Starting your own Bags and Accessories business in Australia can be both exciting and daunting. With a rich market for fashion and accessories, there's no better time to dive into this industry. I've spent years in the business startup realm, focusing on bags, luggage, and accessories manufacturing, and I've seen firsthand what works and what doesn't.
In this article, I'll share my essential steps to kickstart your Bags and Accessories business, from market research to design and production. Whether you're a budding entrepreneur or a seasoned professional looking to expand, my goal is to provide you with some basic insights and confidence to succeed in this competitive market. Let's turn your passion for Bags and Accessories into a thriving business.
Note this article refers to Bags and Accessories but it equally applies to Messenger Bags, Duffel Bags, Backpack as well as industry sectors such as outdoor bags, travel bags, fashion bags etc.
SELECTING A NICHE
I recommend carefully choosing a niche market to enter when you start. This makes it easier to target a specific audience with more effective and efficient marketing. The more niche you are, the more specific you will be with solving the problems of these users and the more effective your business will be straight out of the gate. Examples of niche audiences are:
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Bags for Adventure Motorcycle Riders
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School bags for children with medical needs
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Tool bags for female tradies
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Kit duffels for Fire and Rescue Workers
You can see that instead of just designing a bag that holds general things, applicable to a broad spectrum of the community, each of these product collections would target specific pain points and desires of their intended audience. This makes it easier for you to scope your business offerings to a smaller audience. Doesn’t that mean I'll have less chances to make money? No. It means that your business can speak directly to the wants and needs of a group of consumers who are passionate about the exact thing you are offering. It means you can zero your marketing and waste less time and money.
MARKET RESEARCH
Market research provides critical insights into niche selection. Identify the needs of a small, easy-to-find customer base to ensure your business solves relevant problems. .
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Customer Preferences: Analyze what potential customers value in the design of gear for their niche. Are you situated to solve those problems or do you have an innovative approach that your niche audience hasn't considered yet?
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Competitor Analysis: Who are your competitors in Australia or overseas. Note the kinds of products they have on offer. Try to identify their most popular styles. Note how they communicate to their audience and on what channels. Immitate successful brands and improve on their success.
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Trends: Monitor trends such as sustainable materials or functional designs. For example, there's growing demand for canvas backpacks and affordable travel luggage.
By focusing on specifics during market research, you'll narrow down your niche and ensure your handbag business stands out.
STICK TO WHAT YOU KNOW
This is not a hard and fast rule but I encourage it. Stick to industies, activities and groups that you know and understand. This makes solving the problems of your niche audience easier because you already understand them. Attempting to build a business that operates in an area you are unfamiliar with is going to be an uphill battle you are best sparing yourself from.
ESTABLISH A BUSINESS PLAN
A business plan of some sort is highly advisable to starting a Bags and Accessories business. It lays out your roadmap, helping in decision-making and securing investments. A business plan doesn’t need to overly complicated to begin with but I highly encourage you to spend a few hours writing covering off some crucial considerations and then adding to that plan as you progress.
A BUSINESS OR A BRAND?
Decide if you want to create just a business or build a recognizable brand. A business focuses on selling products, while a brand aims to establish a strong identity that attracts loyal customers into the future.
If you decide to build a brand, concentrate on highlighting unique selling points, especially within the niche markets we’ve previously discussed. A strong brand positions itself as an authority in its specific area or movement, inspiring its audience to connect with and support its vision. An example of a brand is Jack Stillman.
Simply going down the "business" route means you are going to focus on multiple related products that immediately appeal to your intended consumer base. An example of a Bags and Accessories business that is not necessarily a brand is Rushfaster. This is a highly successful business that sells other brands gear but speacialises in Carry Bags and Gear Online.
IDENTIFY YOUR MARKETS
Determine where and how you'll sell your bag and accessory products. Decide whether to sell online, wholesale, or through retail stores. Each option has advantages. Selling online allows you to reach a broad audience without geographical limitations. Platforms like Etsy, Shopify, and your own website can serve as excellent starting points. When you sell directly to customers (B2C) you collect more of the revenue but you need to factor in overheads like marketing, website fees and more.
Wholesale and bulk sales to retailers, such as luggage wholesale or handbag wholesalers, can offer consistent revenue streams without the needs for you to champion your own marketing. However, you must have sufficient margins in your manufactured products in order this to become a viable business model.
If you factor all of these consideration in early, you can potentially create a business that utilises both B2C and B2B revenue streams.
DETERMINE YOUR FINANCIAL GOALS
Set clear financial objectives. Is this going to be a part-time business or your full-time gig? If the latter, how much income are you going to need personally in order to meet your living expenses. You'll need to factor in your earnings plus all of the costs associate with running your business.
Outline short-term and long-term goals, considering initial startup costs, production costs, marketing expenses, and expected revenues. Develop a budget that covers all these areas.
Once it's clearer what you will need to turn over each week, establish targets for sales, profit margins, and return on investment. For instance, calculate how many canvas backpacks costing $X each you'll need to sell for $Y each to cover costs such as production, shipping, GST and marketing ($Z) in order to make enough profit to cover your salary. This is where things can get complicated and you are better off talking to an expert to really uncover the hidden expenses.
I say this to a lot of people starting out in business: If you are going to leave your $100k per year job to start your own business, you should aim to turn over enough to cover your previous salary or trade for some other kinds of benefits such as shorter working hours. Running a business can be a liberating experience but it puts the onus of putting money into your personal back account to you.
CREATE OR FIND YOUR PRODUCT DESIGNS
Whether you create your own designs, find a designer, or choose white-label products, each option has its advantages and disadvantages.
DESIGN YOURSELF
Designing your own bags allows you to bring your unique vision to life. Focus on incorporating elements that reflect your niche audience. In these scenarios the designer chooses most aspects of the final design from the materials to the branding. If you are not a professional designer you need to understand what is required when it comes to the production process. You must be able to provide details drawings, measurements, materials lists and other crucial details outlined in a Tech Pack. Not having this makes its extremely difficult and hit and miss when it comes to quoting let along producing your designs.
FIND A DESIGNER
Even if you lack design skills, a professional can work with you to create the product you want. Look for designers experienced in creating the kinds of bags you are making. Leather ladies handbag designers are not necessarily specialists in outdoor backpacks or tool bags. A great place to find a designer is the website Upwork. On this site, most designers show a portfolio of their work and even specify what kinds of bags they specialise in. When selecting a designer, review their portfolio and seek references. Expect costs anywhere between $500 and $4,000 per design depending on the complexity of the bag and experience and education of the designer. If you want assistance designing your bag or accessory products, contact us.
WHITE-LABELING
White-labeling offers a quick entry into the market by partnering with a private label bag manufacturer. Choose a bag manufacturing company that provides high-quality products suitable for your brand. This option allows you to focus on marketing and sales while leveraging existing expertise in bag manufacturing. White-labeling can provide custom branding opportunities without the need for extensive design and production efforts.
MANUFACTURING IN AUSTRALIA OR OVERSEAS
Choosing where to manufacture your handbags significantly impacts your brand's appeal, quality, and costs. Here are my thoughts on the question of manufacturing in Australia and overseas.
MANUFACTURING IN AUSTRALIA
Being able to find a manufacturer in Australia is unlikely unless you are planning to produce very basic bags made with locally available outdoor canvas. The truth is that Australia does not have a prolific apparel and accessories manufacturing sector. I won't go so far as to say it's impossible but at the time of writing, I can attest to the fact that most companies in Australia offering manufacturing are merely interfaces between you and an overseas factory. I am not aware of any companies operating in Australia that offer competitive, stylish, technical bag manufacturing on a level found in China, Vietnam or India.
Australia has a wonderfully high quality of living standard supported by high wages and industrial laws. As such labour is expensive. It's also true that the majority of apparel and accessories sold in Australia are imported (95%) and this is a signal that local operations are not viable. Compounded by this is the fact that access to materials, machinery and skilled machinists is extremely low or nonexistent.
MANUFACTURING OVERSEAS
Manufacturing overseas typically lowers production costs, enabling higher profit margins or more competitive pricing. Private label bag manufacturers and large-scale factories offer diverse options for entrepreneurs.
Cost Efficiency: One primary benefit is the reduced cost of labor and materials. Countries like China and Vietnam have well-established Bag Manufacturing industries, providing economies of scale.
Varied Options: Overseas manufacturers, particularly those offering Private Label MGF, can produce a wide range of products from canvas bags to backpacks. This is generally due to factors such as diversified skill and technical knowhow as well as greater access to raw materials and machine infrastructure.
Scalability: Overseas factories can handle larger orders, which is beneficial when scaling your business. If you plan to target international markets, manufacturing abroad facilitates this expansion.
Challenges: However, there are notable challenges, including poor communication, longer lead times and potential quality control issues. Establishing a robust process for regular inspections and clear communication is essential to mitigate these risks.
Shipping and Tariffs: Increased shipping costs and tariffs rarely offset the savings from lower manufacturing costs. Australia has a free-trade agreement with countries like Vietnam making this a minor concern in my opinion. However, it's important to factor these additional expenses into your pricing and logistics plans.
STILLMAN MANUFACTURING
We offer all of the benefits of manufacturing overseas with the benefits of an Australia Bag Manufacturer. However, we don't pass your business on to a local factory, we own our factory and employ our own workers. Our operation is ethically managed and fully compliant with local industrial laws. We also act directly on your behalf to monitor quality from design to delivery to your door.
By weighing the pros and cons of manufacturing in Australia versus overseas, you can make an informed decision that aligns with your business goals and brand values.
PRICING
Establishing the right pricing strategy is critical for your bag and accessories business. Here's a very basic way to calculate costs and determine margins.
HOW MUCH DOES IT COST TO MAKE A CANVAS BAG?
Manufacturing costs for bags and accessories depend on several elements, primarily materials, labor and shipping. Typically, creating a bag ranges from AU$30 to AU$100 per unit depending on materials and complexity. Here are some cost components to consider:
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Materials: High-quality leather or sustainable materials can increase costs. A final bag product is literally the sum of its parts. If you choose quality materials and components I assure you your product will last longer and represent better longterm value for your customers - it will also cost you more to make.
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Labor: The onus is on you to engage a manufacturer that maintains high labor and environmental standards. Supporting bad actors who exploit for profit in poor communities is neither sustainable nor ethical.
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Production Volume: Larger orders can reduce per-unit costs. Smaller orders will incur a higher unit cost but reduce your exposure to ineffective inventory.
WHAT SHOULD YOUR MARGINS BE?
For bags and accessories manufacturered specifically for your own brand, setting appropriate profit margins ensures sustainability and growth. For bag businesses, I recommend aiming for an 80% retail profit margin. This way you can explore numerous revenue streams such as B2C and B2B while still allowing for a decent profit. Here’s how to calculate it:
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Manufacturing Cost: Total the expenses for materials, labor, and overheads. For example, if it costs AU$50 to make a bag, start there.
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Retail Price: Add desired margin (e.g., AU$50 bag + 80% margin) results in a retail price of AU$250.
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Wholesale Price: Double the retail price for the wholesale market; AU$250 retail price translates to a AU$125 wholesale retail price.
Not all business will take this approach.
MARKETING CONSIDERSATIONS
I am a strong believer in determining how how you will market your business before you start it. If you uncover restrictions or roadblocks to reaching your desired customers at a scale that will grow your business at sustainable levels. Stop and rethink.
ESTABLISH A WEBSITE
A website acts as the digital storefront for a handbag business. It needs to be visually appealing and user-friendly. Ensure the site is responsive on mobile as this is where the majority of your customers will browse your store. Integrate an easy-to-navigate menu, high-quality images, and detailed descriptions of each product.
Optimize the website for search engines by incorporating relevant keywords like "Australian Designed Handbags" and "Canvas bags Australia." Create dedicated pages for each product category such as handbags, backpacks, luggage, and totes. Add a blog section to share content related to fashion trends, sustainability, and bag care tips. Use a secure payment gateway to build customer trust.
Incorporate customer reviews and testimonials. This provides social proof and improves conversion rates. If selling bespoke designs, offer a custom order form on the site. Enhance customer experience by providing multiple shipping options and easy returns. Consider an FAQ section to answer common questions about your products and services.
PROMOTE YOUR BRAND ON SOCIAL MEDIA
Social media offers valuable platforms for reaching potential customers. For a bags and accessories business, focus on visual-centric networks like Instagram, Pinterest, and Facebook. Regularly share high-quality images and videos showcasing your products, including new collections and behind-the-scenes looks at the bag manufacturing process.
Use hashtags like #AustralianDesigned #HeritageStyleBags #OutdoorCanvasBags to increase visibility. Engage with your audience by responding to comments and messages promptly. Run targeted ads to reach specific demographics interested in handmade and custom bags. Collaborate with influencers who resonate with your brand's ethos.
Create engaging content like styling tips, customer testimonials, and unboxing videos. Host giveaways to boost organic reach and follower count. Use Instagram Stories and Facebook Live to launch new products or share real-time updates. Incorporate social proof by sharing user-generated content. This boosts credibility and fosters community.
Analyze performance metrics to understand what's working. Adjust strategies based on insights to maximize engagement and ROI.
AD BUYING
You must be prepared to pay for marketing on platforms like Facebook, Instagram, Google, TikTok and so on. This is an essential element of your potential success and it is unavoidable. Our brand Jack Stillman makes over $2 Million per year and spends between $1k - 2k per day in advertising costs across Facebook, Instagram, Google and more.
EMAIL LISTS
I can’t emphasise this one enough. Growing an email list of potential and former customers is crucial. As this database grows, so will your profits. Keep regular contact with your audience through weekly emails and automated flows.
CUSTOMER CARE
Customer care should be a priority when running any products based business in my experience. Ensuring exceptional service will lead to repeat purchases and positive word-of-mouth.
ESTABLISH CLEAR COMMUNICATION
Provide multiple contact options. Email, phone, and live chat ensure customers can reach out easily. Response times should be fast, preferably within 24 hours. Consistency in communication builds trust.
IMPLEMENT A RETURN POLICY
Create a straightforward return policy. Outline conditions, time frames, and the process for returns. Clearly stating this on your website builds customer confidence. For example, a 30-day return policy with free returns will appeal to Australians.
ENSURE PRODUCT QUALITY
High-quality products reduce customer complaints. Partner with a reputable company like Stillman Manufacturing. Regular quality checks of manufacturing processes and product design ensures that production run improves on the one before and so on.
LEVERAGE FEEDBACK
Solicit and analyze customer feedback. Use surveys and reviews to gather insights. Implementing suggestions shows customers that their opinions matter. We must listen to customers in order to know what is working and what it hurting.
IS A BAGS AND ACCESSORIES BUSINESS PROFITABLE?
I can assure you that running a bag business can be profitable, especially if it aligns with current market trends and customer demands in a niche tribe. I’ve found that Australian-centric crossbody bags and luggage have high demand especially when they lean heavily towards a particular community or need. According to IBISWorld, Australia's fashion accessories market, including bags, is valued at approximately AUD 3 billion, indicating substantial opportunities for new entrepreneurs like you.
FINAL WORDS
Starting your own handbag business in Australia is a thrilling venture filled with opportunities. With the right approach to market research, design, and production, you can carve out a niche that resonates with local tastes and values. Emphasizing sustainability and functionality in your designs will help you stand out in a competitive market.
Remember to build a solid business plan and choose your manufacturing options wisely. Pricing your products correctly and establishing strong sales channels are crucial for financial success. Effective marketing and exceptional customer care will drive brand loyalty and long-term growth.
This article can't give you all of the information you need to be a success in this industry but by partnering with the Stillman family, you can access more from our handbook for proven success. Reach out to us today for a free 30 minute consultation to get your successful handbag business underway.
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