How to start a clothing manufacturing business

Alibaba.com JANUARY 20, 202115 MIN READ
How to start a clothing manufacturing business

If you have ever considered opening a clothing manufacturing business, now is the time to do so since the global fashion industry is growing larger than ever. In fact, the global fashion industry is worth a whopping $406 billion1.

People need clothes, and with the ever-changing trends in fashion and pop culture, wardrobe upgrades are a regular thing.

In this post, we will teach you everything you need to know about breaking into this industry and opening a clothing factory of your own. We will start by covering the basics of clothing manufacturing before we leave you with 10 actionable steps for starting a business of your own.

We will wrap things up by sharing a success story from a clothing manufacturer who sells his garments on Alibaba.com and discussing a few possible challenges of operating a business in this industry.

What is a clothing manufacturing business?

Up until the 1800s when the world saw a shift towards industrialization, homemakers generally handmade clothing for their families and sometimes members of their local community. Clothing was fitted for the person that would be wearing it, and the styles were generally quite uniform.

However, the 19th century saw a shift towards clothing that was mass-produced and designed in a range of standard sizes. Although styles were still relatively limited, this was the beginning of the fashion industry that we know today.

As the name implies, a clothing manufacturing business produces garments. These factories either produce the clothing to sell to other retailers, or they sell them directly to consumers.

Since clothing manufacturing businesses often specialize in a limited number of garment types, it is most common for them to sell to retailers that are looking to stock their shelves.

The two main types of clothing manufacturing that businesses like this offer are cut-make-trim (CMT) services and full production packages (FPP). CMT means that you would be making the goods that a buyer orders, whereas with FPP, the buyer purchases goods that you have totally produced. With CMT, the buyer may design the garments.

clothing manufacturing

How to start a clothing manufacturing business

Now that you understand what a clothing manufacturing business is, let’s take some time to talk about how to start one.

1. Study the industry

Before you get into clothing manufacturing, it is a good idea to study the industry. Take a look at the different business models successful clothing manufacturers are using. Study trends in the industry.

The clothing industry is pretty consistent in the sense that people will always need clothing. However, trends come and go very quickly, especially since pop culture is so accessible through social media.

For example, 2020 saw a spike in loungewear sales2 as people were forced to stay at home to social distance. Tie-dye was also a huge trend over the past year3 as people felt more comfortable opting for a bolder look since they wouldn’t be going in public.

These shifts in trends are not a problem as long as you prepare to navigate them. With any trendy items will be skyrockets and rapid drops in demand, so you need to learn how to create a supply that matches that.

2. Choose a niche

When it comes to clothing manufacturing, there are so many niches to choose from. Let’s take a look at some of the different types of clothing you can create.

  • Streetwear
  • Shoes
  • Sportswear
  • “Athleisure”
  • Lounge Wear
  • Intimates and Under Garments
  • Swimwear
  • Accessories
  • Cultural Clothing
  • Costumes and Novelty Clothing
  • Luxury Fashion
  • Sustainable Fashion
  • Formal Wear
  • Business Attire

Even within each of these niches, there are many types of garments you can create. The basics would be shirts, pants, shorts, socks, skirts, and dresses.

3. Identify your target audience

Choosing a target audience that you can serve well is essential in the success of your clothing manufacturing business. As we mentioned earlier, you can sell to either consumers or retailers, with selling retailers being the most common approach.

If you’re targeting retailers, you’ll narrow them down by the consumers that they serve. For example, if you are going to manufacture dresses, you’ll target retailers that sell clothing to women. You’ll also want to identify where these retailers are located. Will you sell to local shops or retailers that sell clothing around the world?

Narrow it down even further by the price point of your product. Are you manufacturing clothing that would be considered budget-friendly, luxury, or somewhere in the middle of the road?

Furthermore, where will your ideal customer be looking for clothing manufacturers? How large of orders will they make? Will they want or need customized garments? Do they value sustainability and fair trade, or are they okay with you taking measures to lower the cost of production?

Having a clear understanding of who your target audience is will help you down the road. Defining this audience from the start will help you make decisions more intentionally as you build your business.

4. Identify your value proposition

We mentioned earlier that the fashion industry is quite sizeable. That means that there are likely many other businesses that serve the same audience and manufacture the same garments as you do. Since you’ll likely have several direct and indirect competitors, you have to have a unique selling point or value proposition that sets you apart from the rest.

This does not mean that you have to be “better” than the competition. It simply means that you have to offer something different. Since you’re working with a unique team with unique skillsets, it is nearly impossible to operate identically to a competitor.

Identify what you do differently and leverage that in a way to win over potential buyers.

Your value proposition could have something to do with the quality of your products or your service. It could be a guarantee on order fulfillment or turnaround time. Just figure out what you can do to provide a unique experience that benefits your customers and stick with it.

5. Create a budget

A clothing manufacturing business requires quite a bit of capital to get started since the production process requires quite a bit of equipment. Create a budget to determine exactly how much you’ll need to get started.

Some factors to consider include:

  • Legalities (business licenses, insurance, and other dues)
  • Warehouse space (lease or purchase)
  • Labor (factory workers, marketing team, accounting team, sales team, management, etc.)
  • Machinery and equipment
  • Marketing and advertisement
  • Raw materials (fabric, thread, buttons, zippers, etc.)

Add up the total startup costs and figure out how much it will cost to sustain these operations at your target output. Identify how much money you have to invest in the business and identify how much financial support you will likely need to sustain operations until you break even.

Be generous with any estimates because you’re better off starting with too much capital than too little. All of this information will come in handy as you create your business plan.

6. Create a business plan

Once you’ve figured out the general direction of your business, it is time to sit down and hammer out your business plan. This will serve as your guide as you continue to build your business.

A business plan should include:

  • A summary of the product (or collection of products) that you’re going to offer
  • Mission statement
  • Who your founding members will be
  • How the company will be structured
  • What sort of business entity you will have
  • Where your factory will be located
  • Your budget
  • Plans for financing
  • Financial projections
  • Market analyses
  • Supporting materials and legal documents

Your business plan can be pretty casual, especially for the first draft. You don’t have to worry too much about proper formatting until you’re putting your business plan together to present a pitch for funding.

If you are trying to get funding, you will add a section to your business plan that covers your funding request. Include how much capital you need and how you will use it.

7. Build a reliable team

Starting off with a reliable team is key to building a sustainable business. You will want to build a team of people who are professional, driven, reliable, and skilled. Not only should your team of experience in running a business, but at least a portion of your team should have some startup experience. That’s because it is a lot harder to get a business off the ground than it is to maintain operations in a thriving business.

Assuming you’re the CEO, it is wise to have people who have experience in accounting, marketing, advertisement, sales, sourcing, and customer relations. Since you’re opening a factory, logistics or industrial engineering experience is also key. You will also need designers and specialists for creating prototypes of your garments.

Having a team with diverse experience will allow you to delegate different tasks to individuals who can handle them the best.

Depending on what sort of capital you have, some of these founding members may have equity in the company in lieu of a salary for the first year or so. Work out a structure that makes sense for all of the team members.

On the same note, if you are going into business with friends or family members, be sure to set professional boundaries. Do not appoint unqualified people to important positions just because they are your loved ones. This will cause stress and issues.

Please keep in mind that you will also have to hire factory workers. Some parts of the manufacturing process may require skilled workers for sewing and cutting fabric by hand.

8. Work out a sales plan

The next step is creating a sales plan. A sales plan outlines how you’ll optimize your sales process to shorten the cycle and ultimately get more customers.

Your sales plan should outline your revenue goals within a specific time period, current information on the industry and market, how you can optimize your team’s performance, how you can best use your resources, technology you’ll use, who is responsible for what, and how you will assess your success.

Here are a few questions to answer as you figure out how to optimize your process:

  • What problem are you solving for your customer?
  • How will you generate leads?
  • How will you foster your leads?
  • How will you present your products to prospects?
  • What sort of perks can representatives offer to close the deal?
  • What is the protocol for following up with customers for reorders?

The goal here is to document the process that a buyer goes through from the time they are a lead up through when they have submitted an order. This will help you set standards for your sales representatives to follow so that you can create a consistent customer experience.

9. Set up your factory

Next, it is time to set up your factory. You must choose a location that makes sense. Rural areas with lower real estate costs, and low costs of living in general, make for better locations. This will save you money on the factory building itself, and it will give you access to cheaper labor.

From there, you will have to order your equipment and set up your space with the most optimal and efficient layout.

If you don’t have one on your team, you’ll likely want to hire an industrial engineer to come in for a consultation and help you with your setup and plan for operations. This specialist will help you optimize your operations to save time and money.

10. List your products online

Once everything has fallen into place and production has begun, it is time to list your products online. Today, many wholesalers and manufacturers are finding success in listing their products on B2B eCommerce marketplace, like Alibaba.com.

Listing your products on this type of platform gets your brand in front of retailers and business buyers who are looking to source clothing items for their shops. The nature of Alibaba.com and similar platforms give you the ability to connect with serious B2B buyers both near and far. This also means that you can export from the start if you choose to do so.

When you list your products online, make sure that you use professional photos and videos to present the articles of clothing. Using models makes listings more attractive than using a mannequin.

As you optimize your product listings, be intentional with the keywords that you use in your titles and descriptions so that the items are easily found when buyers search the marketplace.

Selling clothing on Alibaba.com: a success story

In order to give you an idea of how everything we’ve covered can come together with the proper planning and hard work, we’re going to take a look at the success story of a clothing manufacturer who sells his garments on Alibaba.com.

alibaba clothing seller

Nichol is an Italian clothing manufacturer who makes shirts for men and babies. He originally started his business, Camiceria Mira, to serve his local market. However, he soon saw a greater demand for his goods, and he began spending lots of time and money to travel attend tradeshows and industry events.

In 2013, he realized that by listing his products on Alibaba.com, he could reach buyers from around the world without leaving his home. Nichol has worked with buyers in Africa, the EU, the United States, and beyond.

Today, Nichol receives over a dozen inquiries a day. He says that his orders average 500 to 1000 units. His goal is to use Alibaba.com to continue to connect with larger clients and grow his business.

Nichol remarks how easy it is to use the platform and how incredible it is that he can make global connections with “a few clicks of the mouse.”

Possible challenges of clothing manufacturing

Before we wrap things up, it’s important to point out a few challenges that could possibly come with clothing manufacturing.

Let’s take a look at some of the more difficult aspects of the fashion industry.

Hefty start-Up costs

Opening a factory is expensive. Producing clothing requires a lot of different machinery that can take up a lot of space.

The start-up costs alone are a major barrier for many people who are interested in building a clothing manufacturing business.

It’s a competitive industry

Many clothing manufacturers make similar items, so acting quickly as new trends arise is key to staying ahead of the cutting edge. This will help give your business a leg up on the competition and help your business stand out.

If you can manufacture garments as they are still becoming popular (without sacrificing their quality for the sake of speed), your business will be in good shape.

It can be unpredictable

We briefly mentioned this before, but ever-changing fads can quickly disrupt regular production as manufacturers make quick decisions to jump on a trend. Quick business decisions are high-risk, but they can also be high-reward.

Sometimes, quickly producing a trending item can make you a pretty penny. But every now and again, it will lead to an overproduction that leaves you with a ton of overstock. This type of situation will cost you, but again, this is a risk that you have to be willing to take.

Minimal worker accountability

No matter what sort of company culture you create it is difficult to make factory work pleasant or enjoyable. Workers stick to their stations, and since they are paid relatively low wages, they have no motivation to go beyond the call of duty.

If something is a little off during the production process, you cannot necessarily expect a worker to point it out or come up with a solution to correct it. That’s because this isn’t really in their job description.

It’s evolving fast

Artificial intelligence (AI) has optimized processes in so many industries. Slowly but surely, AI is finding its way into the fashion industry. Industry leaders are forced to stay on top of the newest technological trends in order to keep up with competitors.

This is not necessarily a negative thing, but it can be challenging for a start-up since the newest technology comes with a hefty price tag.

Final thoughts

The fashion industry is growing by the year, and there’s never been a better time to get involved. Building a clothing manufacturing business from the ground up is a bit of a process, but with the right team, adequate resources, and a solid strategy, you can make it happen.

Once you have chosen what sort of garment you’re going to make, created your business plan, set up your factory and started production, you’ll be ready to sell your clothing. When the time comes, Alibaba.com will be here to help you set up your digital storefront, list your products and find buyers.

Last year on Alibaba.com, the fashion and apparel industry saw a YoY growth of over 60% in buyers, and over 50% in business opportunities. As main buyer countries will gradually lift quarantine restrictions and online trade shows are being held, the platform is expected to see huge growth of apparel buyers and business opportunities in 2021.

Top Apparel Categories on Alibaba.com:

  1. Women's Clothing
  2. Sportswear
  3. Men's Clothing
  4. Novelty & Special Use
  5. Children's Clothing
apparel industry reportIndustry Report 2021 Clothing and Apparel Industry
Check out our latest Apparel Industry Report which introduces you to the latest industry data, trending products, and tips for selling on Alibaba.com


Contact us now with any questions about how Alibaba.com can help you grow your manufacturing business and reach your goals.

References:
1. https://fashionunited.com/global-fashion-industry-statistics/
2. https://www.foxbusiness.com/lifestyle/gap-loungewear-retailers-increase-sales
3. https://www.elle.com/fashion/a33435723/tie-dye-trend-2020/