Sramana: How much overstock inventory did you have to buy in terms of dollars?
Amy Laws: We probably bought $30,000 of inventory.
Sramana: What kind of markups were you getting on that $30,000 overstock inventory?
Amy Laws: We were probably selling those at a 100% markup.
Sramana: That’s about what I would expect. I actually ran a fashion company on the Internet in the early days, in 1999. So you turned $30,000 into $60,000 and then decided to manufacture your own. Tell us a bit more about that and your design process. Do you have design skillset in your shop or did you get somebody to do that for you? How did you handle manufacturing?
Nicole Brewer: We had to find great people to help us. Amy and I do not have any technical design background, but we knew what we liked. We had children in this age range, and we knew what we wanted for them. We had sketches of what we wanted, and we found great manufacturing partnerships to get them made.
Sramana: Did you find those partnerships in the US or overseas?
Amy Laws: Both. We did quite a bit locally in Dallas. About 50% of what we sell is made overseas and the other 50% is made domestic.
Sramana: Are you completely private label at this point?
Amy Laws: I would say that 95% of our clothing is private label. We buy some clothing wholesale. There are some brands that we like and that our customers liked and which do a very good job. We buy pieces from these brands that we like if we can get them at great price points. We have more flexibility in garments that we design because we control the costs.
When we buy wholesale, we stick to the wholesaler’s rules. We mark those up 50% as per their directions. One of the things that is key is that there are two ladies here who are mothers. We don’t have formal design training but we have strong points of view when it comes to what we like to see our daughters in. We know what our friends like.
Our personal style seemed to resonate with our customers. We could not find what we liked in the showrooms. We did not like being constrained by what the manufacturers would present. They only offered the summer collections and the winter collections. Our customers expected fresh, new goods at each and every auction. We started off having two auctions per week and there was no way to get that variety buying wholesale. By bringing in our own label, we were able to control that ourselves. We could control the fabric and the volume of merchandise that we could get.
Very early on, we told ourselves that if we could not afford to buy it we would not do it. We operated and still operate debt free.
Sramana: In this business building process, how have you prioritized? If you are doing little girls’ or little boys’ clothing, there is a pretty sizeable range of ages groups. Where did you prioritize your sweet spot and where did you expand from there?
Amy Laws: The buying patterns of our customers dictated that. The girls’ moms far surpassed the boys’ moms in terms of volume of buying. Our best selling sizes are our 12 month to 3T. That is because moms are still in control of what they dress their kids in. Once the kids get older, they start to get their own opinion.
We get emails from moms who are frustrated because their daughters refused to wear something on a particular day. Some little girls just want to wear princess clothes everywhere they go.
We only go up to a size 6 for that reason. Once you get above a size 6, size ranges get more varied. You have more continuity of size in the younger ages.