Choosing The Correct Business Model For Your Startup / by Benjamin Steele

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Blog #28

I remember when I started Sir Wylde 10 months ago, how everyone around me said that selling online would be the best model for my startup. The few mentors and professors involved at the time, explained how focusing exclusively on online sales would enable me to have less overhead than opening a store and larger margins than selling wholesale (to other stores). Although both of these points are true, selling online does enable me to have less overhead and larger margins, I've now learned that their advice was still completely wrong.

After being in the industry for nearly a year, I have seen first hand how online sales is definitely not the best avenue for what I do. It's an essential part of what I do yes, but it shouldn't be the exclusive focus.

You see, I sell high-quality goods that have been handmade in America. Because I use exclusively American-sourced materials and make everything domestically, my costs are SIGNIFICANTLY higher than if I was ripping something off in a sweat shop overseas. And as you know, higher costs, means a higher priced item. I've learned that people generally (not everyone) don't like buying higher priced items online; especially if they aren't at least somewhat familiar with the brand. If possible they would prefer to see and feel the product themselves before purchasing.

A good example is Red Wing Shoes. Red Wing is able to sell their very high-quality, American-made boots online for $400 a pair because people have been exposed to the brand for years. They have either seen the brand in other sporting goods stores, or in Red Wing stores themselves. Because they are familiar with the brand and have seen the product's quality first hand, they trust it. With trust, buying online isn't such a hard thing.

Obviously there are ways to battle this with brand ambassadors and product placement, but still, in my opinion it's simply not the most efficient way.

When I look at my competition I can now see that they have an online presence, but that it's not their focus. Instead they have set up their own stores across the country as well as are in sometimes as much as 120 other specialty stores. Rather than spending lots of money to get the niche market who will buy your product on your website, why not put your products in the stores they shop in every weekend.

My point in saying this is that you need to learn your market and you need to develop a smart business model. No one can tell you what is the best way to sell in your industry, unless they have sold in your industry. No offense to those professors who gave me advice early on, but they simply didn't have any clue what they were talking about. Fashion is much different than other consumer goods and technology businesses.

It's not at all that selling online is a bad thing at all. Now that I've introduced T-shirts and leather suspenders, our online sales have begun to greatly increase. But for high-end, handmade neckties, online just isn't the best avenue.

When you go to start your business spend weeks studying the competition first and create a vision. Find out what the best avenue is to sell your product or service. It could be webinars, online, retail, door to door, through a subscription service or in an app.

You need to become the expert in your industry. Don't trust anyone else to be that expert for you.

Thank you,

Ben