On today’s Success Stories podcast, we’ll take a hard look at retail merchandising with industry veteran Seth Anderson with Westside Merchandising. You might not know their name, but you’ve seen their work in virtually every mall or concert venue in the United States.
With over 160,000 square feet of combined production space in Mexico and the US, Westside cranks out over one million monthly shirts for their clients.
Seth will share his journey into the business of licensed products. Buckle up; it’s going to be a great episode today!
On today’s Success Stories podcast, we’ll take a hard look at retail merchandising with industry veteran Seth Anderson with Westside Merchandising. You might not know their name, but you’ve seen their work in virtually every mall or concert venue in the United States.
With over 160,000 square feet of combined production space in Mexico and the US, Westside cranks out over one million monthly shirts for their clients.
Seth will share his journey into the business of licensed products. Buckle up; it’s going to be a great episode today!
Marshall Atkinson
Welcome to Success Stories brought to you by S&S activewear. I'm your host, Marshall Atkinson. And this is the podcast that focuses on what's working so you can have success too. On today's Success Stories podcast, we'll take a hard look at retail merchandising. With industry veteran Seth Anderson with West Side merchandising. You might not know their name, but you've seen their work in virtually every mall or concert venue in the United States. With over 160,000 square feet of combined production space in Mexico and the US, West Side cranks out over a million monthly shirts for their clients, Seth will share his journey into the business of licensed products. So buckle up. It's going to be a great episode today. Seth, welcome to the Success Stories podcast.
Seth Anderson
Thank you for having me. Wonderful to be here. Mr. Marshall?
Marshall Atkinson
Yeah, well, I can't wait. And I think this is gonna be a really interesting episode today. Because I think a lot of people wonder how those guys do that. And I think we're gonna, we're gonna peel the label or behind the curtain, or whatever you want to say about it, I think it's gonna be a lot of fun, you're ready to get going.
Seth Anderson
Hopefully they like what they hear. Good.
Marshall Atkinson
So Seth, let's say we have an idea for a licensed cartoon character that you guys have the license for, and you're gonna put it in the mall, you've got 10 ideas you're submitting to the store, right? Walk us through how you guys come up with the ideas, how you get the production samples done, and ultimately, how those sell through into the stores.
Seth Anderson
Sure, once you make your submission of your initial artwork to the buyer, at any given retailer, they pick what resonates with them what they want to move forward with. At that point, you do pre production sample, the pre production sample gets printed, most of the time a photograph is taken of it, but some retailers requested going, you know, shipped out so they have it in their hands. Once they have that sample 90% of the time, they make some changes and they want to see a color and a different spot or sizing differences. Once they approve that you get a test order. That's what the buyer right? That's what the buyer and very, very, very rarely, if ever, do they ever send an order, you know, full all store going to every location of Urban Outfitters. So they'll place a test, that test usually goes to their E comm locations and a few selected regional test sites. Within about six weeks, you'll get a report back of how that sold through. And if you hear nothing, you'll never see an order. They don't call to tell you that it didn't perform well. They call it to tell you that they're going to place a nother test, which is a little bit more than that first test and they're going to try it in some other regions or they're going to go all store all store now you're jumping from 600 pieces to 6000 or 7000 pieces. Every time you go from sampling to a full scale all national order. They want top of production samples so every time you produce it from the first time to the last time you send 346 samples whatever the retailer requires to their compliancy departments or to their their retail department where they scrutinize those blanks and again we'll make changes in a lot of cases and as a production house. We think that a lot of the retailers actually come up with phantom reasons to delay the process or to have to resample because they want you to be a couple of days late at the end so they can charge you back for a quarter on on all invoices. The retailers are all having a tough time making money right now and chargebacks are a profit center for retailers so they're looking for any mistake in the world. You put the sticker in the wrong place on the bag. You didn't fill out your bill of lading correctly. You didn't put your polybag you know fold the shirt perfectly for the polybag you didn't put a sticker in the right place. Anything that like that that happens and God forbid you actually printed a color incorrectly. You printed color incorrectly it's going to cost you probably $1 Discount a t-shirt not 10 cents or 20 cent charge back some of the other ones. So you know when you do get an order you do get a shipping guide from each retailer and those shipping I really lay out every aspect you could possibly think of from the height of a pallet, the width of a pallet, where the shipping labels are placed on each pallet to where the cargo has to be locked and sealed and numbered, they won't take it on certain days, you can't deliver it without scheduling the shipment. There's a lot of logistical tasks that again, if you do incorrectly, you're gonna get chargeback or actually open yourself up to have your order cancelled. And they love to cancel orders because they cancel it knowing they're going to reopen it and take it. But by canceling it, they open up the negotiations for how much of a discount you're going to take for them to give that open that order back up to you. So how you avoid those things is you do things quickly, you do things correctly, you know, you dot your i's and cross your t's. And you know, but this is a very, very complicated process that you really do need to have experts in each part of your business or work with companies like my screenprint facility, we only really ship to retail and tour. So we know how to deal with all the different retailers standards. But if a screen printer hadn't done that, it'd be very difficult for them to maybe they could ship Hot Topic, maybe they could ship zoomies, but they'd really have to learn each individual thing. You know. So we at our factory, we have shipping clerks that only handle one or two retailers per clerk. And then we have another guy that handles the other retailers because there's so many very specific things that each retailer requires that if you don't have someone that knows what they're doing, you're gonna make a fatal mistake.
Marshall Atkinson
It sounds like actually just printing the shirt is the easiest part of the whole thing.
Seth Anderson
Very much. So that is definitely the easiest part of the job is the actual print. And one of the hardest license ORS used to be Looney Tunes. Because Tweety Bird yellow is different than Tony the Tiger is yellow. And their yellow is different than the next characters. And they always had to be exact right on spot on. So every printer complained about you know, doing a 14 color design for Warner Brothers, you'd need to make it a 22 color design and have to use half tones and all kinds of stuff. Well, the Japanese licensers With animais take it to a whole nother level, the colors, they want to have different versions of you know, fire engine red, and it's really crazy. So you really have to get into, you know, a very, very specific place where when we mix colors for the licensers in Japan, we literally keep the inks and don't remix it for the next job. And now because it was so hard to get there, you know that we literally will burn a whole bucket of ink and just keep exactly
Marshall Atkinson
so were you using a color spectrometer to dial in your colors when you're measuring color.
Seth Anderson
We Yeah, we are in that's actually above my listening level. I have good partners that do all that stuff. So I'm the guy that talks at the front of the line and lets the guys behind him
Marshall Atkinson
do all the work. Okay, great. Let's just say you've got everything dialed in, right? What is the production time with this stuff? How long does it take to go through all the machinations until shirts you're actually in stores.
Seth Anderson
We are living in the world of Fash fashion my friend. Nobody wants to buy from China anymore. They want to order smaller minimums they want quicker turn times because if something's working at retail right now, they want it back in there reloaded before people change their mind on that they like it again. So the retail used to be six months out and stores like the gap and Old Navy still do it that old school way. But the majority of the malls in this country for a regular print white, black, navy, red, standard stock colored T body color shirts, orders like that are you've got a week to 10 days to sample it. And you've got three weeks to produce it. So you're looking at four weeks from purchase order to being shipped to the stores you're looking at four weeks. And if it's a tie dye or a mineral wash or some kind of wash treatment shirt, you're adding three weeks to that. So you're probably at you know, six to eight weeks on a wash program from the time it gets ordered to being in the store and on a regular stock color t shirt. You're Looking at three to five weeks.
Marshall Atkinson
Okay, that's some hustle. Yeah.
Seth Anderson
And then of course, there's some exceptions that forever 21 is ordering about four months in advance, but they've got two months worth of BS on the front end, that always gets stretched into two months and three weeks. So by the time they say yes, go ahead and print it. And these are the approved price tickets that you can put on it, you're really left with about no joke, four to five days to print 7000 pieces, put price tickets in it, stick it in a polybag palletize it perfectly, get it across the border into San Diego and up into Los Angeles, I've got to do all that in five days. And I had three and a half months in the onset. So that's the biggest problem is that the approvals in retail are, you know, so hard to come by, you know, Led Zeppelin, I think every surviving member has to approve something and all three of their managers, you know, so you're sending actual shirts to the license e to the license or to the sublicense, or I mean, there's, there's so many people that have to check off on something on on some of these licenses, that you really have to know that going in and ask the retailer for an extra month, if if you're going to have a slow like like with animais, you've got to put an extra six weeks on the approval process just to deal with Japan, because they require physical samples to be shipped to them. They will not look at a picture or video and say yes to anything they wanted in their hands in Japan.
Marshall Atkinson
Okay, so it seems like securing the deal for licensed apparel is a process unlike any other. So this is where you come in here. You're the master. So how is that business built and transacted like? So let's say that you've got a new license that you want to pitch, right? So how do you orchestrate that and kind of line that up? Because there's opportunities abound out there, right? And we're always looking for a new deal. So how does that work? My advice
Seth Anderson
to a screen printer that's out there looking to get into retail is, you know, first and foremost, every licensor and retailer is going to require that you have a secure facility. So first and foremost, you have to have cameras on every entrance and exit in the facility. Because you know, you're protecting intellectual property at its final frontier of protection. So you know, these retailers and brands are all in the same position of caring about, you know, no bootlegs going out the back door, there's no funny business going on, every one of them is going to you know, Disney has a complete vetting process that they have their own certification process. And there's more questions in the application about how you do business, you pay overtime, social compliancy. If you have doing some Ico things, those are great. There'll be areas to mention it but they want to know that you pay for overtime. The questionnaires for becoming a vendor for these are very invasive. Most of these people think they're buying a house not trying to print for a retailer with a lot of the information that you've got to share. You've got to be bonded, you know, you have to deal with your inks or ink suppliers have to be current with all their certifications, because the retailers are going to ask for all that stuff. You know, you have to have a licensing letter showing that you have the right to print Batman for Warner Brothers, or for whoever the licensee is, you know, you can't just take it at face value that some guy calls you up and says, Hey, I need to print some Batman shirts. But you've got to make sure that that guy has a valid license. And because again, it's the printers but that's on the line. If you're printing even a contract, it's out of date, you know, somebody could have had an agreement to print Batman, and then it expired and they're trying to do it another 100,000 at the end and their regular guy wouldn't do it. So that's why they called the new guy.
Marshall Atkinson
Do you call him up and say, Hey, I'm just checking that this so and so is the license, Batman? Yeah,
Seth Anderson
absolutely. Because we know, you know, and a lot of times we'll take you know, we'll just ask for a copy of the contract, you know, and we'll just take that at face value. But if I had any reason to doubt that the contract wasn't, you know, absolutely we would reach out to either directly to the source, you know, or again, you know, through my attorney and find out
Marshall Atkinson
like what you hear so far, be sure Just subscribe so you can get the latest from Success Stories. And now here's Devin free with the S&S Spotlight.
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Marshall Atkinson
What are some tips for building a custom merchandise line maybe not even one that's licensed just something that sells locally or something. So kind of give us some inspiration ideas with just dressing fabric or colors to use or colorways. Or just I've always said that, you know, a really great looking design that sells well retail, it's half half of it is the shirt, the other half is the design. And you can't skimp on either half, right? So give me some ideas about how that should work. Because I'm sure lots of people out there got a really great idea that they know is going to kill, right? What should they be thinking about?
Seth Anderson
First and foremost, keep it simple. You need to spend a lot of time and in other people's stores, looking at other people's product, you know, get away from looking at your product for a week and just look at other people's stuff, see what other people are doing. Look at what's in people's windows, you know, because most retailers will put their best foot forward right in the window or right on the end caps. You know, those are not mistakes, you know, they're putting things you know by the cash register for a purpose. So go into a store and look how the stores are merchandising things, you know that imitation is the highest form of flattery. And, you know, I hate to break it to your fans, but you think you have a groundbreaking print idea. It's been done before. It's always they've all been done before. But everybody can make fresh out of old and new out of old. And apparel goes in cycles. It's almost every three years things become cool again, and then start over. So you really have to study trends, you have to see what other people are doing. Almost every retailer goes out to see Urban Outfitters Herald Square store in New York City, because that's their flagship store that they will do launches that are, you know, ahead of even the stuff that they're showing in their chain. So a Nordstroms buyer will go to that specific Urban Outfitters store because that's where they know they're putting their new stuff. So again, finding out those things by talking to people. And you know, if anyone's listening to this, or people that are listening to this show right now, need to know that okay, if I'm in New York City, let me go into the Herald's urban and, and really study the layout of the place. Let me see how many shirts they put in this color opposed to that color. A couple years ago, it was black shirts, black shirts, and more black shirts. And now you know, colors are really starting to be more of the merchandising, you know, picture. Now it's you know, what colors? Well, you know, this year, it looks like it's muted colors. And again, you know, the pigment dyes are really, really looking hot this year, you know, were last year as reactive dyes, and they're more solid colors and mineral washes are really, you know, the wash trend hasn't really slowed down, you know, the, I think that our dye house is slower than it has been normally. But that's because there's just an overall downturn in retail right now. It's related to the war and Russia and the economy and interest rates and everything else. And if people are paying more for eggs, they're probably buying less T shirts. So traditionally, T shirts are a little more immune to economic climates, especially the license industry, because, you know, it's a $20 shirts and impulse buy. But the last year last six months been a real struggle. So how we got into licensing ourselves was we weren't making enough money on just traditional screen printing and traditional contract washers, we first started doing more full package stuff by supplying the t shirt and then you know, making a little bit more margin on the blank. And, you know, that wasn't really enough to fill the machine. So again, now we're going out and getting licenses of our own which, you know, we've got to pay royalties and lawyers and all that other stuff. So it's got a whole other set of risks and investments but you know, There's a bigger payout at the end, it's very easy to get business, it's really hard to keep it, you know. So again, that's getting your facility in order prior to, you know, really, again, this securing all exit points, you know, having a surveillance, surveillance is a big thing in the retail industry, they want to know that you run a secure facility, they want to know that you've, you know, do counts at the end of every shift. And we have a camera in Mexico of at end of each dryer that we've actually used for counts when things are off, we have cameras in our packing department. So again, if we do make a mistake, we can go back and see where the mistake was, if there was a mistake made at all, we've had retailers say that there was three pieces of tape on something and that's why they charge us back a dime. And I showed video proof that we put two pieces of tape on just like we were supposed to, except for 100 pieces of triple extra large because they were puckering. And then they charged us back a quarter times 100 Not times 11,000, which was all the other pieces. So you have to really be organized. Because you're going to be put to task by the retailer's, it really is a business model that that they charge people back, it is a business model, they cancel orders,
Marshall Atkinson
if you know that going in, Is there money in there to begin with to charge the last kind of like, I know from holiday shopping, you go somewhere, it's 50% off, but that's the price he wanted to sell it at anyway, right. So
Seth Anderson
it's never enough. Whatever we put in for damages, it's never enough. That's why producing consistently, you know, to really make sure you have your approval set. So you don't ever have a 3000 piece misprint, and you didn't put your black print, you know, on the wrong body color, if you got three different colorways that you're printing, and somebody got those three colorways confused, there is not enough margin to cover a complete chargeback. Complete Cancellation, you have room in there for small mistakes. And but if you make a big mistake, you printed that order for free, you know, and there's places you can close out mistakes, but usually that market is $1.75 Well, the shirt cost you $2 And the printing cost you 75 cents. So the cost you 275 to make and you can only sell it for 75 cents or $1 Do the math, you're losing a buck 50 assure, but again, last year, you know, at a we probably printed 12 million impressions, we maybe had 0.5% in damages and rejects which is below industry standards, I think you know a lot and wash 3% is a good tolerance for Fallout or losses with printing, you know, 1%. But again, you know, we don't have more than 1% built into it, there's just at this level of printing, everyone knows what your print costs are, you know, there's no secrets to really what the costs are and what you should be charging, and you can't go in there and justify that you're a better printer and you're deserving of 20 cents more than what the other 99% of the printers will print for. So, you know, again, my advice to people would be to go and find yourself some printers that are printing for retail talk to them about what kind of prices they're getting, we actually got into this business by work facilitating that as a contractor for somebody that was doing it. And we kind of had our handheld by, you know, the bigger company seven years ago that that knew more than we did and we just paid attention and followed instructions to be a good support player for them. So we worked as a contractor for a year and a half before you know we really had any of our direct customers that were sending us you know the shipping logs and the labeling is very complicated a lot of cases the vendor actually has to order the price tickets and the price tickets you have to you know coordinate with the retailer the barcode numbers and and most retailers do a specific trim companies trims are things like price tickets and barcodes and and hang tags and things like that. So again, the retailer's actually make money on the price tickets because you got to pay the price ticket people directly and they know that the price ticket costs seven cents so they'll let you charge them five cents for the price to the retailer knows you're losing two cents on the price ticket but You've got to put that two cents somewhere else in your cost sheet. So, again, it's very complicated, but at the same time, it's very rewarding because the volume is a lot larger than the beat, you're gonna find printing for local played businesses and restaurants and employees and staff, you know, 7000s, with a nice hit. But you know, again, it's throughout the 7000, you gotta be changing the anxious, you can't let the colors get away from you, if you end up with saying to yourself, you know what, these 90 pieces out of 7000 were crooked, I'm gonna go ahead and ship them anyway, it's a big mistake, because the retailer is going to find one of those 60 pieces at the store level, it's going to come back, they're going to assume the worst that the whole load was crooked. And you just didn't want to eat 60 pieces. So you put those 60 into your 7000. And, but they're gonna find it. So what you really have to work on is having a great quality control department that's not going to let any of those 60 get through. So you don't have those kinds of problems. And then the retailer's build up trust in you. And then when you do have a problem, they'll usually work with you, you have shipped us 70 jobs with without a mistake. And yeah, we can well, we'll take this one, but I still gotta charge you back. And well, thank you, but they took the order, you know, because again, every time a mistake happens, retailers do have the right to cancel the order. And you know, that's what you're up against all the time is, if you don't do your job correctly, they just won't take it.
Marshall Atkinson
Right, right. So let's talk about, you know, culture and that quality control thing. So, you guys have a large facility in Mexico, they handles a lot of your production. So most of our listeners really just have one place, you know, their shop, right? So talk about what it's like to have a Mexican facility, and then some of the differences between operating one there and then also one in California at the same time. So you got to how do you juggle stuff? How do you juggle the scheduling? You know, what's it like to have a plant in Mexico, I don't think a lot of people know that. Right. So talk about that a little bit.
Seth Anderson
One of the things that jumps out to me is in, you know, everyone thinks that you're in Mexico, because the labor is a lot cheaper. But we're really there, because that's a factor. But you know, in Mexico, you can't just lay off someone like you do in the United States. If someone's been working for you for certain amount of time, you actually have to pay them 90 days of their current salary. If you let them go in advance a day you let them go, they don't collect unemployment, you give them a check for three months of work that severance and Mexico. So again, it makes it very important to train your staff in Mexico, we were having a terrible time with turnover, where we were losing employees, we started serving our employees lunch every day down there, and you know, two meals a day, and our turnover went to almost zero, but we were looking for ways to keep our employees happy. Our facilities are only a couple 20 minutes over the border. So it's a constant flow of trucks, you know, bringing stuff in and out. And if you're going to be doing in business in Mexico, you have to have a good freight forwarder. You know, we have someone on this side of the border and someone on on the other side of the border that handle all the paperwork for us. So we're constantly moving things back and forth, we actually do have a facility in Oceanside as well. So we kind of know, both sides of the sword. And you know, there's a lot more labor paperwork on the United States side. But on the Mexican side, there's a lot lot more human challenges, you know, like when, during COVID, we were paying for all the testing. And it wasn't so much that we were trying to be great people it was we needed to make sure that they were getting tested. They're earning a living for their whole family of 12 people or seven people or whatever, the only earner in the family and they can't collect unemployment, they're going to come to work sick. You know, and, you know, so to assure that wasn't happening, you know, we were requiring that, that we do the testing with our people will pay for at all no problem. You know, we're but again, we needed to really protect, you know, their co workers. We don't let anybody into the facility with backpacks and stuff like that. The backpacks are kept out in the parking lot, you know, outside the gates and, you know, we're very cautious to theft control and things like that. We never have any problems with that kind of stuff. But we also, you know, take steps to prevent it. You know, Mexico is a place that you can, you know, work longer hours and you can you know work on Sunday. As long as your people are wanting to, you know, work and get paid, they'll show up on a Sunday, it's easier to coordinate night shifts there. But you know, we have our own set of challenges in Tijuana, it's to transient labor force, because people think they're going to come up and get across the border and get a job to temporary at across, I figured out, it's not going to happen, and they go back to where they came from. So a lot of challenges there with just keeping our workers were in the United States, it's more, you know, making sure people are legal, making sure that, you know, we vet people's social security numbers, and, you know, make sure that person a, you know, the paperwork, so it matches all the way down the line. And, you know, and again, having consistent breaks, and all those things are, are much more, you know, control in the US because again, making mistakes, everybody wants to sue down in Mexico, you know, the workers can complain, just like any worker can up here. And when they do, it's a really bad thing for a company because the government will come out and Mexico they don't find you they extort from you, you know. So again, it's, we really try and handle all of our business in house, we were good to our employees, and we very rarely have any situations that are uncomfortable. But there's a lot of paperwork, you know, I'll give you a very interesting difference with the NAFTA, the North American Free Trade Agreement, you can move blanks into Mexico without paying any duties on him. But the blanks get to Mexico, and you decide, You know what, I'm gonna print those at my US facility, I'm gonna, I need to move them back, not without a 19% tariff unless you do something to them. So we've have least once a month where somebody asks us just to print neck labels in the inside neck, because they're actually trying to get their blanks back. And that's how you can kind of circumvent that thing. Because, okay, you did the network too. It could be a label removal, and something could be handwork. It could be grinding, it could be printing, some sort of service that has to happen to that shirt for it to come back into the US tax free. You just want your blank back, you're going to pay an 18% duty just to get your blank back that nobody touched. So you know, knowing a lot of the caveats of what will and won't get across the border, because if they see a blanks, the border crossing people, they will fill cracks, start cracking boxes, make sure it's blanks, make sure it's labeled, or they're gonna hit you with those duties, and very rarely does anything sneak through.
Marshall Atkinson
So very interesting talk today. Seth, thank you so much for sharing your story of success with us today. What's the best way to contact you as someone who wants to learn more about what you guys do? Or maybe how you can help them?
Seth Anderson
Seth at West side merchandising.com. And that's probably the best way.
Marshall Atkinson
Awesome. So hey, thanks a lot. It's been great. And we'll check you later.
Seth Anderson
My pleasure. Thanks, buddy.
Marshall Atkinson
Well, that's our show today. Thanks for listening. And don't forget to subscribe, so you can stay up to date on the latest Success Stories episodes. have any suggestions for future guests or topics? send them my way, and Marshall and Marshall atkinson.com. And we'll see you next time.