Shoe Agents: What to expect in a shoe development contract

Question:  Do I really need a shoe sourcing agent to start my own shoe business?   If you are new to the shoe trades you are going to need some help!  The answer is YES!

Question: What will it really cost to develop my shoe ideas and get them into production?
Read on!  This is the question we will be answering.

A trusted Shoe Agent will be your partner:

Have you heard horror stories of a factory in China shipping a load of rocks instead of shoes?
YES, so have we, but we have friends on the ground in China so that can’t happen to us!!

If you are ready to start a shoe company but don’t have shoe design, development, or manufacturing experience, you are going to need a footwear sourcing agent. The shoe manufacturing agent can help you make contact with a shoe factory suitable for your project and help you manage your shoe development projects. Footwear buying agents will have relationships with several shoe factories, sample rooms, and outsole mold suppliers.  A qualified shoe sourcing agent will have technicians that help develop your design and make your ideas into a real shoe.

Finding a shoe manufacturer is very hard but you are lucky! Having been in the shoe trade for many years, I have worked with many fine people inside the major shoe brands. Some of my friends now have their own shoe sourcing businesses in China. I’m happy to make introductions. But only if you are ready.

Footwear Development contracts:

Here are the terms of a typical footwear development agreement or contract. You need to remember, footwear production setup charges are high and MOQ (minimum order quantities) will be required by the factories. These charges are:

Outsole Molds

Shoe Outsole Molds, 1 set (per size) $1500-2000 for rubber, $2000-2500 for EVA compression molds.  You will need a minimum of 10 molds to cover the standard shoe sizes. During development, a samples mold will be needed to confirm the design before the set of production molds is opened. Prototype parts may be made from cast rubber or foam before a steel mold is made.
Factories may offer “open” molds but please note there are very few suitable for quality shoes. To ensure your shoes fit and function correctly we will not work with these “open” molds.

Footwear Sample Development

Sample development charges paid to the factory:  To make your design come to life, plan on 3 samples stages, 45 pairs of samples, the total cost of $5000. This includes factory time and the shoemaking sample materials.  The shoemaking expertise of pattern makers and mold technicians does not come for free.

Project Management Fees

Product Management time will be around $2000 per month for the project. This covers the agent’s development team following up with the shoe factory, last factories, material vendors, and outsole suppliers. This puts your representative in the factories working for you. A standard development project is expected to be around 6 months.  This is enough time to make the pullover, samples, and tooling.  Very complicated projects may require more time.

Basic terms you need to expect:

Confidentiality agreements will be signed. Your agent will protect your project from the eyes of competitors.

Sample delivery charges will be your responsibility.  Fed-ex and UPS bills are not cheap for shoes shipping from Asia to the USA or Europe. Plan accordingly.

Costs for shoe outsole or upper molds must be paid in advance of tool cutting.

Costs for samples paid before each shipment.

Product Management Fees will be paid at the beginning of the month of development

Once you place your Production Orders a 9-month retainer fee of US$5,000 will apply.

This will see your shoes through pre-production and provide you QC and logistics support once your shoe production order is complete.  The Project management time fee of US$2,000 will be waved for development from this time.

Production, MOQ 6000 per style, 1200 pairs per colorway.
Production lead time, 120 days. Then add time for shipping.

For any new customer, the shoes must be paid for in-full before shipping.
You will need a Letter of Credit or a Wire transfer.

So are you ready?

If you have made it this far you are one step closer to starting your own shoe company!  Before I introduce you to an agent, we need to make one more cost calculation.

What is the purchase price of 6000 pairs of shoes?

This is the hard part!  You are going to need some capital to bring your shoes home from the factory.  Friends, family, kick starter- you are going to need some money. The shoe factory and agent will not give you delayed terms. You will need to pay the entire amount to get your shoes shipping. Roughly, your shoes will cost about 25% of the selling price to import from Asia.  So, if your shoes will cost $100 in the store, plan on $25 for the shoe with shipping and import duty included.  So….$25.00 X 6000 pairs = $150,000!!!!!

We have detailed the cost of a shoe in the article: How much does it cost to make shoes?

Your next steps:

Check out our book:  How to Start Your Own Shoe Company
Read these articles:  Can I start a shoe company?  and Finding a Shoe Sourcing Agent. 
Please visit our: Online Shoe School.