The USA market is big and on average USA citizens have sufficient budget to spend on clothing. There is room in every segment of the market, as long as you can stand out with your product and pick the right approach. From our experience in guiding several brands to the USA market, we have gathered a number of essential steps:
Prepare and test
If you want to set up your sales, first go through these preparatory steps:
- First validate a market for your product: who is your target group and do they actually like your style of fashion.
- Identify relevant sales channels
- Do your competitors analysis
- Figure out your landed costs (US Customs Duty, Intl. Freight) and then calculate the margins required including sales commissions, retailer markup etc.
- Then step back and decide if the USA market is one you can tackle.
A quick way to influence this decision is to walk through 1 or 2 relevant fashion trade fairs like Coterie and Project and to visit a good cross section of retailers.
Choose your commercial approach
If you decide to enter the USA market, you have quite a few options, including.
- Open a showroom/office of your own and hire a well-connected sales manager.
- Appoint a sales commission based multi-line showroom in New York or Los Angeles. Commission rates range from 5%-15% with a monthly showroom fee or advance on commission of around $1,000 to $2,000 a month or more
Either way you would need to support sales by exhibiting regularly at appropriate trade fairs. And always remember that getting a new brand into market will depend largely on the relationships your salespeople have with targeted buyers.
Pick a city to start in
While New York and Los Angeles are considered the true ‘Fashion Capitals’ of the USA’, vibrant and exciting Fashion Markets also exist in Chicago, Dallas, and Atlanta. And then, on the other hand, you have Las Vegas, which is truly the King City of all Trade Fairs, and home to Fashion Fair behemoths like Magic & Project.
Legal Entity & Back Office
No matter how you structure your sales program, at some point you will need a business entity, like an LLC, to set up your USA Bank Account and get a Factoring agreement in place (Accounts Receivable Credit Insurance) with a reputable Trade Finance company. Note that 90% of Fashion Brands run their Accounts Receivable through a Factor.
Back-office functions are no different in most countries and likewise your USA business will need a savvy Account Administrator to handle an End-to-End myriad of tasks
Setting up your logistics
Most Fashion Companies use the services of a 3PL (3rd Party Logistics) The 3PL facility will warehouse your product, pick-pack & ship your orders and handle the procedures. Most of the 3PL facilities can handle E-Commerce (B2C) along with your traditional brick and mortar retailers.
Working with a 3PL party may take a share from your margin, but especially in the beginning it may save you from making investments for which you don’t have the scale yet. And since you can use every dollar that you have for marketing purposed, this is not a bad approach.
Bring your budget to enter the USA market
The potential of the United States is huge, but competition is also strong. It may not be possible to find just one agent or distributor who covers the whole market for you, mostly you will have to work with one per group of states. Unless you can do business with one of the big retailers.
If you want to enter the market, bring your budget. You will have to go there and spend time. If you want our team or any other consultant to do a distributor search for you, think of 10,000 to 15,000 euro as a base fee. Your distributors will ask for marketing materials, perhaps advertisements, retailers will ask for slotting fees. So draft a proper business case and be prepared to invest in order to gain.
Alliance experts is happy to help you with your strategy to enter the USA market. Just contact one of our team members or click below.