Your promotional clothing line is doing well. Your next big marketing campaign is a national one, which you hope will gain traction from customers all across the country. You are now looking into expanding your business, perhaps creating another company or adding a new product line to your existing business.
You already received a few proposals for joint ventures and investment requests from start-up entrepreneurs. You rejected some because they veer away from your current product line. But among the proposals you received, you’re seriously considering the one for creating a purse and handbag line. You’ve asked one of your business development people to study this possibility and to present the findings at the next executive leadership meeting.
Here are a few things the research might reveal.
An Overview of the Bags Industry
The handbag, luggage, and accessory stores industry generated some $17 billion in the U.S. as of October 2019. The handbag segment alone recorded more than $12 billion in revenue, with a per capita spending of $36.54. The growth rate for the next five years is anticipated at around 1.8%, which will push the revenue by 2023 to nearly $13 billion.
These figures are very robust, which might make investing in the bags business a positive move.
Key Areas to Consider
You have the right instinct to ask your staff to study the business first before plunging head-on. Many start-ups begin enthusiastically only to see their brand fail a few months into the business. Here are a few more things you need to consider when starting a purse and bag business:
- A unique message. We’ve been captivated by the line, “Once upon a time…” as the beginning of every fantasy story. It’s no different in business. Telling your story and conveying a unique message to customers will help sell your business. It might be about the environmentally friendly materials that you use or the fact that you hire differently-abled people as part of your operation. Of course, design and quality should never be overlooked. Customer service and how you handle requests and complaints also form part of that unique message.
- Mode of distribution. You also need to choose between selling wholesale or selling retail. There are pros and cons to both methods. With wholesale, you move your product quicker by selling in bulk to retailers, but you gain a smaller margin per item sold. Selling retail yourself gives you a more significant margin per piece, but your inventory stays on your shelves longer. Thus, the cost of your money is higher in the retailing option.
- Pricing and your market. Selling more lower-priced items with smaller margins or selling fewer with triple or even quadruple the margin? This might be the difference between a mass-market price point and a luxury item price point. Your analysis of the market and where the need lies will help decide your price point and target a specific market.
- Engaging other professionals. You might have a brilliant design idea, but don’t have the resources or tools to execute them. Identifying partners or hiring other professionals will be one of the decisions you will make. Pattern cutter and machinist are some of the professionals that help turn your design idea into an actual product. Work with them to create your initial prototypes and to implement improvements where necessary.
More ideas should be incorporated in a sound business plan, including your financial strategy and an analysis of the competition, as well as the possible approach to selling online. But these main points will help you make a final decision in your next meeting.