual panels for each dress that have to be cut separately and carefully sewn on  (a process that involves folding down the edges by 2 millimeters to create a smooth, neat seam), along with the pockets, and applique vehicles at the ends of the sash, this dress is incredibly labor intensive for the fantastic seamstresses who sew for our factory, Sew Precise, in Chicago, Illinois. We’ve already begun to rethink the dress to lower the production costs, but for now, the price will stay where it is at $79 - expertly, ethically made here in the USA.

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