Comment by fabricexpert | Hacker News Reader

Comment by fabricexpert | Hacker News Reader

I run an almost identical fabric shop online. 20k/month revenue is great but remember this is not a SaaS with unlimited scale and low costs. It's actually a very traditional business model, and margins here are only going to about 20-30%, potentially a lot less if you have to pay for your storage space.

You buy the fabric, typically you'll double the price when selling to customers. Then you take off additional postage fees/packaging (note the flat fees on postage), payment fees (3-4%), discounts, returns, shopify monthly fees, accounting software etc.

You'll spend about 50% of your day cutting & packing orders, taking them to the post office etc. (or you can employ someone to help) and the rest of the time taking shots for instagram, sourcing new suppliers, working on SEO/blogging and doing admin.

If you're good at marketing you can shift quite a lot of fabric, but it will take you about a year to get your stock levels up to a sustainable amount to pay yourself a wage. If you want a real shop front you will generate most of your profit from running classes as the costs for a high street store are significantly higher than shopify and you gain little in terms of footfall vs online traffic.

This isn't a get rich quick model but over time it works well and is replicable at scale.

Thanks for your insight. You're not too far off, but my margins are much higher - thank goodness. I've been at this for 5 years and also have an employee who helps with all the cutting, packaging and shipping. I offer a flat rate shipping fee for small price orders anything under $45. Sales above $45 ship with a Canada Post calculated shipping rate. Good luck with your business :)

Just out of curiosity, have you tried building the price of shipping into the product, and marketing with free shipping? From my own experience in eCommerce, it really boosts conversions.

I have a similar-ish product. For non-discrete items sold at a single price per unit, and where people buy a wide range of volumes, baking the shipping costs into the product leads to strange prices outside whatever sweet spot you choose, because shipping prices don't scale linearly with your product.

The flat rate shipping under $45 in this example is probably because it costs nearly the same to ship half a yard or five yards; shipping 20 will cost a good deal more, but not be anything like 20 times the cost of shipping one yard. So there's no way to bake in a price that doesn't end up generating absurd results either for you, your customer, or both.

Can't you just give a lower price at 10 yards and again at 50 yards for example? Then you solve your baked in price issue and get to offer discounts on high amounts, incentivizing buying more.

Depends on your range of purchase sizes and industry expectations. My product will sell regularly in quantities from 1 to 10,000, and my shipping costs on those vary from about $5 to $50, so I'd have to have a lot of price tiers. That's kind of absurdly broad, though. I'd think fabric and other categories should have a few orders of magnitude less, but I might be surprised.

But, you can do that if it doesn't fly too much in the face of customer expectation. In some industries, like printing, it's common. In fabric I think there's a strong expectation of a single price per length unit, though I suppose you could challenge it.

I don't think lots of price tiers is a good customer experience, so I decided against it as a long-term customer satisfaction strategy. I do wonder if it's costing me sales. Maybe I should set up an alternate brand that does tiered pricing and free shipping.

There's a study of pricing psychology to separate the base and shipping.

[source] https://www.nickkolenda.com/psychological-pricing-strategies...

This is good advice. We do free shipping once your order is over $x. Interestingly when we email offers that are above x and will attract free-shipping the response is significantly better.

Thanks - how are your margins higher even with an employee? I'm guessing your markup is way higher?

I'm in the UK - I don't think our market can support higher margins (cost to import fabrics is relatively high), so just curious.

You're in an overserved marked in the UK, whereas OP is in an underserved market in Canada.

Can I quickly thank you both for honesty - it's always good to get behind the scenes insights into businesses I know little about but see in passing. Thank you

I'd be very interested to know how customer sales typically break down between design categories: solid colours, geometrics, florals etc. Do you have any insight you can share there?

Context: trying to understand the design market.

We stock a lot of florals and dressmaking fabrics, I don't think the data is large enough to derive any insight on market trends though.

Firstly accounting. Almost anything can be included in your margin (as long you are consistent). I think you atter talking more in terms of net- profit margin (all costs included) whereas fridaysoff seems to be talking about gross-profit (sales minus cost of the goods that you sold). As an online retailer I would suggest that you understand your gross-margin (how much you make on the product) separately from the costs of warehousing and shipping and separately from the overheads of accountancy, banking etc.

The reason for this is that by just summing your costs you louse sight of how various areas are performing, and you also lose the ability to compare. If you become a better buyer your gross margin improves, but by employing a picker it stays the same, however type warehousing costs do increase.

So in essence when most people say 'margin' they mean a simple sales-minus-cost-of-goods-sold.

Disclosure: I'm in finance at a retailer/wholesaler who is doing around 5x what the article is doing on ecommerce, it's smallest channel (about 1/20th of the company, but growing)

Used to run pretty active online shop from Toronto - I would advise you to look into CA to US shipping services. In our case (US centric customer) it was cheaper and more transparent to ship items via 3rd party forwarder and USPS, even back to Canada. Go figure.

> If you're good at marketing you can shift quite a lot of fabric

For me marketing is always the toughest part .

How do you do your marketing ?

What tips can you offer us that save the most time and money spent ?

tl;dr: Learn retail.

It's kind of funny that people will get advice to get CS degrees, take a boot camp, learn a language, etc. to execute on an idea, but for soft skills you never see classes for business or marketing recommended. People could take 2-3+ business/marketing classes in the time it takes to learn React from zero Javascript knowledge. Instead, people are told to sign up to Stripe Atlas or Shopify and Instagram. "...and then a miracle occurs."[1]

Imagine a bizdev person saying, "for me, programming is always the toughest part, any tips?" and the response being, "Oh, you should definitely sign up for Stack Overflow. Simplifies things quite a bit." This may reflect a conceit on the part of programmers that it's soooo much more complicated and important, and the business side is full of chads and beckys who talk too loud on speakerphone (yes these people are a cancer, but that's beside my point).

Biz/Mark has its own, shall we say, "Data Structures and Algorithms" to it, there's just no one set of books that everyone (...) agrees on. Even so, people have been selling fabric for thousands of years, there's not much that the internet changes about that, or many if not most other business categories.

1. https://c1.staticflickr.com/5/4003/4633000725_8817dcedb9_b.j...

Look around for what I call The MicroConf Crowd. Practical advice on the business part of business abounds. Books courses and more. Often targeted at programmers.

The Independent Consulting Manual is a good place to start, then go down the list of authors and read their other stuff.

They often do a christmas sale too.

Follow Patio11 on twitter, read his stuff. Follow Amy Hoy, do 30x500.

Then spread out from there.

If you’re funded, great! All the same advice applies, you just have more gasoline to pour on the fire. Try things faster.

Ah yes this, I am lucky to discover the MicroConf Crowd early on in HackerNews.

Patio11 taught me how to raise my salary in my full time job.

Amy Hoy got me off the couch and start building products (that user wants).

Not to forget advice from Rob Wailing, Kai Davis etc too.

Some of those “Chads and Beckys” (I must be old as I don’t recognize those terms but know exactly who you are talking about) bring in absolutely massive amounts of revenue. Furthermore they can often be cheap since they’ll work for less than they can make elsewhere as long as they can have status markers (private offices, etc.) I made good money employing them.

Marketing and advertising is a 24/7 job for me. As soon as I take my foot off the pedal my sales suffer. You can automate some of it with email flows and facebook/instagram advertising , but you still have to stay on top of the analytics and keep the content fresh. The thing that works really well for me is treating the customers like human beings. The customer is always right. Being nice flows out and then your customers want to help promote your business on social media etc. Try everything.

I work in IT.

I never respected sales,

Until I tried it.

It really depends on your business / niche but what works for me is:

- Get to know potential customers. This means talking to them, making friends with (some of) them, getting involved in the community around your product etc.

- Build up a solid blog, instagram etc. for inbound and discovery marketing

- Giveaways / discounts can give you a temporary boost

- Tell your story well, if you're a small business people love to buy from you, and they even accept slower delivery and issues if you personalize your support

- Go to relevant events / shows, try to get featured on podcasts etc.

- Work on SEO

- Pay for ads directly to bloggers, vloggers and relevant content sites

- Send free samples to targeted influencers

- Use but don't abuse your mailing list

What doesn't work for me is buying traffic from google/facebook, they just tend to send junk through with an appalling bounce rate.

The bible of marketing : https://www.amazon.com/dp/B000FC10HA/?coliid=I2YIAW7ADWWUPH&...

Simple straightforward and so insightfull !

Nice, thanks for the numbers! At a certain point you start competing with Home Depot, Michaels, Walmart, Amazon, whoever. You are in the product retail business, rather than the manufacturing or services business.

I think if you get really good at streamlining your marketing (Instagram photos and landing pages) as well as your pick/pack/ship operations (i.e running a warehouse), then you can expand into multiple niches. Fabrics, clothes, prints, whatever is super niche and high margin and can't be found on the shelves of a big box store.

You can also move up the supply chain into the wholesale or even raw materials business (but you need more capital here) or down into actually manufacturing bespoke/custom items (but that's hard to scale).

Ultimately I think you need to actually be passionate about the product you're selling and embrace the community around it.

You're welcome. Ya you can't be scared off by the big guys like Michaels, Walmart, Amazon. The fabric I sell isn't really mainstream and it's more boutique quality designer prints. My market isn't really people who would shop at the big box stores anyway. I tap into the niche markets, etsy shop owners, small biz crafters. There is a real community and it's one that likes to shop local and Canadian.

What’s the URL? I’m in the market for specialty fabrics

www.fridaysoff.ca

Thank goodness there are people like you that aren't scared off by the big box stores. I am not in the market for fabrics right now, but I am looking for various supplies for a home remodel. I frequently find that while the big box store might have multiple options in any given product category, they are all garbage and I have to look at specialty stores to find anything worth spending money on.

How do you source your fabrics? Do designers or agents approach you with existing inventory? Or do you seek new art online or at trade shows? My wife worked in fabric design and it's hard for new designers to break into the industry.

I work with a few manufacturers and meet with their sales reps on a quarterly basis.

One thing I've been wondering about wrt high-volume online shops: how do you protect your hands against the dryness of the cardboard boxes and papercuts? Is this an issue?

Lightweight cotton gloves :) Put them on, do all your materials handling, and be done.

I developed an allergy to the fabric at one point and had to start wearing surgical gloves. As long as I keep them well moisturized in the dryer months I'm ok now :)

At what point do you decide that it is not worth your time? To me it seems taht at a certain point, once you've established the the margins, you grow the business to where you're no longer doing any work.......turning the business into an asset which has some nice cash flow and allows your employees to be happy.

When you're bored with the business and uninspired to do the work then I think it's time to move one. Also if you're deep in debt and not making any money I would say that's a pretty good indicator too.

Reply on news.ycombinator.com