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How To Start a Successful Clothing Business Online

Online Clothing Business

If you love design or have an entrepreneurial streak, starting a clothing brand business or online boutique can be a fun and fulfilling source of extra income.

Online e-commerce businesses also come with legal issues that differ from physical stores. You need to keep those in mind before opening your online clothing store.

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Ten Steps To Opening Your Online Clothing Business

If you long to be your own boss in the clothing industry, opening an online clothing business might be for you. By starting an online business rather than a physical store, you may be able to avoid hiring employees and managing a retail space. These advantages can save you money and time, which are at a premium for a small business.

Creating a successful business can require you to do a little market research. The clothing industry is very competitive, so you may need to learn about rival fashion brands. This will help you understand if there's a market for the products you want to sell. It might also be a good idea to carve out a niche. You may see an opportunity that others have missed or know that you could innovatively improve a product.

Before you open your online business and pick a domain name, there are legal issues to think about. By considering these issues, you can avoid time-consuming administrative hassles.

The following steps can help you prepare for potential legal issues and simplify the process of opening your clothing business online.

1. Decide Which Business Model Is Right for Your Online Boutique

Opening a business online can be easier and cheaper than opening a brick-and-mortar store or starting a clothing line. There are also more customers shopping online all the time. This gives you a large marketplace of potential customers to target.

Business models in the online fashion industry vary widely. They vary in terms of upfront costs and the amount of work. If you're most interested in the design, creativity, and control of your product, you might want to pursue a custom cut and sew business model. You might prefer dropshipping and print-on-demand if you want to be involved in the startup business's manufacturing process.

Dropshipping

You might choose dropshipping if you're more interested in the entrepreneurial side of the clothing business. With dropshipping, you act as a retailer for a supplier's products. You can create your own designs, product descriptions, and t-shirts. You place them for sale on a website.

Customers order a product through your website, which is sent to the supplier. One supplier often used is Printful. The supplier prints the item on demand and sends it to the customer. Your customer never knows you dropshipped it.

One benefit of dropshipping is that it's usually inexpensive. Another upside is that it does not require you to store inventory. But the profit margins of this type of business are low, and the time from purchase to product delivery is long.

Most of the profit goes to the actual supplier of the clothing items, not the clothing line entrepreneur.

Custom Cut and Sew

When many people think of a clothing business, they think of cutting and stitching their designs together on their own. This is known as "custom cut and sew." This type of clothing maker designs and sells its own products.

Some custom cut and sew businesses team up with manufacturers. The manufacturer can take the seller's designs and produce them more efficiently on a mass scale. If you start a custom cut and sew business, you may need to lease a space to work from.

Otherwise, you may need to contact a manufacturer who can implement your designs and reduce your production costs. If you go with a manufacturer, you should have a good contract with them. You may want the agreement to cover costs, quality expectations, timelines, and ownership of intellectual property. Getting the manufacturer to sign a nondisclosure agreement may also be a good idea.

Print-on-Demand

As the name states, print-on-demand manufacturers print your designs onto clothing for a fee. They then ship the product to the consumer for you. This is a good way of entering the apparel market if you have an original logo or funny slogan you want to print on clothing. It can also be a good option if you own another business and would like to print your business's logo onto blank apparel.

Another benefit to this business model is that there is a low cost of entry. As with dropshipping, you won't need to carry your own inventory.

If you go with a print-on-demand business model, make sure that your images, logos, or slogans are original. If they are not yours and are subject to copyright protection, you could face legal problems.

2. Choose Your Clothing Designs and Materials for Your Online Clothing Store

This is where you can let your creativity shine. If you design your own clothing, ensure your designs and logos are original creations.

It's important not to use copyrighted or trademarked images in your designs unless they are fair use or in the public domain. Doing so could open you up to liability. Originality is also important to help you remain competitive with other clothing manufacturers.

To avoid intellectual property issues, you could also resell vintage clothing you purchase at flea markets or estate sales. This makes your private label brand unique with carefully curated pieces.

3. Secure Your Business License

It might seem surprising, but even if you work out of your home and sell online, you still need a business license. Seek permission from your homeowners association (HOA) if you have one, and review your lease agreement if you rent. Some lease agreements expressly prohibit at-home businesses.

The requirements for licensing vary by state. You can often apply for a license online. For more information about local licensing requirements, visit the U.S. Small Business Administration.

The Internal Revenue Service dictates a business license for any business activity, even selling online on Etsy. If it's a hobby that does not profit for multiple years, or it appears you do not intend for it to create money, then you likely don't need one.

4. Check Your Insurance and Regulatory Requirements

If you open your own manufacturing facility, there will be some unique legal issues to consider. You might need workers' compensation insurance, property insurance, and others. You could also be subject to OSHA regulations.

Your online service captures sensitive customer information, like customers' addresses and payment information. Online clothing companies should carry cyber insurance in addition to general liability and product liability insurance.

5. Decide on Your Business's Legal Structure

If you choose to incorporate or form a limited liability company, it can help to shield your personal assets from liability. There are also potential tax advantages as well. You can operate as a sole proprietor with a doing business as registration. Still, your personal assets remain in jeopardy in the event of a lawsuit.

6. Fund Your Clothing Line Business

Depending on your business model, you may need startup funds. One option is a business loan. If a loan is challenging to secure, you could seek investors. Friends and family may also be interested in investing. A business credit card should be your last resort, as the interest rates are much higher.

7. Write a Business Plan

business plan can help you figure out your objectives, how to be profitable, and what your vision is. The more well-thought-through a business plan is, the more likely your business will succeed. A good business plan also helps investors see why they should invest their money into your business.

8. Learn About Your Tax Obligations

Even though you sell your products online, you still need to collect sales taxes. States can require out-of-state businesses to collect sales tax even if they have no physical business there. If you're not sure whether you do enough business in a state to require you to collect sales taxes, you should check with that state's tax office. As a business owner, you must also pay federal income tax and other business taxes.

Shipping across state lines opens your new business up to federal lawsuits for interstate commerce. This means you can be sued or sued in federal court.

9. Create a Marketing Strategy

To help make your target market aware of your products, you will probably have to put in a little extra marketing effort. This is when a marketing plan is useful. To be successful in the online fashion industry, you must engage with your customers.

Social Media

This might include social media marketing and even paid advertising. Satisfied customer referrals and sharing your clothing on their social media account are effective. You could offer discounts to existing customers for their referrals.

Email Marketing

Another way to advertise your online clothing line is to send marketing emails. You can have customers or potential customers sign up for a newsletter on your e-commerce website. Once a week, or whatever schedule you prefer, send these customers a newsletter with new products, discounts, or styling tips.

Some helpful email marketing platforms include:

Be sure to offer an option for recipients to unsubscribe from your newsletter, as it's the law. Your emails must have your physical address as well.

If you choose to advertise, including email marketing, make sure your advertising is truthful and accurate. There are consumer protection statutes in every state. You could risk legal action if you promote your products inaccurately.

Predict the Needs of Your Target Audience

Fashion trends and classic staples are vital to your success as an online boutique. You need to stay ahead of current market trends. A cost-effective way to do this is to follow fashion influencers and fashion blogs and watch what people are wearing globally.

Use social media to your advantage and get creative with your clothing company marketing. Use polls in your Instagram stories and ask questions on your Facebook pages. Ask your clients what other brand names they purchase and what they think about your future products before you invest in inventory or designs.

Another way to focus on what your market cares about is to find your own niche. This could be sustainable fashion, vintage clothing, inclusive sizing, microtrends, or gender-neutral styles.

10. Think About Your E-Commerce Platform

Your e-commerce platform is another area with different options to suit your business idea and needs.

Your Own Clothing Boutique Website

One option is to sell directly to potential customers through your own website.

This option may be a good fit if you already have a customer base or a large social media following. If you link your clothing website to your existing online presence, you could have a large market to draw from. If you choose this option, you must comply with certain standards to protect online credit card transactions from fraud.

It will also be important to ensure a seamless checkout process. This is a key aspect of customer satisfaction.

Online Store Builder

If you think you need some extra help with your e-commerce platform, you might consider an online store builder. There are several online store builders on the internet which cater to clothing sales.

Some online store builders include:

  • Big Commerce
  • Shopify
  • Webador
  • Wix
  • Woocommerce
  • Wordpress

Online store builders can help with marketing, inventory, and payment processing. But you usually must sign a contract. This contract allows the company to charge fees or collect percentages of your sales. This means you lose part of your revenue. Depending on your needs and expertise, getting the extra help that an online store builder offers might be worthwhile.

Selling on a Third Party Platform

If you don't want to set up a full e-commerce store online, you can put your new products up for sale on an online market.

Examples include:

  • Amazon
  • Ebay
  • Etsy
  • Redbubble

Social media platforms that allow for storefronts or products, like Facebook Business, Facebook Marketplace, and Instagram Shop

These platforms usually connect to your bank account or a third-party accounting processor. That processor is usually Apple Pay, Google Pay, PayPal, Square, or Venmo. A percentage or fee is also taken from your revenue here, but you likely don't need to sign a contract.

Get Help From a Lawyer in the Fashion Industry

Opening your own clothing business online can be exciting and fulfilling. However, you should also be careful to follow licensing and regulatory guidelines. If you have questions about licensing, taxes, business structures, or other legal issues, contact a local business attorney today.

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