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selling to department storesThis article is adapted from the one originally printed in the Chicago Tribune

I should really call this story, “My Big Dumb Stupid Newbie Mistake and How I Lost $25,000”.

No, it’s not a joke. My biggest mistake in business was when I screwed up an order with a major department store and it cost me way too much money. Today’s article is a case study about an emerging designer in Chicago – Me.

One thing I talk about repeatedly is the importance of being a business person first, and a creative person second. That’s assuming you want a business that makes money. As a brand new fashion designer, I made tons of fashion business mistakes. One of the epic ones was when I didn’t trust my gut, and it ended up costing me $25,000 in sales. Here’s what happened:

I get my first big order

I was 25 and barely out of fashion design school when I started selling my designs out of my own women’s clothing boutique. Just two months after I opened, a buyer from a major department store (now acquired by Macy’s) walked in, and soon I shipped my first order to four of their stores. I was thrilled!

I ran into trouble with the second delivery. I had ordered the fabric with plenty of lead time, but when it was two weeks late I finally heard from the fabric supplier. The black fabric I ordered was out of stock, and could they replace it with a “charming forest green?” I had promised the store outfits in two colors — red and black — and I was afraid I’d lose the whole order if I only delivered red. Since there was no time to order this exact fabric in black, I sent a swatch of the green to the department store buyer and to my surprise, she approved it.

I get a sinking feeling in my gut

I was surprised. Because I had a sinking feeling in my gut.  There’s a reason why black is so popular. It’s slimming, hides dirt and goes with everything.  Women know this, I know this  I should have listened to my gut then, but I really knew things were wrong when I was packing the boxes of red and green — it looked so Christmasy — but after all, the buyer had approved the swatch, so it had to be OK, right?

Well, my gut was right. The green did not sell. It was a disaster. The department store buyer told me I had two options —  I could take the green outfits back or I could give “markdown money.”

What is Markdown Money?

I was a new fashion designer and had never heard of markdown money, which is when the designer gives a credit to the store when the designer’s merchandise has to be marked down. I was horrified, but I agreed to it because I was afraid of losing future business.  I agreed to give a credit on a future order to the tune of $25,000. My business would take a major hit, and I was scared.

Learning to trust my instincts as a fashion business owner

I was mad at the buyer — why should I give the markdown money when she approved the green fabric swatch?  She should have taken it out of her own check.

But then I realized I was equally to blame, and I was just as frustrated with myself.  I KNEW that green color was wrong. I literally got a sick feeling in my stomach when I saw it. It just wasn’t right. But I was too excited and I WANTED THE ORDER THAT BAD.

The good-news ending: this mistake didn’t put me out of business. I learned from it and now I don’t ignore that feeling in the pit of my stomach. Ever.

My mistake was costly and embarrassing, but I was – and still am – determined to learn from it.

So what do YOU think? Did you like this article? If so, give it a LIKE and a SHARE, will ya?

And tell me this… Have you experienced something like this? Can you give me a specific example (in the comments below) of a business mistake and what you learned from it? I can;t wait to read your answers!

Sincerely,

Jane

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7 Responses

  1. Hi Jane,

    Thank You for sharing your story.
    Have a number of mini stories, though. All lead to levels of loss. Each one led to a teaching moment.

    Thanks again,
    Eleanor

    1. Eleanor,
      You have had a LOT of success and learning over the years. Plus I admire how your business has evolved. Would you consider sharing a story with this community? Just email us if you’d consider it! brain at fashion brain academy dot com.

  2. I still don’t understand why you had to take responsibility of the bad color choice APPROVED by the buyer.. If we forget fashion sense, and guts feeling, legally nothing to be done?
    Of course we don’t want to lose good relations with the big heads, but aren’t they taking advantage of it?

    1. Hi Judith,
      I know it seems crazy but the there are really only 2 options wen this happens. 1) Don’t do the markdown money and lose the account. 2) Take the hit and keep selling them (but be smarter next time). My HUGE mindset shift from this experience is this… It’s not about “getting the sale” it’s about working with the store to make sure it sells at RETAIL. Period. Getting the sale is only the beginning. Thanks for commenting!

  3. Hi Jane,

    Your articles are so valuable, thank you! My question is, I got some new orders out of state for the first time (!) and in a great store. So I am shipping for the first time since before I was just delivering the goods myself locally. I am fearful of charging them shipping and that they won’t order any more from me again. I do not account for shipping in my wholesale price so I feel like if I don’t do this I could be putting myself out of the race…Is it acceptable to charge shipping and handling fees?

    I am making a selling trip next week to Japan and this whole shipping thing is making me extra nervous! Would love to know your thoughts, thank you so much!

    1. Hi! It is totally normal to charge the store shipping and the retailer will expect to pay for this. you tack it on to the invoice.
      Jane

  4. oh, I love this story. It’s a different one than you being screwed in the beginning with big store asking for a discount and you saying yes without knowing what it meant! This really puts my $8000 learning experience in perspective:) this story is an example of why I think there is a sweet spot of selling to many boutiques vs losing your profit margin with the big stores.

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