Dropshippers are always looking for wholesale clothing suppliers that will provide reliable fulfillment services at the lowest possible costs. This typically means going into business with a Chinese manufacturer or distributor, because this is where the lowest prices are consistently found.
Those are the breaks, right?
There are, however, more factors to consider when dropshipping clothing made in China than just item price. These factors include clothing quality, safety issues, shipping concerns, and communication problems. There is also the fact that consumer perception about clothing made in China is a sign that a dropshipper isn't reliable — or worse, outright shady.
Fortunately, it seems that U.S. manufacturers may be poised to take up the mantle of top wholesale clothing suppliers for American dropshippers and retailers. Taken all in all, there are many signs that the outlook for U.S.-based wholesale clothing suppliers is getting brighter every day.
According to the 2014 NRF Index of Forrester Research on Internet sales, women's apparel is the top seller in online retail sales, and clothing in general is the third ranked of all products sold online, trailing close behind electronics and computer software/hardware. Online sales comprise 8 percent of total retail sales in the U.S. with a total worth of USD $142 billion. Clothing is included in the category that has a market share of 13 percent, representing $26 billion in sales.
According to the Bureau of Labor of Statistics in a 2012 report on U.S. consumer expenditures on apparel (the latest available), the average household spends $1,700 on apparel and related products:
Demand is certainly high, so appropriately, the competition is equally fierce. According to a report on eBay generated using our own SaleHoo Research Lab, men's and women's clothing show a respectable 18 percent and 17 percent success rate, although sellers of children's clothing are less successful at 6 percent.
This is not a big concern with dropshippers, as they keep no inventory. This means that regardless of successful sales rates, you can always list products and ship them out only when they're actually sold.
Moreover, if all of these competitors are competing on price point, that opens up an opportunity for someone to compete on the quality of clothing instead. If you're moving product produced in the U.S. you're more than likely going to have inventory that's of superior craftsmanship to all but the elite of Chinese manufacturers, and you won't have to worry about the extra shipping costs from overseas purchases.
What's really important to note is that you can make a killing if you move enough volume. Just take a look at these revenue estimates over a month long time frame:
China has made it a big business supplying low cost inventory to U.S.-based retail and dropshipping businesses, but how do they really measure up?
There is a widely held (and anecdotally verifiable) belief that most clothing made in China is made of substandard material and that it usually fits poorly. Chinese clothes are produced in factories where machines are outdated, workers are poorly educated, and the focus is in mass production rather than quality. All of this contributes to making it more cost-effective than clothing made in the U.S.
It is quid pro quo; you get what you pay for.
Some manufacturers in China are striving to duplicate the higher quality that U.S. consumers appreciate in order to counteract this perception of products made overseas. Unfortunately, they are few and far between.
These manufacturers are also less likely to win any bids for the lowest prices for wholesalers clothing online; with their manufacturing improvements, prices are likely to approach that of clothing made locally. With shipping overseas costing what it does, U.S.-based dropshippers with an eye for quality are unlikely to choose items made in China over those produced in the U.S.
Greenpeace released a report citing a study that tested 82 samples of children's clothing made in various parts of the world by small and medium-sized manufacturers, which comprise the bulk of suppliers that export to the U.S. Researchers found that clothing from 20 of the 29 Chinese companies included in the study contained toxic chemicals including antimony and nonylphenol ethoxylate (NPE).
Government regulation on safety standards for garment manufacturers in China is sketchy at best; officials merely provide advice to consumers about what they should buy to avoid any health risks to their children.
The Beijing Consumer Association also stated that 38 percent of clothing made by local manufacturers does not meet safety standards, and there is no assurance that clothing made in China is free from toxic residue.
Guess which manufacturers are most likely to offer fantastically low prices for children's clothing to dropshippers?
Government regulation in the U.S. is much more stringent, which is why clothing made by U.S. manufacturers is guaranteed to be safe. Businesses that seek to cut corners with quality standards expose themselves to hefty liability lawsuits, so compliance is the better route for a majority of these manufacturers.
Are they more expensive? Probably, but health issues are a big thing with U.S. consumers. You're more likely to develop a loyal customer base if you have a reputation for selling clothing that doesn't make children sick.
The study cited above concentrated on children's clothing, but there is no reason to believe that quality wholesale clothing for women and men doesn't have the same problems. When it comes to potentially hazardous materials on your exposed skin, you want to err on the side of caution.
Needless to say, clothing dropshipped by a foreign company is much more likely to run into problems when it comes to shipping as well as communication. Shipping takes time and/or costs more when it comes from China.
Dropshippers who have been around the block a few times already know there's risk involved with delayed shipping or items that never get delivered. Additionally, while many manufacturers in China will probably have translators or customer service representatives who can speak English, there's always a chance of something being lost in translation which can land you, as the dropshipper, in a heap of trouble with your customers.
Most people in the U.S. have a negative perception of products made in China, including clothing, largely because of the factors mentioned above. It's also interesting to note that according to one article, U.S. and international consumers give more value to the fact that a product is made in the U.S. than they do to the price of an item! In fact, products made in the U.S. top the list of the world's brands in terms of positive brand perception in 2013. That's the fourth year it has done so in a row.
The biggest advantage that China has over U.S. is that the labor pool is massive and cheap, but even that is slowly changing as labor costs continue to steadily rise. A good example is cited in this report from the Washington Post, which relates the tale of a company based in China that moved manufacturing to the U.S. They did this because it ended up being more cost-effective.
The article also claims that other industries have announced plans to move manufacturing back to the U.S. This is good news for the U.S. labor market, as well as consumers. It's only a matter of time before the clothing industry follows suit as market forces level off the playing field.
In fact, Los Angeles is already making a name for itself as one of the largest wholesale apparel suppliers in the U.S. and the world. This is fantastic news for U.S.-based dropshippers of clothing as well as other industries.
Currently, many dropshippers still favor products made in China, because they make narrow profit margins just a little bit wider. Savvy dropshippers that plan to stay in the running in the long-term, however, will have to at least consider the advantages of dealing more with U.S.-based wholesale clothing suppliers.
Buying American can be better for them in terms of cultivating customer loyalty, and better for consumers, who are assured that their purchases are up to safety standards, will arrive as expected, and do so in a timely fashion.
Have you had any experiences with clothing made in China? Let us know in the comments section.