Here's Why Your Garment Unit Costs Decrease When You Order More (and Why Bulk Orders are your Secret Weapon)
One question we often get asked by fashion brands is ‘why do the unit costs decrease if I order my garments in bigger quantities?’. If you’re starting a fashion brand, leveraging the power of bulk orders is crucial to keeping your production costs as low as possible and boosting your profitability.
In essence, the more clothes you order from your manufacturer, the lower your unit costs.
In this article we’ll explore why ordering in bulk makes your clothing more cost-effective to produce. Not only that though, we’ll also share some insider tactics on how to order the right quantities so that you maximise cost savings, without overloading your inventory.
Let’s start out by looking at a few key concepts…
Understanding the concept of unit costs in clothing production
To start off, let’s look at a key term - unit costs. In simple terms, unit cost refers to the cost incurred to produce, store, and sell one item of clothing. This includes costs associated with materials, labour, overheads, and others. It's key to grasp this, especially for your startup fashion brand, as it directly impacts the profitability of each item of clothing you sell.
Why bulk orders matter for startup fashion brands
Bulk orders play a huge role in reducing your unit costs. As you increase your order size, the cost of production per unit tends to decrease.
It’s because certain fixed costs across your supply chain, like your clothing manufacturer’s setup fees, the cost of your materials and the cost of shipping, can be spread across a larger number of units, thereby decreasing the unit cost that you have to pay. In the image below we show the difference between fixed costs and variable costs in clothing manufacture.
By placing larger, bulk orders, you can significantly reduce your garment unit costs. This enables you to offer competitive pricing and increase your profit margin, which is essential for your growth and survival in this tough industry.
If you’re more profitable, you can reinvest more into your marketing, which then helps you to grow and scale your brand. So, unlocking the power of bulk orders is a game changer. But how do you best go about it, as a startup brand? Keep reading for a few key considerations and tactics.
Negotiating terms for better pricing
A first port of call is to negotiate with your clothing manufacturer. Once you've established a strong relationship with your suppliers. The way to achieve better pricing from clothing manufacturers is to up your bulk production units. It's about understanding the sweet spot: the point where the cost is sustainable for you, whilst also being rewarding for your suppliers. This negotiation tactic works very well.
Cost savings vs. inventory requirements
Whilst getting your unit costs as low as possible by ordering in bulk is vital, one mistake that startup fashion brands sometimes make is ordering too much stock, which causes a load of headaches.
If you order more than you can sell, the cost of excess inventory and storage can quickly gobble up any savings made on unit cost reduction. It's a delicate balancing act, but getting it right is definitely worth it for the significant garment unit cost decrease that you can get.
So it’s key that you work out the optimal amount of garments to order in each production run. Being able to work that out comes from good inventory management, if you do not have existing statistics for this then see our suggestions for first time purchase numbers below:
Managing inventory to maximise cost savings and minimise risks
Here's my advice for once you've ordered your first collection...
Plan your inventory carefully in order to minimise stocking expenses. Make sure you keep tabs on your most popular items, and order them in larger quantities in your next drop (just make sure the designs are ever so slightly different so it keeps things fresh).
It's all about striking a balance between demand, supply, and inventory costs. Implementing a robust inventory management system will help you keep track of the inventory levels, ensuring that you don't order excess stock items and negatively impact your cash flow.
Quality Control in Bulk Production
So, what about quality control when ordering clothing in bulk? If you’re ordering in bulk, is there a risk that the quality levels and consistency of your garments will drop?
Fret not, quality does not have to be compromised when ordering in bulk, in fact, it’s normally better than smaller orders.
Let’s face it, ensuring your garment's look, feel, and quality are uniform across the board is a must for your brand. The beauty of bulk orders lies in its potential for consistency. With each piece made, your production line gets better at replicating your designs flawlessly. Voila! Bulk orders lead to lower costs and, in the process, can help to increase your brand's standard of quality and consistency.
Essential quality control checks after manufacturing in bulk
If you’re keen to make sure that your clothes are quality checked properly after manufacture, we’ve written a checklist on how to quality check your clothing after bulk manufacturing - never miss these steps if you want your orders to come out the way they should!
Sustainability and Bulk Orders
Another aspect to ordering in bulk is the environmental impact. The fashion industry is increasingly under scrutiny for its impact on the world around us (check out our article on the real costs of fast fashion), and bulk orders can actually play a pivotal role in supporting your sustainability efforts and reducing your brand’s carbon footprint.
Here's how bulk orders can help to reduce your Carbon Footprint:
- Consolidating orders into larger shipments reduces the number of shipments and deliveries needed, which, in turn, decreases the carbon footprint associated with transportation.
- Minimised Waste: Efficient production and inventory management help in reducing waste. Startup brands can cut back on excess materials, making a positive contribution to a greener and more sustainable fashion industry.
For startup fashion brands, bulk orders give you a strategic way to boost cost-efficiency, whilst also improving the quality of your clothing, and contributing to sustainability efforts.
So next time you're thinking about replenishing your inventory or launching a new collection, remember that placing larger orders doesn't just save you money; it also aligns with the broader goals of sustainability and customer satisfaction. If you can find the right balance of order size and inventory requirements, it’s a win-win for your brand, manufacturers, and your end customers alike.
If you’re thinking of getting your clothes manufactured in bulk, be sure to check out our guide for fashion brands to make sure you’re making the right decisions around bulk manufacture.As one of the UK’s leading clothing manufacturers, we’ve helped hundreds of fashion brands design and manufacture successful collections. If you need any guidance from us, just get in touch and we’ll be happy to share a few thoughts to support you on your way to growing a knockout brand.