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ARCH: To Be or Not to Be?

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Okay utilizing antiquated Shakespearean dialogue for my little shoe company is kind of reaching. I am not that important and “To be or not to be?” is a question that tends to take itself too seriously, right? Maybe not. I founded ARCH in 2009. At the time I went in front of a group of investors, ala Shark Tank, called the Catfish Tank based here in Memphis. I had under my belt a successful shoe company named Sho-Shot where I had advanced the brand to the point where the owner decided to sell it causing me to lose a lot of money and time, which is more important than money. I had sold 1200 pair of SS shoes housing the shoes in my garage and using basketball camps, and flea markets to get the brand out there. I had this great website full of high school and JUCO basketball players that was pulling in 3 million hits per year… at least. I had sent over 100 players to college under the SS banner and hell I even had 9 colleges wearing the uniforms along with streetball teams, the Puerto Rican legends, and I had the brand even featured on Madison Square Garden TV. I say all of this to state that I have never really feared the idea of branding and creating a company. I have never feared the idea of spending money to try and create something. In other words, my decision in regard to ARCH, founded after SS in 2009, is going to be based on a variety of factors. Like always, I will give you graphs and a lot of insider information to help you in the process of starting your business or just if you like reading this kind of stuff.

ARCH will go on hiatus at the end of September. There, I said it. It feels good to get that off of the old chesty chest. The brand has seen incredible growth this year, but here are the ultimate numbers that you need to see to get an understanding of why I have to push pause on the boombox.

ARCH Sales Grand Total = $8,686.07

After 15% Amazon Subtraction = $7,383.16

ARCH Manufacturing Grand Total = $13016.00

Doesn’t include tee shirts, boxes, designer fees, or additional fees such as shipping boxes, etc.

These are eye opening numbers for anyone. I had a guy write me last week offering to put a team together to help me with branding. After asking about his experience he had sold 40 of his own tee shirts. He didn’t give me numbers for the cost of those tee shirts, or how much was spent to advertise, but more importantly he didn’t tell me who bought the tee shirts. ARCH definitely needs help with branding, but it’s not pictures or facebook, it’s distribution that ARCH has always needed. A person who hasn’t shown me that they have given as much to their own brand can’t really help with a shoe company. Shoes are not complimentary items. Shoes are the foundation of fashion. People are deeply in love with their footwear and to do what I did in this last year is a huge accomplishment. But if you look at these totals and multiply them by 4 years, there is a very disturbing pattern taking shape, and I have to question whether it’s smart to continue to put money into a vanishing vault.

When I first started ARCH spending the money and losing the money wasn’t that bad. ARCH was started as an addition to my sneaker boutique. Sales in the sneaker world were very high and I could afford to pump money into the project without worrying about a lack of a return. In the last year though things have changed. More people have entered in the sneaker market. This has not only hurt my business, but it is even hurting franchises. In Memphis alone, A Footlocker, Champs, and Finishline have all shut down. Local clothing and fashion store City Gear has lost one of its biggest employees and they have consolidated all of their stores under one umbrella and are in a continuous mode of rotating managers. While this is information that is easy to understand, I have a graph that can show you what has happened to the market over the last two years.

Sales graph 2011-13
Sales graph 2011-13

This graph is from my Amazon store account and shows how the market has begun to play out after two years. This has happened for a number of reasons. 1. Initially I was one of the few people in the resell market in Memphis. 2. The connections and networks I built to gain access to footwear has fractured and fallen apart. 3. The constant development of ARCH as a brand has removed a lot of profit from the business over the years. 4. With all of these things taken into account, my overall sales have suffered right in line with brick & mortar locations. Basically, ARCH would have to generate a return now and personally I don’t believe ARCH is a need for anyone.

What do I mean by need? People need food, housing and clothing. People need Air Jordan shoes because they are a status symbol. People need Adidas shoes because they have an extensive history. In this market, ARCH falls along the same lines as Under Armour or Fila and other brands. The difference is those brands have huge distribution and vendors who purchase their footwear. Why are we in the same boat? Because at anytime, you can walk into a brick & mortar store and find UA, Fila, Reebok and other brands at ridiculously deep discounts. You can also find Nike shoes at these ridiculous discounts. In other words with so many options a brand that can only be purchased online really has a difficult task of gaining any marketshare. While I have successfully sold shoes on Amazon, when all of these factors come into play, it just doesn’t seem logical to continuously pour money into the vanishing vault with the hope that ARCH becomes a need.

Like I said before I did have a number of factors that played against my success. I had a solid share of the market in February of this year. However Chinese New Year and then the extended time it took my manufacturer to make my new shoes, along with the damaged shoes (NOTE: ABOUT 3000.00 of the losses are because shoes were damaged direct from the manufacturer. When you consider this the losses are not that bad really), I lost a lot of time that hurt the release of the next colorways this year. Summer is a tough time for shoe sales overall and that’s when I got my next shipment in. Look at the graph and you will see what I mean.I did have a solid month this September. Although I reduced the price of my shoes to a point where I only made 24 dollars per pair. I have questioned whether it was a smart thing to do dropping the price to 9.99. I have come to the conclusion that it was not. Due to the drop in sales overall, I can no longer sit on inventory in the same way I once could and wait for the shoe market to recover and people to rediscover the brand.

ARCH CG097II (Black Storm/White) Lightweight Running 18 $421.40 18
ARCH CG097II (Star Grey/Dallas Blue-White) Lightweight Running 15 $383.34 14
ARCH CG097II (Black Steel/Pitt Yellow-White) Lightweight Running 11 $303.60 11
ARCH Casual Shoe: The Allen Black Suede and Denim 6 $149.17 6
ARCH Allen Casual Shoe (Navy Blue/Navy) 4 $90.46 4
ARCH Casual Shoe: The Allen Merlot Suede and Denim 4 $107.27 4
ARCH Casual Shoe: The Allen Rust Suede and Denim 4 $85.22 4
ARCH Casual Shoe: The Allen Oak Suede and Denim 3 $57.03 3
ARCH Casual Shoe: The Allen Rust/Merlot Suede and Denim 2 $37.66 2
ARCH CG097II (Earth Suede Limited Edition) Lightweight Running 0 $0.00 0
TOTAL 67  $                                                 1,635.15 66

Now compare September sales to the previous month of August

 

ARCH CG097II (Black Steel/Pitt Yellow-White) Lightweight Running 8 $361.76 8
ARCH Casual Shoe: The Allen Black Suede and Denim 3 $110.84 3
ARCH Casual Shoe: The Allen Rust Suede and Denim 2 $78.89 2
ARCH CG097II (Black Storm/White) Lightweight Running 2 $109.94 2
ARCH Allen Casual Shoe (Navy Blue/Navy) 0 $0.00 0
ARCH Casual Shoe: The Allen Merlot Suede and Denim 0 $0.00 0
ARCH Casual Shoe: The Allen Oak Suede and Denim 0 $0.00 0
ARCH Casual Shoe: The Allen Rust/Merlot Suede and Denim 0 $0.00 0
ARCH CG097II (Earth Suede Limited Edition) Lightweight Running 0 $0.00 0
ARCH CG097II (Star Grey/Dallas Blue-White) Lightweight Running 0 $0.00 0
TOTAL 15  $                                                     661.43 15

Now compare August sales to the previous month of July

 

ARCH CG097II (Black Steel/Pitt Yellow-White) Lightweight Running 3 $154.89 3
ARCH CG097II Women’s (Power Pink/Storm Grey-White-Blk) Limited Release 3 $144.88 3
ARCH CG097II (Star Grey/Dallas Blue-White) Lightweight Running 3 $221.88 3
ARCH CG097II (Earth Suede Limited Edition) Lightweight Running 2 $156.24 2
ARCH CG097II Run (USA Blue/Haze Grey-Red-White) Lightweight Running 1 $50.95 1
ARCH Casual Shoe: The Allen Olive Suede and Denim 1 $46.94 1
ARCH Casual Shoe: The Allen Oak Suede and Denim 1 $46.94 1
ARCH Allen Casual Shoe (Navy Blue/Navy) 0 $0.00 0
ARCH Allen Premium Casual Shoe – (Haze Grey/Storm) 0 $0.00 0
ARCH Casual Shoe: The Allen Black Suede and Denim 0 $0.00 0
ARCH Casual Shoe: The Allen Merlot Suede and Denim 0 $0.00 0
ARCH Casual Shoe: The Allen Rust Suede and Denim 0 $0.00 0
ARCH Casual Shoe: The Allen Rust/Merlot Suede and Denim 0 $0.00 0
ARCH CG097II Lightweight Running Shoe (Grey/White) 0 $0.00 0
ARCH CG097II (Black Storm/White) Lightweight Running 0 $0.00 0
TOTAL 14  $                                                     822.72 14

The numbers in both July and August are much better than September based on the price per pair. However selling 15 and 14 pair per month would literally mean that I could never produce another shoe. I would have had to wait until next year to go through the rest of the inventory at this rate. I still actually have about 20 pair in inventory at 9.99!

I did have a great month of branding from the standpoint that I sponsored the Patriot Day 5K and this garnered me a lot of great connections on Facebook. It however did not translate to many sales at all. I have also gotten amazing feedback about the brand on both Amazon, and the website. I’ve even had great personal messages about the performance of the shoes. All of these things have been important, but after 4 years it is becoming harder to fund the project. I thought about doing a Kickstarter, but it didn’t really feel like the right thing to do. I’ve been so self sufficient that being in a position where I had to offer on pre-order often makes me uncomfortable. Anything could happen.

ARCH is not going away. The online boutique will be open. I’m even expanding into other items that I think will help to improve the market. I have redesigned the old CG097 and I am talking with a manufacturer about limited runs that will not place such a big burden on me financially. As of right now though, the production of shoes is on pause as I adjust to the climate and develop a new plan of action. I have truly appreciated the support and as always Stay Motivated!

Chris B.