New business venture - some advice please

SteadyEddie

Hi all. Myself and a friend who both work full time, are considering setting up a business. Without giving away what makes the business novel, it essentially involves the selling of fancy dress costumes - the kind you would see people wearing on halloween.

Just some questions I have:

• What is the best approach for finding a wholesaler - where are the irish costume shops sourcing their goods from? I did find http://www.fancydresswarehouse.com but no idea what they are like.
• Is there any typical problems encountered shipping to customers in Europe?
• Is it possible to get an order from a customer, then contact distributor who would ship directly to customer?
• How much stock typically would you have to hold?
• Whats the best/cheap approach for getting lets say a few boxes of costumes to a remote part of france for example? Ideally it would hurt margins as little as possible.

Really appreciate your opinions on this one.

- SteadyEddie

Gurgle

SteadyEddie wrote: »

What is the best approach for finding a wholesaler - where are the irish costume shops sourcing their goods from? I did find http://www.fancydresswarehouse.com but no idea what they are like.

This will be the making or breaking of your business - inexpensive, reliable service. Forget about who the Irish shops are using, the typical Irish retail business model is to gouge what you can out of anyone who will pay with no effort at keeping prices down. I'd start with google.co.uk, google.de and google.fr

Is there any typical problems encountered shipping to customers in Europe?

None, thats the biggest and clearest advantage of being in the EU.

Is it possible to get an order from a customer, then contact distributor who would ship directly to customer?

Yes, they will ship to wherever you tell them *BUT* make sure they don't include the 'wholesale' invoice. Even if you were providing the best / least expensive service in the country, some (ignorant) customers will feel ripped off when they see your margin.

How much stock typically would you have to hold?

Decide on your business model first - are you going to hold stock at all, or have suppliers ship to customers?

Whats the best/cheap approach for getting lets say a few boxes of costumes to a remote part of france for example? Ideally it would hurt margins as little as possible.

Depends on your throughput and delivery times. An Post do a pretty good / pretty quick / pretty reasonable parcel-post service. If your volumes are high enough, DHL / UPS / FedEx become competitive.

Again though, do you really plan to hold stock?

If the supplier does direct shipping they will (presumably) already have the volumes to keep shipping costs down.

PCPhoto

sounds good - I was looking at that idea last October - while I was looking to source a decent costume for myself - you'll need plenty of stock to cover halloween but outside that there isnt much need for fancy dress.

Most of the stock that people want to buy are fairly tacky and low quality, my advice is dont bother - for the costs involved and the limited seasonal requirements its not really a viable business venture.

if you choose to do this - ensure you have a cheap but recorded delivery service (things go ...ahem... missing in the post)....and ensure a fast supply of stock - if you sell out of one item you need to be able to source it fast...or you loose customers and unhappy customers leads to unhappy feedback.

compare your prices to ebay and other online costume resources..... what do you do with the leftover stock after pre-halloween sales ? wait till next year ? In theory the concept is great and could work ...but I wouldnt bank on it due to the infrequency of its requirement. (its gonna mean you'll work like crazy in Sept/Oct ...but after that ....very slow)

SteadyEddie

Fantastic advice Gurgle - the cost I can source the items for is what will make or break the idea. I have a bit to go away and think about.

Pcphoto: What makes this interesting is that I am not after the halloween market and in theory could be selling 12 months of the year with 6 months being particulary busy.

Thanks for the tips & advice.

PCPhoto

having read over your post again .... if you could find a distributor that will ship for you - why would they do that - basically you'd be doing nothing other than taking an order and charging a fair amount for it.

Distributors will deal in bulk orders only and ship in bulk - its upto you to purchase in bulk and sell individually.

SteadyEddie

What problems would a distributor have with shipping goods to a cetain location specified by myself? They are getting paid regardless...

The alternative is that we bulk order to ourselves and we organise the logistics of shipping the goods. I need to look into this with regard to it hitting our margins.

Gurgle

PCPhoto wrote: »

Distributors will deal in bulk orders only and ship in bulk - its upto you to purchase in bulk and sell individually.

A large proportion of what you buy online never passes within 100 miles of the seller.

The big distributors are not interested in dealing directly with the public; order management, billing, VAT, returns, credit card fraud, language etc are a major pain.

They leave all that crap to the retailer.
Then all they have to do is ship to order (they have a mark-up on the shipping costs too) and put it on the retailer's account.

SteadyEddie

Currently our company is not registered, but before we would register, we love love to know:

• Will wholesalers supply us & be happy we can supply other businesses in europe as opposed to the end customer
• Will they deliver direct to customers and under what conditions

Would it be advisable to contact these wholesalers and find out their criteria before being registered, or should we register and follow up the steps?

delllat

SteadyEddie wrote: »

Currently our company is not registered, but before we would register, we love love to know:

• Will wholesalers supply us & be happy we can supply other businesses in europe as opposed to the end customer
• Will they deliver direct to customers and under what conditions

Would it be advisable to contact these wholesalers and find out their criteria before being registered, or should we register and follow up the steps?

You may find that wholesalers have a minimum order quota and id imagine costumes are something that people wouold buy in small numbers

You could find wholesalers not interested in shipping 1 or 2 costumes and may require a bulk order to justify the dhl costs and paperwork

since its a credit crunch they might take any order they can get so i would ask them and see how it goes

Axwell

I know you said along the lines of fancy dess but i assume it must be closely enough related so just curious have you sussed out the competition in Ireland, there are a few out there and along with some of the other bits of advice above i think your ability to sell ahead of them will make or break you. Competition is good for business but its a seasonal type of business with Halloween being the one time of year its most popular so you have to be sure you will be able to compete well enough to make it worth while.

SteadyEddie

Axwell: The nature of the business means that we would not be competiting with the costume shops in Ireland, and what makes it novel is we are not concerned with the halloween market. In fact the costumes could in theory be sold for at least 6 months of the year with significant volume. I have no problem sharing the idea once it is all up and running.

From reading previous posts, manufacturers don't seem to have an issue with someone selling their goods onto other businesses. Provided this is the case then I believe it can work. That is what I need to go and research...

Axwell

Sounds good so once you sort out the suppliers.

TheCostumeShop.ie: Ronan

Hi SteadyEddie,

On Average there are 6 Online Fancy Dress Start ups in Ireland every year and 5/6 of them go out of business. Not trying to put you off but its a very very competitive industry.

www.TheCostumeShop.ie we are the biggest Costume Retailer in Ireland so i should be able to point you in the right direction. Disclosure - yes i work there, so dont tell me your secrets and yes i do know the industry inside out.

Here's some answers:

• What is the best approach for finding a wholesaler - where are the irish costume shops sourcing their goods from? I did find XXXXXXXXXXXXXXXXXXXXXXXX but no idea what they are like.

We deal with 27 Different Suppliers ranging from USA, UK and across Asia. We had awful issues dealing with that lot you mentioned, shudder. They have a large hedge mark up to deal in Euros.

• Is there any typical problems encountered shipping to customers in Europe?

Nope its as simple as hiring a courier or using An Post

• Is it possible to get an order from a customer, then contact distributor who would ship directly to customer?

There can be B2C drop shipping in the UK and USA, none in Ireland. None for B2B that i know of unless your talking full container loads. Some places like us have affiliate programs, where you get comissions for passing on business and then they send direct.

• How much stock typically would you have to hold?

How long is a piece of string, depends how many customers you have and how much variety you intend on having on the site.

• Whats the best/cheap approach for getting lets say a few boxes of costumes to a remote part of France for example? Ideally it would hurt margins as little as possible.

Courier Service - try calling around for quotes.

• Will wholesalers supply us & be happy we can supply other businesses in europe as opposed to the end customer

This is called a Master (or a Minor) Distribution Deal. They will be happy to supply you and let you sell on - however with some suppliers you would strictly enforce that you are not allowed to sell on ebay or on to people who will then sell on Ebay. Licenced costumes have become very strict on this.

• Will they deliver direct to customers and under what conditions

The large suppliers have agents in the likes of France, Germany, Ireland etc who deal with the territories. So usually they have made contact with all the players in the game. However im sure if you could offer them decent numbers they would consider it.



A few questions you should ask yourself before you commit too much investment:

Why would a business repeat buy from you when they will receive products branded by the actual businesses themselves? Would they not cut you out then once you've done the hardest past - getting the customers?

Have you factored in that there will be Returns on Items you then are responsible for?

Don't forget that businesses often expect credit terms and as a new business you would be unlikely to qualify for such with your suppliers.

Sorry if all that sounds a bit negative - it really is a great business once you manage to break in. Better to think about these things now though. Any other questions (within reason) you have i'll be happy to help.

Ronan