Essay About Retail Stores And Large Volume Of Its T-Shirts

Threadless Essay
THREADLESSWhy retailer’s offer not to be accepted?When Threadless accepts retailer’s offer, in order to carry large volume of its T-shirts in the retail stores, more employees need to be hired, heavy investments need to be made in printing equipment, a bigger warehouse may be required, more packaging and shipping expenses in order to meet the retailer’s guidelines and to avoid fines, should be prepared to handle risk of huge returns.If sold in retail stores, Threadless will be seen just like any other T-shirt; buyers in retail store may not appreciate and give much attention to T-shirt’s design as they do not know the story behind every design unlike online buyers who interact with designers, vote for the designs and blogs about the submitted designs.Threadless company’s brand image might get damaged if designers get to feel that by paying meagre $2000 for their designs, the company is able to make huge profits by joining hands with retail store.Threadless should continue the business the same way becauseOver the years as the founders say, it has grown organically because of its unique community based business model; rather than companies coming up with product ideas and pushing them to customers, Threadless involves customers in creating and validating new product ideas.Every week it has been successful in coming up with new designs and has grown considerably with no advertising, no sales force and no professional designers.It has been able to achieve sky rocketing growth(able to increase revenue from $1 million in 2003 to $23 million in 2007- Exhibit-2) by selling this way and customers also get higher satisfaction buying this way.Their operating margin is 28%(approx. calculated from the following table) as compared to other firms in casual designer retail spaceThe following is calculation of profit (approximate) of ThreadlessRevenue (a)23,000,000Cost involved:(i) Cost of producing T-shirts         (7×1,500,000)10,500,000(ii) Shipping clerk salary         (15×32,415)486,225(iii) Employee salary         (15×68,528)1,027,920(iv) Warehouse rent      (5.30×25,000×12)1,590,000(v)  Internet      (75,000×12)900,000(vi) Rewards for designers       (802×2500)2,005,000 Total cost (b)16,509,145Profit– (b)6,490,855Source: