The Direct To Consumer Approach With Denim

We’re all familiar with buying our jeans from our favourite online shops like Shopbop, Revolve, Net-A-Porter, Donna Ida, Trilogy etc (here’s a list of our top 10 places to buy jeans online) and we always love going to the boutiques to try them on in person, but the price tag can often leave us disappointed. I know that myself as some premium jeans can be extremely expensive. What do you do then you love premium denim but you can’t afford the price tag? We can either wait for the sales and hope they’re in stock, or try the outlets, but another approach is the direct to consumer approach, which some new brands have started to adopt.

We spoken about the brand called DSTLD in the past, who make their jeans and sell them on their website only, cutting out the middle man, but there’s also Everlane (a clothing brand), and most recently, One Denim. These brands are paving the way for cheaper premium denim for us and I’m quite excited by it. We recently did an interview with One Denim and found out about the process and inspiration behind their designs, but we thought it would be good to share with you exactly how the direct to consumer approach works and how you manage to keep the quality of the premium denim intact, but with a much lower price tag.

What are the steps for buying your regular premium denim in the store? Cost of goods – wholesale – retail. This means that whatever it costs a brand to produce a garment, they then multiply that by at least 200% (or more for big brands) to get to the wholesale price so they can make their money. That’s all fine, that’s what you would expect from a brand and how they make their profits. The wholesale price is obviously what the retailers purchase the products at, but in order for the retailer to make money as a store, they need to bump up the price as well so they can get their own income. The final price can be between 250% – 300% more than the wholesale price, which was of course higher than the actual manufacturing price to begin with. So that’s how it works when you’re a brand trying to get your products in stores. Every single product you buy from a shop will have markups in places so everyone involved can make their profits.

As an example, say it costs around £40 to make a plain pair of premium denim jeans (we’re talking about jeans made from Japanese Selvedge or something similar – not a regular basic fabric), the brand will then wholesale that for a minimum of £80 as they need to double the price to make their profits. The next price increase comes from the shops as mentioned, which means they will then double it or more again, meaning the jeans would be sold for around £200 or more. That’s over 5x more than the original starting price, but more often than not, a lot of brands will work on a 10x increase if they’re big names. I’m not trying to say this is bad as this is how it works, it always has, I’m just explaining the process to you.

We spoke about the direct to consumer denim brands above, but you might be surprised to know that labels like Zara and H&M do not wholesale their clothes, they sell them directly to the customers in their shops or on their website, meaning there’s not the 3rd price increase so their clothes are a lot more affordable. If we think about One Denim (as I know most about them), they adopt the same business model as the high street labels, but on a much smaller scale. They take the production cost of a jean and sell it directly to the customer working on an overall margin of less than 250% (inc VAT). So a pair of jeans that costs £40 to make, they would sell it for £100 or less, which is a x 2- 2.5 margin in VAT. That means you would benefit hugely because that jean would normally retail for around £240 if it hit the shops, but the best thing is that the quality of the jean is still the same, it’s not cheaper because the quality is sacrificed. There’s just no extra price increase from the boutiques. Which is what I think a lot of people don’t understand, which is why I wanted to help explain it to you all.

What do you think about premium denim being sold cheaper online with a direct to customer approach? I think it’s fantastic as you’re able to get the quality you love, but at a much more affordable price. Before, it meant you had to sacrifice some of the trends and fashion forward jeans, but with the likes of embroidery etc becoming popular, brands such as One Denim are including that, as well as DSTLD doing more trendy pieces too. Hopefully this increases more and more! Comment and let us know!

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