Knocks Socks — Chapter 1 — The Abstract

Starting new projects has its challenges, and in this series of newsletters I will do my best to cover each step of development and every chain of thought in a format of a business diary.

I will shamelessly ask for your support by following this newsletter series, as well as this project’s related LinkedIn Page and Instagram.

Purpose of these occasional letters is the search of like-minded people, partners, distributors, supporters — it is an ever changing, ever evolving project pitch. Hopefully it would be nice to receive feedback, comments and advice if my process has any merit or is outright wrong and can be improved, so why not go all in on transparency?

Knocks Socks idea in various forms was on my mind since long time ago, but crystallised around mid 2023, and now in early 2024 the project is in its full swing development.

Why Socks?

I am approaching the main business issue from a distribution challenge, how to enter shops, how to capture eyeballs of consumer? What product requires small retail footprint for rent cost optimisation? What kind of product can be very fashionable, but at the same time simple and complimentary? At the same time what kind of product is highly scalable, but easy to manufacture and can provide competitive price point for consumer to buy without much consideration? Production MOQs, Stock Optimisation, Logistics? After many and more similar questions the product category turned out to be SOCKS.

Consumable Product?

I was surprised to learn that average Italian customer buys 16 pairs per year; French customer buys 9 pairs per year; German customer buys 13 pairs per year. After considering modest purchasing power averages, considering wear and tear inevitabilities, it is safe to say that 4 pairs annually is what an average European would confidently consume. And that is excluding the gift seasons where people might consider buying weekday 5 pair bundles, to wrap it nicely in a box.

// How many pairs of socks do you buy annually? //

Addressable Market?

Well, folks hopefully have to wear fresh socks every single day when they need to put their feet in the shoe. 4 pairs annually multiplied by countries populations, that is at least several dozen million pairs of socks are consumed annually. Without going to much into the details and precisions, taking an example of 10 million country population, analysing the demographic by removing third of population who are youngsters and don’t spend their own money and removing third of population of elder people who don’t really care about consumerism anymore. We are left with 3.3 million of hard working consumers who will require 13.2 million socks annually. When it comes to pricing, prices always vary. There are luxurious brands with 20$+ price tags, there are quality mid-market brands with 7–10$ price tags, and low quality mass diffusion products with 2–3$ price tags. It is safe to say that majority of purchasing happens at mid (9$) and low (3$) price points and shall average at 6$ a pair as a fair price. 13.2M x 6$ = 79 200 000 $ / every 10M population in Europe Market looks realistic. Perhaps it is a small market for a big corp, but for a small creative team it is an interesting opportunity.

// All numbers are estimates and predictions based on assumptions and not real data, therefore I will be very curious to hear feedback and comments so we can address realistic numbers. //

Competition & Market Share?

It is fair to assume, that majority of market share shall go to big corp brands, however from creative excitement point of view their products, although competitive in price, is very plain and boring. It is not their primary category and they are not pushing much energy into development, so it usually ends up to be a plain colour with a logo. Some fashion focused brands try to match up their socks as accessories category with their main line apparel collections in terms of colour, but usually this offering has a very limited choice. There are some big corp brands who is focusing primarily on basics as core categories and their socks offering usually consists of large selection of colours and would offer a serious competition, however they completely neglect trendy/graphic offering that a more fashion conscious personality would look out for. In the end of the day if market is 100%, and from the top of my head I can easily name 100 big corp fashion brands & retailers when it comes to clothing, yet on the second thought, perhaps only 50 of those brands have any decent worthwhile socks offering. When in comes to naming specialised socks brands represented on any given market, I might not remember more than 25 socks brand names. The ones who are offering creatively designed, yet affordable socks are even less numbered, perhaps I can name 10 such titles in any given market. On top of that, an average customer is not even concerned by the brand names for this category, in comparison to us, designers and business people, as long as product is of good quality and competitive price. To summarise this imaginary math let’s gamble with an assumption, that 50–60% of market share is with big corp brands and retailers, 25–35% of market share is with specialised socks brands, the remaining 5%+ of market share is with no name start-ups and merchants. Although it might sound very ambitious, yet quite reasonable to expect that a well structured, organised, forwards looking, efficient and competent start-up can look into aiming for 1% market share as its primary objective. 1% market share would account for approximately 8M$ business / 10M population market. Again it might sound very tiny for a tech venture capital, but for a small creative team it is a beautiful number to pursue. A lot here depends on how developed and saturated the market is, as well as competitive advantage of the product, but if we look into not so evident and desaturated places, we might find interesting opportunities to make brand stand out and attract consumer eyeballs.

// It would be very interesting to hear feedback and comments on market share estimates to challenge these above assumptions. //

E-Commerce Competitive Landscape?

That is an exciting question to brainstorm. Everyone is well aware of e-commerce giants and their recent domination in apparel industry. But fashion e-commerce has its own challenges. I can identify and address two major challenges on spot: 1. Logistics; 2. Return Rates. Let’s assume we figured out our logistical issues and just look at the return rate problem for starters. Return rates are enormous in fashion e-com. According to my latest European market research it reaches as far as 25%, when it comes to Chinese market e-commerce with its effortless efficiency due its free or low delivery costs the return rates reach as high as 80%. This theory and numbers are well confirmed after I have had a meeting with one of the very largest market leading Chinese high street retailers, who openly stated that their e-commerce work is not aimed at driving profits and is primarily oriented at online brand presence and exposure in order to incentivise people to visit their offline retail locations. Most people I know who shop fashion online confess of purposefully over ordering multiple size ranges, to keep the ones which fit, and to return the sizes that don’t. That is 50% return rate on spot already there, embed in online consumer behavioural pattern.

Handling these returns is a huge expense for the large e-com corps, let alone for the start-up, and this is a big risk and downward pressure on margins and profitability. Therefore I might argue that online direct-to-consumer fashion start-ups shall not be considered as major competition, for sure they do distract the focus and take consumer attention away, but it shall not convert into an actual market share. Hype does not equal reality. Another consideration is that fashion requires variety, hence consumer would always scout for new, unless it is associated with underwear segment, and i would argue that socks category fall under such segment too. In underwear, once one likes the quality and size fits well, customer would stick with the brand and reorders. Then it turns into a question for logistics. Socks is a relatively small accessory product, hence logistics seems expensive in comparison with product value, unless bought in bulk, or in conjunction with other products. Unless a socks brand has a strategic partnership with large marketplace, distributor or retailer, which expands its socks category offering as a compliment for its fashion offering, I might again argue, that e-com competition in socks category, despite its seemingly threatening appearance, is actually manageable. Objectively the strategy shall be not to compete, but rather to partner with big e-com corps to be represented and endorsed by them, which would immediately resolve the concerns of e-com competitive landscape.

// What other challenges could be considered in socks e-com category? //

Other Challenges & Headwinds? Scalability?

All other challenges might definitely occur within domain of daily operations, focusing on team-building, manufacturing, distribution, promotion and of course financing of the project itself. But these issues are not part of the abstract considerations, so these problems and my solutions will addressed in these newsletters following the development of Knocks Socks. And of course a major headwind would be just tirelessly doing it without looking back.

Scalability of the project will be addressed upon revealing initial tangible developments, and there are ideas already, but I would be very curious to learn your views on how Scalable Socks Business actually is?

Chapter 1 — The Abstract — tried to cover the thinking behind the motivation to launch ourselves into socks start-up project and it would be amazing to hear all your feedback.

In the next Chapter 2 — The Concept — I will describe what kind of socks brand we are building already and what is our current progress.

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