This topic came up today as I was talking to Kathleen about an internet retailer who has developed a line of merchandise. It’s a complicated issue but basically, the internet retailer is selling the line to other retailers (internet and brick and mortar) but the brand name is also a website and a very popular one at that.
One of the issues that comes up when you’re manufacturing apparel is whether or not you should put your domain name on your hang tags or garment labels. If you’re only selling to consumers directly over the internet, this isn’t an issue. However, if you’re also selling to stores or plan to, putting your web address on hang tags may become a problem. Kathleen and I have talked about this quite a bit, from both sides of the fence.
If you know anything about Kathleen, she is very much about humanizing the apparel manufacturing process. She thinks it’s important to show that there are real people, with real lives, who work in decent working environments (not sweatshops) who make the clothing that people wear. She thinks consumers should know that a manufacturer who produces domestically supports American workers and local economies and helps families make a living, many of whom don’t have other marketable skills outside of the apparel manufacturing industry. And if Kathleen had a sewn product line this is exactly what her website would be about.
I only wish more companies were like Kathleen.
Usually, you’ll find that companies with very large department store distribution tend to have informational websites with glitzy photo shoots, a media section with press releases and magazine clippings, sales rep contact information and maybe a restricted access area for buyers. The reason the these sites are this way is that companies with department store distribution usually cannot create an ecommerce website without encountering serious backlash from their big retail accounts, especially if those retailers also have websites that move a lot of product.
Designer entrepreneurs however, often sell directly to consumers through their websites and for good reason. For starters, they can often show their entire line while a retailer may only have a portion of it. Second, they often use it when seeking press so that consumers will know to buy the product. Third, they can get a higher profit margin selling retail. However, this becomes a problem if the DE’s site is so successful that they become a serious internet retailer. By that I mean DEs move to put up revamped websites designed to facilitate ecommerce with buying pay per click ads on Google and Overture, advertising online in different e-zines and blogs and so on. They start taking internet retail very seriously. This creates a sore spot between the DE and the independent boutique because the stores feel like they are competing with their supplier for sales. This becomes more of a concern if the boutique has a website companion to their store or is an internet-only retailer.
As it is, retailers are leery of DEs having ecommerce websites, but the thing that really makes this a problem is if the manufacturer puts their domain name on the hang tag or product label. Retailers see this as a way of subverting their sales because customers have no incentive to return to the store if they can purchase the product from the manufacturer directly, especially if the manufacturer is selling at the same retail price as the store is. Some manufacturers have even been known to undercut their own retailers with pricing, selling under suggested retail price! By the way, that’s a great way to lose all of your retail accounts. Retailers usually will not accept your product with the domain address for this reason. Under these conditions, the retail store is forced to play a game under unfavorable conditions because the manufacturer only has to pay product costs, whereas the retailer has to pay the wholesale price.
This is a very tricky issue, especially when it comes to new DE’s. If you do this, you will turn off some retailers and you may cannibalize their sales and never get the chance to fully develop your retail distribution channels. For those who only sell wholesale, this won’t be an issue at all.