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Boy

I want to start a business making sheepskin slippers

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Posted (edited)

Hello Guys

I want to start a footwear brand starting with sheepskin slippers, I will manufacture it myself and sell it wholesale, maybe 10 pairs at a time. I learnt to operate sewing machines working for a guy that made leather sneakers, so know more or less how to make it and I chose sheepskin slippers as it is easy to construct, doesn't need expensive equipment and sell at a higher price than grandpa slippers. I want to enter the market by selling my slippers at a much lower price than existing brands which sell for around R600 a pair for 100% sheepskin. My problem comes in sourcing raw materials especially the sheepskin itself, I can't source it for cheap enough to reach my target cost price as the sellers are not flexible with their pricing. I don't have a lot of capital to buy in bulk, I have enough to make 100 slippers maybe. I don't want to give away too much information about my pricing but at the moment I can only make around R100 per pair of slippers when selling wholesale and the reseller has to make R100 as well if we want to be much cheaper than other brands. What can I do to make this business a sustainable one?   

In case you don't know how sheepskin slippers look like, they look like this:

sheepskinslippers.thumb.jpg.6c234ccce0d166d265bcead07bb2f3f2.jpg

Edited by Boy

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Posted (edited)

Hi @Boy

The way I see it you have three choices for that design:
Sheepskin (natural top and bottom)
Sheepwool (natural top, synthetic bottom)
Fake fur (synthetic top and bottom)

Sheepskin is the most expensive as it is the actual skin of the sheep after it has been slaughtered, sheepwool is cheaper as it is the sheared wool of the sheep attached to a synthetic base and fake fur the cheapest is made in a factory and usually used in cheap slippers like the grandpa slippers you say you don't want to make. Any slipper made from anything less than 100% sheepskin will sell for less than the real deal. Then all you will have is a cheaper alternative rather than a comparative product that is cheaper. You can look at reducing the cost other parts of the slipper such as using a cheaper sole but that is such a negligible part of the overall cost compared to the sheepskin that it might only shave a tiny fraction off.

The reason it's so expensive is that it is quite a labour intensive matter to cure, clean and process the raw skin and not many people do it and those people usually have buyers lined up whether export, medical use, rugs, underblankets, slippers, car seat covers etc. (although I don't know if many people still use it on car seats outside of pimps and drug dealers). It's not like offcuts is readily available as the smaller pieces as even small pieces are turned into stuff like bicycle seat covers.

Even if you can procure under current circumstances at a lower price, it won't last as soon as things get back to normal, you won't be able to get it at same price and your cost advantage will diminish and ultimate your businesses whole value proposition with it.

I know more or less what sheepskin cost at tanneries and it's not cheap. You might want to look into other aspects of your business such as marketing as it's not something that you can just buy from the abattoir and process yourself the equipment, space and time required to properly process the skin is beyond the effort a manufacturer will take (unless this looks like something you want to do). However if you are making R100 per pair and you can make and sell enough in a day then you might very well have a business.

Ask @Admin top make the footwear page (https://www.sb2sb.com/draft/footwear/) live over here and post a business lead to see if you can get a constant supply at a good price. 

Edited by Material Boy

dirt.jpg.d80b5ba0cbb09ca9f6b07fd0b90a8501.jpgDirt for my shrew :)

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Thank you @Material Boy for the information and advice.

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Posted (edited)

@Boy based on what you and @Material Boy are saying it appears that you do not have optimal conditions to adopt a low-cost strategy and might want to reassess your thinking.
 

  • Your cost advantage must be "durable" (constant and consistent) to have an edge. While it can be argued that you will have less overheads than rivals with staff and premises your cumulative costs need to remain consistent. 
  • Sustainable low-cost strategies require economies of scale you mentioned that you don't have enough to buy in bulk.
  • Low-cost models also benefit from the "experience curve effect" as you said just starting out. What the experience curve means is as you become more experienced you become more efficient and develop labour efficiency: "become mentally more confident and spend less time hesitating, learning, experimenting, or making mistakes. Over time you will learn short-cuts and improvements". What this means is if you are just starting out and you can only make 2 pairs a day and you only making R100 a pair then you only have a minimum wage job and maximum frustration while still getting experience.
  • Less suppliers mean the suppliers have bargaining power, lower cost models are favoured by the opposite situation when there are a lot of suppliers to bargain with. Read that page I linked to.
  • I think you might want to reevaluate your business model and strategy. You might not be in a position yet to wholesale and might be better off selling retail - direct to consumer and put the whole R200 in your pocket or even better make a more expensive slipper and make even more. But first you need to asses how many pairs you can produce in a day and I don't mean if a pair takes 1 hour to make and you working 10 hours a day you can produce 10 pairs. You need to sit and make those 10 pairs and see what inefficiencies and distractions you have to deal with. Even if you can produce 1 pair in 1 hour that does not translate to 10 pairs in 10 hours we are human and not robots and when doing monotonous work some people tend to daydream or procrastinate. This is where experience comes in as well - the ability to focus on doing a task in a consistent manner over and over again.


That being said I don't think your product falls into a low-cost category, maybe what you's are calling "grandpa" slippers with fake fur would, but sheepskin is a premium product and developing a cheaper product would be considered a "best-cost provider" where your product has comparative attributes than rival but at a lower cost, so don't box yourself into thinking in terms of low-cost and you have to be cheaper than the cheapest out there. If you can find a very soft synthetic backing for sheepwool you might get close to replicating the feel of a sheepskin slipper and you can claim "no sheep was harmed" when making this slipper as shearing is like a haircut rather than the sheepskin which is the hair attached to the skin. 

Sit down and think about all the scenarios selling wholesale vs. retail, low-cost vs. premium. If you can source a constant supply of sheepskin at a consistent price and produce enough in a day and you have wholesaler(s) lined up with proper sales channels that can move your product then you might be on the right track.

Edited by Mesa Verde

Not "if", but "how".

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Thank you for the insight @Mesa Verde I think the main thing I have to figure out is if I "can source a constant supply of sheepskin at a consistent price and produce enough in a day" from there on I can look deeper at the next steps.

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Just to echo the sentiments of @Material Boy and @Mesa Verde what you have is a "comparative advantage" if you can produce it at a lower cost than anyone else. Now having a comparative advantage is not that you are the best at something in your case it means that you have less overheads and can produce at a lower cost per unit. Does this mean you have a viable business? No. As others have pointed out unless you can manufacture enough in a day it won't be sustainable. Your competitors will have an "absolute advantage" in that they can produce a larger quantity than you in the same amount of time, the more volume they do, the more they benefit from economies of scale making it viable for them.

To find your competitive advantage you need to find what is the "opportunity cost" of your competitors, an opportunity cost is the loss of other alternatives when one alternative is chosen. When your competitors decided to manufacture as many pairs of slippers that they could in a day they "gave up" on producing more specialised, customised slippers or slippers aimed at a particular health issue. They gave up producing shoes or boots with the same comfort of slippers as it will take too long to make. That is probably where you will find your sweet spot.

Look here, someone on Gumtree selling sheepskin and wool boots for R1200 (wool instep) and R1400 (leather instep), thick soles according to the advert, you can go shopping with these. Ugg moccasin's cost R2000. A starting out producing genuine sheepskin boots that retails for "much lower" than competitors and making only R100 profit per pair will be a slog especially if you a one man business.

sheepskinboots.jpg.52f0bc7b0d6399cd50482e79f61349e1.jpg

uggmossasin.jpg.486533320f21dfd82dbe4b1434662522.jpg

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37 minutes ago, Mesa Verde said:

@Boy I see you placed an ad looking for sheepskin, try placing one in the international trade section as well to put out feelers in the rest of Africa maybe there are sellers with SA connections. Try Lesotho they had some wool drama last year.  

Also stipulate your preference (e.g. merino) to maintain consistency in your product.


dirt.jpg.d80b5ba0cbb09ca9f6b07fd0b90a8501.jpgDirt for my shrew :)

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