Polo Puzzle: What Goes Into a $155 Price Tag?

I used to work in a clothing store and the markups on clothing, especially more fashionable items, never ceases to amaze me. Unfortunately, this article didn't really get into most of it. They explained why the shirt cost $29 to make as opposed to $1-2 for a cheap shirt from China.<p>What I find fascinating, is how we get from $29 to $155 at the store, or $2 to $30 for a cheaper shirt. The vast majority of the cost of a clothing item comes from putting it on a shelf in a well-staffed store.<p>I think this highlights why we have made a shift from a manufacturing economy to a service economy in the US. The kid who waits on you in an American mall costs much more on a per shirt basis to employ than the arguably more skilled seamstress, even when the seamstress is in the US.

The hardest thing is logistics: delivering product orders on time as a small brand which outsources manufacturing is really hard. Big retailers, like Nordstrom or Macy's will give you a window of a week (maximum) and will not accept your orders if it goes over. Conversely, they also have set packaging and other compliance related requirements which will increase the cost / item. In particular they have these ERP systems that small brands cannot afford. Smaller brands end up outsourcing being plugged into their ERP systems as well which will also increase the cost of the article.

As an entrepreneur, I'm wondering how the MacLanes got an article written about them like this in the WSJ. It's a major, major PR boon for their clothing business.<p>Are there any journalists or PR folk here who can comment? Or entrepreneurs who have had coverage like this for your own company(s)? How can other founders accomplish something similar?

What I found most incredible was that the shirt cost them just under $30 to produce, but would ultimately sell for $155 and this was considered a standard markup.

I have a few Polo (Ralph Lauren) shirts that i wear that I bought in the very late 90s. I'm not saying that the 300+% markup is valid, but I've worn a shirt in three different decades.

There have been quite a few of these "price debunking" articles in the past year, as if we all finally figured out that we're getting screwed. Software's markup is similarly ludicrous, since there's very little variable cost to serving up extra copies--even with cloud-based systems.<p>Another one on $550 chinos: <a href="http://www.nytimes.com/2010/04/29/fashion/29ROW.html" rel="nofollow">http://www.nytimes.com/2010/04/29/fashion/29ROW.html</a><p>Also, anyone else find this "killer app" notion in clothing to be funny? It's like Bonobos claiming they've solved the "saggy butt problem" with a "curved waistband." Genius!

It is for this reason (2.x markups) that I am working on an ecommerce startup idea. I like the idea of selling actual product, making actual revenue and knowing what your margins will be.<p>While manufacturing your own clothing is much more involved and logistically complicated, its relatively easier to become an online retailer and buy clothing at wholesale from existing brands and sell that. That also helps me mitigate my risks (my domain knowledge is technology and not apparel manufacturing/sourcing).<p>On a side note, I am currently looking for co-founders. I have a technical background and have almost completed coding the site. If you are interested, my email is in the profile

So they've described how American Apparel makes their $45 polo shirts. But they haven't described how $30 of materials becomes worth $155.

Solving the "direct from wholesaler" for American made goods is a monster opportunity.<p>$65 is a lot more reasonable that $155 and I'd buy twice as many at that price ;)<p>Etsy comes close but a startup that focused on a niche and curating quality could be a fun and profitable challenge.

So these will popup online for about $85 to $95. No matter how good the service is I doubt going forward you will get a lot of volume at that type of retail price. Retail cosmetics is really feeling this as people now refuse to pay what is probably a similar markup.

I'm curious how much something of exactly that quality made in China in quantity ~50k/yr would cost. $10 per unit delivered in NYC?