The critical mass will tell you it takes 3 years before you generate any profit from your online store. With Hawkins & Shepherd we sold on our first day of trading and I'm pleased to say have enjoyed a healthy trajectory. However, it could take another 10-20 years before it reaches a level that I would be happy with.
Today Hawkins & Shepherd celebrates its 5th year in business and in this article I will tell you all about the mistakes I've made and what you need to be mindful of should you be looking to start an e-commerce store.
SINGLE POINT FAILURE
AW17-SS18 has been the most challenging year for me. I've suffered great losses through supply issues.
With Hawkins & Shepherd the shirts are all handmade so it is extremely hard to find a factory that has skilled workers who will deal with the relatively small orders that I'm placing.
We have always used the same supplier for 5 years and there lies a problem. Looking back to my IT Networking days, that would be classed as a 'single point of failure' which needs to be avoided at all costs.
The same applies with fashion/clothing, by having one factory making your goods is bad business. You always need a 2nd option which will take over if one factory experiences issues. In the world of IT we call this a hot-standby. (I know it sounds like a rolodex of page 3 girls' phone numbers that Charlie Sheen would have on his night stand).
Alternatively, you could place your orders between two factories known as Load Balance.
£10,000 DOWN THE TUBE?
For around 9 months I had ZERO shirts being made and I thought my investment of around £10,000 in cotton fabric was going to be lost.
I run out of my most popular shirts around the AW17 season which is my biggest profit turner and also SS18 which is wedding season.
It hurt, it hurt bad. Not just on the business but on my confidence in people and my ability to continue to run Hawkins & Shepherd.
Over the last month, I've got all of the shirts made and I've also found a second supplier who are currently making samples for me and are in the state of approval to move forward with either taking over production or sharing it with my current supplier.
TURNED THE CORNER
Looking back this lesson has been hard but it has taught me valuable lessons and in the long run made the business more robust. At the same time, we've been working on a complete website redesign to showcase our products and services better.
We've been developing new shirts and searching the world for the best fabric to use in a new premium shirt range...we'll be using Alumo fabrics, renowned throughout Savile Row and the world for being the best (*expensive though!).
We've gone live with our first outdoor advertising campaign in the form of two black taxis fully wrapped and branded with Hawkins & Shepherd promoting our Shirt Subscription Service 'The Collar Club'.
For anyone thinking of getting into clothing and an e-commerce business there are so many challenges and things to overcome but taking advice from someone that has been there done is is crucial.
KNOW YOUR MARGINS
In fact, the other week I was discussing this with a friend who wishes to start something up. In short, he was going to make a product for say £25 and sell for £50. This just doesn't work; your margins are way too low.
For someone starting a business who has no experience may think that is good, you are making 100% on everything. Incorrect!
If you cost in every single penny, your profit will actually be a lot lower. For example what about the costs for, start-up, designs, pattern-cutting, warehousing, packaging and depreciation of stock value over time (the latter being the most important). Don't even get me started on wholesale!
I'm starting a new Business series on YouTube which will take you on my journey of creating Hawkins & Shepherd, how I got into blogging and crammed with my tips to be successful. So subscribe below to make sure you don't miss it.