The most commonly asked question in apparel manufacturing sector is how to find new buyers and more importantly, how to retain existing buyers. While it is getting harder to find new buyers, most apparel factories find existing buyers changing forecasts, reducing quantities and even demanding impossible prices. Often quoted reason are either poor sales or other manufacturers giving lower prices. As a manufacturer, most of the prices buyers are quoting not practical and in some cases asking FOB price only covers the cost of fabric. In this post, I have discussed latest strategies to find new apparel buyers and retain them.
Finding NEW Buyers
So if we attempt to answer the question which is, how could we find new buyers and retain them. Let’s look at the first part of the question. How could we find new buyers? The answer is straight forward. We need to meet buyers. Not the same buyers we meet when they come to inspect the production or when factory representative visit to meet a buyer who is planning to place an order. Simply because those buyers already aware of your company. It is important to meet new buyers who do not know about your company.
Just to give you an understanding about the number of buyers exist, in New York garment district, there are over 2500 buyers who buy apparel from all over the world. The number of buyers who visited Magic show Las Vegas which is the largest apparel trade show in the world in February 2017 was 15,400. Now if someone asks to name few buyers from the USA, it’s not a surprise that we all will mention same buyers such as GAP, NIKE, CK, Express, Tommy Hilfiger, Polo Ralph Lauren, VS and few more brands. However, in reality, there are many more brands and they pay well too.
It is important to attend trade shows, find buyers and visit them periodically to build a profile for the company. There are many apparel trade shows around the world. Need to select the market and the product range interested in and prepare for the show prior to attending.
Most companies follow the crowd and go to same shows where everyone goes. It is important to understand the audience of each trade show and decide whether it’s the right place to be. Another common mistake many companies do is they do not prepare for the show. It is important to understand the buyers who visit the show and make a sample collection based on the season, colours and designs. Don’t just take the nicest looking developments you did for Armani or CK last season or brightest garments you have in the sample room. I have seen this happening every season as I visit trade shows. Often from the manufacturers in South Asia.
Another strategy is to periodically visit various buyers and show them the samples and company profile. Convincing them to give few tech packs to do few samples will get them thinking about you, next time they need a supplier. It doesn’t cost anything for buyers to give you few costing exercises and usually their very forthcoming. In order to get this stage, manufacturers need to visit them as they have no idea about the existence of your company.
Retaining Existing Buyers
The next question is how can we retain existing buyers and ensure every season they increase quantities instead of reducing. Often times factories manage to fill the capacity for the current season yet worry about the next season. It is well observed that manufacturers are constantly looking for buyers and buyers are constantly looking for new suppliers. So one could wonder, what’s going on. The answer is simple. Buyers not getting the service they expect hence they're forced to look for alternative suppliers. Let’s look at an example.
XYZ Manufacturing Ltd sending weekly shipments to ABC Company in USA. Buyers corporate office is in NY and warehouse/distribution center (DC) is in Los Angeles, California. After a one of the shipment, DC manager calls buyer in NY and inform about a quality issue in the latest consignment received from XYZ. The buyer, in turn, call the merchandiser of XYZ company and inform about the issue in hand. Up to now no problem and this is a common occurrence. Regardless of how much efforts one put, there bound to be few mistakes once in a while. However, future business depends on the next few moves factory take. In my experience in working in the manufacturing sector and sourcing/ buying offices, 90% of the time factory try to defend their position. Often times they scan and email final inspection report, send images of inspected garments and try to convince the buyer that it was not the factory’s responsibility as garments were in good condition when they shipped. While these emails and conference call happening back and forth, DC manager is stuck with unsellable garments. It’s causing several issues. First, it’s taken over the space of new arriving shipments. Retail outlets are running short of items to sell. Customers going to competitors stores when they realize buyers stores don’t have the items they are looking for. Understandably both DC manager and the buyer in a difficult situation.
Now let's try to understand this example. It is true that factory may have done the final inspection and according to AQL 2.5 scale, shipment was passed. It doesn’t mean there can not be damages. In the same time, DC manager may have just seen few garments out of many thousand and jumped to a conclusion that the whole shipment is full of faulty products.
The best possible action is to quickly arrange a factory representative to visit the DC within a couple of days and attend to the matter. Regardless of the outcome of the inspection, for the mere fact that factory took the swift action and attended to the issue makes the buyer happy and make her feel that XYZ is a reliable company. It will ensure the continuous business and a trusting relationship.
Another example is lab dip approvals. There are many occasions where buyers reject lab dips more than 2 times. Most time and action plans keep buffers for two lap dip rejections and if it is rejected for the third time or even for the fourth time, it is going to have an effect on the delivery. Most factories try to resolve this issue by email, calling or sometimes through video conferencing. Eventually, the problem gets sorted but not before having to have the painful experience of negotiating revised deliveries. Contrary to common belief that buyers know everything, the truth is they don’t. They need assistance explaining and educating the practical elements and limitations on certain cases. By finding a method to build a close & trusting relationship is vital to ensure continuous business.
What about the COST? How practical is this?
Now come the hard truth that how much does it cost to adopt a strategy where a factory is able to send representatives to solve ongoing quality issues and to find buyers. Most companies have limited financial resources and if the company has to send people overseas frequently, it becomes a costly exercise and naturally, enthusiasm about marketing dies down. This is a win for third party trading houses who traditionally have a strong hold on buyers and pay a much reduced price to the manufacturers.
There is a new breed of consultancy firms who are assisting manufacturers in reaching buyers directly. They will work with the manufacturers to identify suitable buyers. Make appointments and even conduct presentations behalf of them. Also, they will attend to solve any problem related to quality, technical or costing. As these firms are based in buyer’s countries, the cost of hiring them is significantly low compared to factory sending representatives to USA or Europe. For an example, it cost in the region of $7000 to send two people to USA from Sri Lanka for a week. One of these firms will do the same job for a mere $1500. Apart from the clear monetary advantage, the consultants are experienced in a 360-degree knowledge of the industry. One of the reasons many marketing trips ended up in negative results is that the factory representative does not understand the buyer's psychology, the way of thinking and their expectations. It is important to explain the benefits from the buyer's point of view.
Another important factor to consider is opening up an office in buyer’s country. Most buyers prefer to work with suppliers who has representation in their country. Obviously, this is a long shot for many manufacturers. It cost anything between $6000 - $14,000 to run a small office with two people. However, there are consultancy companies who will help to set up and run manufacturers office for a monthly cost as little as $1000. Unfortunately, due to lack of awareness, many manufacturing companies in South Asia do not aware of these available opportunities and options. It's time to do the research.
About the Author: Charm Rammandala is the founder & CEO of IStrategy USA. He counts over two decades in fashion supply chain in diverse roles as Lean Manager and Model himself. He is an expert in rolling out programs in Lean apparel manufacturing and Sustainable labour costing. His former positions included being the first Lean Technologist at George Sourcing Services UK Ltd.
Image Credit WCities via Flickr