Make 1 Million Dollars Selling T-Shirts
Believe me I understand as I did it for years – being the middleman – trying to stitch a deal together without being ripped of in the process I went to Bangladesh, Pakistan, Vietnam, Thailand and lost time and money. However, I did gain valuable info on how the manufacturing business works.
Now, within the blink of an eye I can tell if I have a buyers agent, a broker, a scammer etc on the line. To save time, I simple send them our t-shirt size specification questionnaire and they fall apart trying to answer it. Most would bes cant fill it out and other 20 or 50% - so it goes in the bin.
If someone gets to filling it out then there is the next phase that all real buyers understand. You see there is no real way to lock in prices and shipping as all can change very quickly. Think about the price of oil and how it can effect the total price of shipping, as it takes up to 45 days to buy the yarn, chemicals, spin yarn, dye, cut, sew, pack, ship the t-shirt.
Lets have a look at all this in detail. First, the t-shirt is usually cotton and cotton is a traded commodity on the stock exchange. Most cotton in the world comes from USA or Uzbekistan. It has to be bought on world stock exchange trade prices based on quality and availability.
Timing of the buy and locking it in are therefore based on a long term manufacturing program. Therefore it is beneficial that the buyer state that they would require say xxxx amount per month per year. Then buyer and seller can plan ahead. As you can see trial orders then become a problem as manufacturer cant lock in a futures buy on the cotton or chemicals or even production line space.
It is imperative that the real end buyer state and back it up with a Letter of Credit (LC) that they want xxxx containers of t-shirts per month x 12 months. If the LC goes through broker after broker then they need to push down the price to cover their commissions and all the bank charges/exchange rates.
So the price becomes lower than the cost price and then cannot be done. So a sample is requested from the buyer so that the manufacturer can see the look and the feel of the garment. This is also a way of assessing if the buyers real as they have no problem in sending samples.
But brokers have a problem with getting the samples and then paying the courier charges. A counter sample is then made and sent to the buyer. Like everything you pay for quality. A 50 cent t-shirt is a 50 cent t-shirt. Good for a few washes then its out of shape, stitching broken and faded colour. Again we always ask for buyers samples to see the stitching weight and general quality.
With these in hand we can work out if we can meet the target prices. Third, end buyers know the target prices. They accept that the manufacturer has to make a few cents to stay in business. However, when a middleman or broker gets involved they need to push down the price of the unit by a few cents. The more middlemen the lower the target price becomes, sometimes it gets so low that no one in the world can manufacture for these prices. Not even a 3rd world sweatshops.
