Introduzione

Having worked in the apparel industry for over 20 years, Aung Crown has seen many entrepreneurs immediately ask factories, “How much does it cost to make a piece of clothing?” Only to be dismissed as amateurs and the partnership ended before it even began.

In reality, finding a factory and wholesaler are two completely different approaches. Choosing the wrong one can lead to uncontrolled costs at best, or even a complete loss. Today, we’ll delve into the underlying logic of the apparel supply chain to help you avoid these fatal pitfalls.

Wholesaler vs. Factory: What is the essential difference?

1,Trading model: spot vs custom

Wholesalers : We sell ready-made goods with transparent prices. You can pick up the goods and leave immediately. It is suitable for testing the market in small batches.

Fabbrica: We do customized production, and the price needs to be calculated comprehensively based on the process, fabric, quantity, etc., which is suitable for stable orders.

Key point: The factory does not “sell clothes” but “make clothes”. If you ask “how much is one piece?”, it is like asking a decoration company “how much does it cost to decorate a house?” They can’t answer at all because there are too many factors involved.

2, Price Logic: Fixed vs. Floating

The wholesaler’s price is fixed, and there may be discounts for large quantities, but it is basically transparent.

Factory prices are variable and depend on:

Fabric cost (regular cotton vs silk, the price difference is 10 times)

The complexity of the process (printing, embroidery, and special tailoring will increase the cost)

Order volume (the price per unit for 100 and 10,000 units might differ by 40%)

Delivery time (expedited orders usually incur a surcharge)

Real-life case: We once had a client who took his own designs to the factory for a quote. The first factory quoted him 15$ per piece, and the second factory quoted him 20$ per piece. He thought the first factory was cheaper, but after production, he found that the fabric was cut corners. In the end, he returned the products and had them remade, which resulted in even greater losses.

The deep logic behind factory cooperation: Why are novices prone to pitfalls?

1, The dilemma of small orders

The core cost of a factory is labor + machine wear and tear , and workers can only improve their efficiency if they are proficient in their work. For example:

It might take an hour to make the first piece of clothing, but by the 100th piece, it might only take 30 minutes.

If your order is only for 50 pieces and the style is changed as soon as the workers become proficient, the factory will not make any money and can only increase the price.

Conclusione: If you go to a factory for small orders (<100 pieces), the unit price will definitely be high, and may even be more expensive than wholesale.

2, Proofing cost: a hidden expense that many people ignore

Pattern making fee: 500-2000 yuan/style (depending on complexity)

Sample modification: It usually takes 3-5 adjustments to finalize the sample

Fabric samples: If special fabrics are required, they need to be sourced in advance

Reality: Many beginners think that ‘working directly with a factory means cheaper prices.’ However, they end up spending around 1,000$ just on sampling, only to realize that the overall cost is even higher than wholesale, leaving them stuck in a dilemma.

Advantages and pitfalls of wholesalers

1, Advantages

Zero inventory risk: Can drop ship one piece at a time, suitable for testing styles

Fast turnaround: order today, ship tomorrow

Diverse styles: Multiple styles can be mixed batches to reduce the risk of unsalable goods

2, Traps

Serious homogeneity: If you can get the goods, others can also get them, and in the end you can only compete on price.

Unstable quality: Wholesalers’ goods may be pieced together from different factories, making quality control difficult to guarantee

Transparent profits: The difference between wholesale and retail prices is limited, making it difficult to charge a premium

Case: A customer bought a batch of “hot-selling T-shirts” at the wholesale market. After selling them for half a month, he found that the same style was sold all over the Internet. The price was pushed down lower and lower, and finally he had to sell out the stock at a loss.

Correct strategy: How to choose the supply chain at different stages?

1,Startup phase (0-1 phase)

Goal: Rapid trial and error to verify market demand

Strategy:

1. Get goods from wholesale markets
2. Choose a supplier that can do mixed batches (3-5 pieces or more per item)
3. Focus on testing models and accumulate customer feedback

2, Growth stage (monthly sales of more than 50 units)

Goal: Reduce costs and establish differentiation

Strategy:

1. Find a factory for small batch customization (100 pieces or more)
2. Optimize fabrics and processes to enhance product competitiveness
3. Lock in 1-2 stable factories and establish long-term cooperation

3, Mature stage (monthly sales of more than 500 pieces)

Goal: Scale up production and optimize supply chain

Strategy:

1. Discuss payment terms with the factory for processing of supplied materials, etc.
2. Customize exclusive fabrics and build barriers
3. Consider OEM/ODM cooperation and build your own brand

Summary: Supply chain determines your profit ceiling

In the apparel industry, supply chain optimization has far greater potential than marketing. Many teams have been able to increase gross profit margins from 30% to 50%. The key lies in transitioning from wholesale to factory customization. But remember: don’t blindly look for a factory. Calculate your true costs before deciding on a partnership model .

What stage are you in now? What supply chain challenges have you encountered? Feel free to contact us and discuss!