When Angela Gahng started her direct-to-consumer contemporary womenswear brand Almina Concept in August 2017, she was focused on creating high-quality, essential pieces at a reasonable price point. She wanted to be a step above fast-fashion companies like Zara and H&M but more accessible than some of the more high-end contemporary brands, and thought the only way that could happen was to be strictly DTC.
“When I was first starting, I really thought direct-to-consumer [meant customers] should only be shopping on my website,” said Gahng. “In the beginning, I thought I would just be able to drive all the audience to my website on my own, but being a new brand, it’s definitely rough.”
About six months ago, Gahng said she realized that being strictly DTC while trying to grow a following and gain brand awareness wasn’t leading to a lot of sales or rapid growth.
As direct-to-consumer brands struggle to make it on their own, often due to sky-rocketing customer acquisition costs, many wind up turning to retail partners to take advantage of their reach. But wholesale can be tricky to navigate for small DTC companies, as retailers typically want a specific selection of products or styles, and many expect young companies to scale quickly. With drop-shipping, a young brand can worry less about wholesale partners putting in large orders on a seasonal basis, for specific pieces of a collection, and can instead simply fulfill orders as the come.
Ghang said for many of those reasons she didn’t want to move into wholesale but found the next best thing: the drop-shipping model. In May, W Concept — a marketplace for global independent designers — approached Almina Concept after seeing the brand on Instagram. W Concept asked if the company might be interested in working together, not so much through a wholesale partnerships, but by drop-shipping orders.
This model allows the retailer, whether that’s a Nordstrom or an REI, to avoid holding unsold inventory while simultaneously expanding product selection for customers. It instead relies on the brands being sold to store inventory and ship the product when an order is filled. So, when someone buys a silk cami or oversized blazer by Almina Concept through W Concept, Almina Concept fills the order and ships it.
For the small brands who take part in this model, there are a lot of moving pieces they need to consider, mainly being well-versed in forecasting how much of certain products to make, said Jim Barnes, CEO of enVista.
“It doesn’t matter what the product is — the first thing it goes back to for any business is demand forecasting. Do I have enough apparel, and have I produced enough to accommodate these agreements,” said Barnes. “On an indirect marketplace like a Nordstrom, [a brand’s] ranking is much higher when it’s not out of stock.”
Forecasting was something Gahng said was tricky to navigate, at first.
“We were suddenly getting all of these sales for a single product, so I had to quickly call our factories [in Seoul, Korea] to reorder products,” she said. “We had small delays in trying to get the product to customers at first but no real major issues.”
So far, the model has helped Almina Concept expand its audience in the early days, without relying too heavily on costly customer acquisition channels like Facebook and Instagram, said Ghang. The company declined to share size or growth in the last year but said this partnership has led to a big uptick in sales.
Almina Concept also works From The Lobby, which allows customers to discover new brands in a try-before-you-buy model, using drop-shipping as well. In February, Almina Concept will open a small space inside multi-brand retailer Re:store in San Francisco.
“In the beginning, you are so small that there is only so much you can do and so many people you can reach out to. You really need help from companies that have built their reputation and brand and have a much wider audience,” she said.
As part of the deal with W Concept, the marketplace does some marketing to promote Almina Concept, including in email newsletters to customers and on the homepage when an Almina Concept sale is happening. W Concept does receive a portion of all sales from the brand, but Gahng declined to share specifics.
Gahng said she estimates W Concept has an audience of between 5 million to 8 million customers, plus has an audience of 91,100 followers on Instagram.