Saturday, March 08, 2014

The Business Chat - The ABC's of Wholesale

Wholesaling is when a store buys your work outright. They order from your catalogue, you produce the work and they give you money. 

There are a lot of advantages to selling your work wholesale. The biggest advantage from a business point is that since you don’t produce the work until you receive an order, you don’t have to invest as much in inventory. 

Many makers also like wholesale because they spend more time in the studio and less time selling. Of course you still have to sell to the stores. 
Note: a store that buys wholesale is also known as an account

One big advantage to selling wholesale is that you can lower your manufacturing  costs because when you make in bulk, you buy your supplies in bulk and get bulk discounts on them. 

The downside to wholesale selling is that you have to have a catalogue or line sheets in order for your accounts to order from. The work in your catalogue must be repeatable, wholesale is not designed for one of a kind work. As the store makes their money from marking up your work, you sell to the store at (usually) 50% off your retail price. 

What the store actually sells the work for is beyond your control as they own it. 

Wholesale can be very important for your crafty success. Selling wholesale provides you with another income stream for your business. Unlike consignment the store or gallery has invested their own money in  your work and therefore they are more motivated to promote and sell it. This leads to increased exposure for your work and free marketing for you! 

A good store will actively push your work in the media meaning more publicity for you. If the store is a large one it can mean more media coverage. The media is much more likely to mention your work if their readers can find you in a store. 

What stores are looking for

Stores want to make sure that your product will sell. They are always looking for work that is unique and original. The store will also think about if your product will sell to their customers. You already know your target market, is the stores target market the same? If so, then talk to the store buyer about this.

Many stores will ask you for exclusivity. This means that they are the only store within a certain geographical distance selling the product. Exclusivity makes sense sometimes. If every store in the neighbourhood has the same work the customers will tire of it. You should think carefully before you grant exclusivity to a store, are they the best to sell your product?

How to get started in wholesale:

Here’s a checklist to get you started. You will need:
  • Product.
  • You need a product that is something a store will want to carry. No matter how beautiful it is, if it is not going to sell no store will buy it.
  • You need to have enough product to meet the demand a store might have. Landing an account is no good if you have to tell them to wait 2 months. As a wholesaler, your products must also have the correct packaging (this is not the same as the packaging you’d use at a craft show). If you want to deal with very large retailers you might also need bar codes, hang tags, sku numbers,  labels or other supporting material.
  • Catalogue/line sheet. This is absolutely necessary. Your catalogue or line sheet has to be professional in all aspects. You need professional quality photos, descriptions, lists of ingredients, colours if applicable, a product number , time to ship.
  • Pricing sheet. It’s a good idea to keep the pricing sheet separate from the catalogue or line sheet. This way you can change prices if necessary.
  • Order form
  • State your minimum order, reorder quantity, shipping and payment terms
  • Terms and conditions
  • What happens if they want to return unsold merchandize? State your payment terms How to find wholesale accounts.
  • and any other administration stuff.

How to find wholesale accounts

One way to find multiple accounts is to exhibit at a wholesale trade show. These are very different from retail crafts shows. Trade shows are not open to the general public, only to registered buyers. As an exhibitor at a retail craft show, your booth is filled with as much product as you can as your customers want to see everything you have. In a wholesale trade show booth, you carry only samples of your work. You might only have 20 – 50 items on display. Your customers (stores), order multiple units of each of the products on display. 

Wholesale trade shows are not for the beginner. It is a seriously large financial investment to attend one of these. 

To look for individual stores start by looking locally. Ask your friends and your customers to recommend stores they think would be a good place for you to sell in. 

Online searches are a good direction to go. Try using Google and search for something like “jewelry stores Montreal”.  If you are looking for larger stores, you can look in Linked In. Search for the store name or the buyer. Try connecting with them there. Of course, this means that you have your online presence absolutely spiffied up. 

Approaching a store

Before approaching a store, always do your research first. Check out the store to make sure it’s a good fit. If you can, go to the store and look at their current inventory and who they represent. Find out the name of the store buyer. Ask them if they buy work or consign only. 

Make sure you know your story. When you walk into your appointment with the store buyer you must be wearing your best salesperson hat. Talk about the benefits your products will bring to the store and to the stores customers. Know why your products are better than your competition., You are selling twice here, once to the store and once to their customers. 

When you are ready, call or email and schedule an appointment with the store buyer. Practice what you are going to say and make sure to show up prepared – bring your catalogs, samples, and order forms. 

After meeting with a buyer, always send a thank you note. This keeps you in their sights and shows that you can follow through. If they didn’t place an order this time don’t despair. Schedule a follow up for a later date. Sometimes they may love your work but just not have the shelf space or the money at that time. You can ask the buyer when you could contact them again, or just put a note on your calendar for every 3 months or so.

Notes about succeeding in wholesale

Some makers dream of seeing their work in a large store such as Target, or Nordstroms. While it is always important to dream and dream big, working with very large retails is perhaps not the best fit for handmade work. If you are manufacturing your work elsewhere and can supply large orders a large retailer might work. 

The upside to huge accounts like this is the potential to make a lot of money and the increased exposure you get. 

The downside is that these stores typically pay net 30-90 days and they will want a larger discount than 50%. It is also rare for a superstore to deal directly with you, the small maker. You will need a sales rep or your own sales force.

When you are selling wholesale, you need to have an inventory system so that stores can easily reorder. You don’t want them phoning up and ordering “the really long blue and green necklace with the crystal pendant”. Every single piece must have a number, or code. The easier it is for them to order, the more likely they will. 

It’s a good idea to follow up to see how well your work is selling. Don’t wait for the store to call you once they need more work. If it’s not moving as well as it could, perhaps you can help them. Provide them with marketing materials to help promote your work. If you use a special technique inform them of it. Let them know what’s special and unique about your work, these are your selling features. Sometimes you need to train the store staff how to sell your work. 

It is critical to your wholesale success to properly price your work. Underpricing at a retail craft show means that you might be losing money on a couple of items. Underpricing at a wholesale level means that you will sink your crafty venture. Use your spreadsheets and make sure you have accounted for everything. 

Succeeding in wholesale for a handmade crafty business is absolutely possible. Do your research, prepare properly and go into it with your eyes wide open.

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