QUANTITIES AND ORDERS

Often a designer or new company has a target number of how they hope their new item will sell and therefore how many they should produce in their first production run. This is often an assumptive quantity based sometimes only on confidence, but not always realistic in today’s market. During your first conversation or email with a factory, if you advise that you plan to make 1,000-1,500 units of a style of garment the first time out, you should have orders for those. If you cannot sell 1,000-1,500 units quite quickly, you will be at a large loss and could risk putting your new company out of business really early.

As you source production, you must tell the factories your anticipated quantity (the number of pieces you will order). This should not just be an exaggerated “guesstimate”. You should attempt to calculate a realistic quantity. Often this quantity will be low. It is better to target and source a factory who will produce a small amount for you. You can always increase the order. Any factory will be thrilled with an order increase! However, it is not advisable to initially state that you plan to make approximately 1,000-1,500 pieces, during the cost-quote stage; then when it comes to ordering time, you order 500 pieces. That is frustrating to a factory. Going forward the factory will always assume you may cut your production numbers by more than half, and therefore not trust you what you say or work their hardest for you. Working with a factory is a relationship, and work the same as other personal relationships, the most successful ones value honesty.

So what quantity should you state?  The answer is… how many order do you have and will you get?  You should have committed orders before you go into production with a new item. You need to be able to ship a good percent of the finished production immediately, as soon as it is delivered to you or your warehouse.  If you wait to begin selling until after you have the finished production order in-house, then you could be sitting with 1,000 baby hats that may take you many months sell. That is dangerous to a new company, as we work in an industry that wants to see new and fresh merchandise every 1-2 months.

Therefore, first you need orders to determine your quantity; and once you have some orders in hand, you can realistically give the factory an estimated production quantity. New companies will often produce the amounts they have firm orders for plus an additional 20-25% more units to cover any new orders and reorders. However, many companies are now using a more conservative approach and producing only an additional 10% of units. It’s a risk no matter how many additional for produce- produce too many you lose money. Produce too few, stores and customers find another product instead.

As you are just at the start of your sourcing stage, the estimated quantity you advise the factory is for pricing only.  It will help you determine if a factory can possibly produce your order and if they are in your ballpark. Stay low regarding your quantity estimates, as you can certainly revise a quantity if and when you place a production order with the factory.

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