I have actually been planning to write a full series of posts about fulfillment (mostly about third party fulfillment), but some other issues need to be ironed out first.

While the margins are higher than selling wholesale, they aren’t necessarily as high as you might expect. Some of the costs you have to take on:

1. Website. While one could put up a static website and forget about it, most sites find that they need to keep their site fresh and updated.

2. Photography. Retail customers need more than linesheets to make their purchases. They need to see what the product really looks like on a person. While you can just photograph anyone in any setting, it works better if you use “real” models. Photographers and models are expensive. (We do our own photography and only hire models willing to work outside of agency constraints to keep costs manageable here. It works because we are in a large city – if we were in a more rural setting, it would be far harder.)

3. Fulfillment. Filling wholesale orders is much simpler than filling retail if for no other reason than the sheer number of them. You can end up with a lot of packages in flight and making sure you get them all correct takes time, energy and money.

4. Customer service. Customer service for wholesale accounts is simpler than for retail. There are accepted norms for wholesaler/manufacturer relationships and there isn’t a lot of hand holding requirements. When dealing with end customers, you need to make sure you have allocated enough employee time to answer questions, help people with their orders, give advice on styles, colors, sizing and deal with any other issues that come up.

5. Advertising. This is a biggy. Selling direct, you cannot rely on your retailers to have their own foot traffic to look at your goods. You have to find a way to bring customers to your site. Generally, that involves advertising – which is expensive (and actually getting a bit more so).

Direct to consumer is still a very viable approach, but its important to realize that there are a lot of things pulling down some of those higher margins.