tl;dr: Keep exploring around the Ancient Tree.
You can get the dye from Ole. Other than that, you'll need Soft Fabric, which is made from Cashmere, Flax, and Patches.
Cashmere drops from the Goat Huntsmen. Patches drop from the Dummy in town. Flax can be found at the Sparkling Lagoon, which you should randomly unlock if you explore enough at the Ancient Tree.