When executed well, wholesale can be a fantastic revenue driver for your business. One that is structure, reliable and ever-growing.
However, too many times I see independent businesses setting up wholesale partnership with "dell-boy" processes. Often hugely beneficial to the wholesaler...not so beneficial to the brand.
When setting up any new revenue stream there needs to be processes and procedure. Without them, your business won't grow sustainable.
As we continue to navigate the pandemic we need to ensure we are building business relationships with people/organisations that share a similar alignment to our values. Wholesale is no different. The stores in which you choose (because it should be the brands choice!) to stock your product need to be the right fit. Share a similar customer profile, share common brand interests. Otherwise, you will dilute your brand message by stocking in stores that feel unaligned with your brand vision.
Within this article I will be cover 3 areas;
Understand your Wholesale Process.
Understanding the Wholesale Relationship
A section of Wholesale/Stockist Agreements you may use.
Firstly - The Process.
The key point here is you should never feel like you are being dictated by the Wholesaler. You are the creator, the supplier, the manufacturer, the maker of the product, therefore you hold a certain weight in the process. You need to set clear expectations around;
when orders will be received
when stock will land
when & how payment is due
if there is the opportunity to reorder during the season.
All this information needs to be clearly shown within both your Linesheet and Excite & Inspire docs - provided in the Wholesale Bundle.
Selling Season; You will need to research into this specifically in your product areas - but as a rule, the below shows a rough guide to selling seasons;
Autumn/Winter - sold in February
Christmas/Transition - sold in June
Spring / Summer - sold in September
As an independent business, you may only "sell" twice a year. This is dependent upon your product and your buyers.
You need to decide and communicate when your selling window takes place. This usually needs to be for at least 2 weeks, but can be for much longer. You need to be clear on when your buyers can start to place an order with you - but more importantly, you need to detail exactly when all orders need to be received.
You need to ensure that between the order deadline date and the date you buyers will receive stock is an achievable timeframe for you to produce/manufacture/supply the goods.
Secondly, The Relationship.
An important aspect to remember within any wholesale partnership is that it is a PARTNERSHIP. Both parties will be mutually benefitting from the exchange of goods. They are your customer, but they are also a profiting business. This B2B relationship looks different to the B2C relationships.
You need to research the stores you want to stock in. As well as look into stores that enquire about becoming a stockist. Any wholesale relationship needs to be a continuation of your brand, otherwise, you risk these stockists tarnishing your values. Do not feel obliged to "stock everywhere" - this won't elevate the brand. Be thoughtful and considered in your partnerships. Quality over quantity. You would much rather have a hand full of reliable, wholesale partners that buy big each season - than many smaller individual accounts.
The workload will out-weight the reward. But the exclusivity you can offer your selected wholesalers will give you more leverage power in the relationship.
Finally, don't be scared to end partnerships that you don't sit well with your business. You constantly need to be thinking from the customers (final paying consumer) point of view. Every stockist needs to have those consumers at the heart.
Thirdly, The Agreements.
Within this section, I'm going to talk you through the types of wholesales agreements you can create.
Wholesale; A standard wholesale relationship is where the store buys your product at a reduced rate and then sells the product for the RRP. I will always say there is no set % in which you can work. You, as the supplier, need to make a profit - but equally does the buyer. I would always encourage you to work to a % by where you earn similar profits. But you must take into consideration the reduction costs of packaging, postage, marketing and admin that have been removed from your side - and this will now sit with the buyer to factor into their profits/margin.
Regardless of whether the product sells or not, the product is the responsibility of the buyer/store owner. You don't have to consider marketing cost, individual postage and packaging, or liquidation. All of these things need to be taken into consideration when deciding on a price.
But it needs to be a price you offer EVERYONE. Do not start creating "dell-boy" pricing for individual partnerships. Work out a price that you think is reasonable and is going to support the growth of your business - and stick to it.
There are options such as sell-through agreements and stock swaps which can take place in season - but I will cover those at the end.
SOR - Sale Or Return (or consignment)
This is exactly what it says - if the product doesn't sell, the wholesaler has the opportunity to return it. This IS NOT a module I would encourage people to work on. The wholesaler holds no responsibility to sell the stock - there is no pressure.
However, I do believe there is a place for SOR within your normal Wholesale framework. If you have best sellers, new product or exclusive product that you believe in - and your wholesaler hasn't opted to buy into - offer them SOR on a first-term basis. If you are confident that those lines will sell (because they are your best sellers but also sell for other stores) then you want to allow the wholesaler to try them. This, SOR option is only available for the first time. Should those items sell and the buyer returns for more - they MUST be moved to your normal wholesale agreement. Make this very very clear.
Also, if you have a store or wholesaler that you want to stock in. You see it as part of the longer-term plan of your business to partner with this organisation - then on a first time order basis, you have the opportunity to offer them SOR on their first collection. I would only advise this if you are certain that your product is a perfect fit for this store. You need to remember that the wholesaler will have not the responsibility to market or sell your product - so the alignment with brand and business is vital.
This is predominately a physical retail option - but it does feel relevant to mention. Concession is where you rent the space - at a fixed cost and then you profit 100% of every sale. This is something that you see a lot within department stores - small brands rent a space on the department store floor. The advantage is you profit 100% from each sale. The disadvantage, you have to absorb marketing, packaging and selling costs - no one else is incentivised to sell your product.
This works well if you have small items & price points. And instead of large department stores, you may choose to stock your product in cafes, hairdressers, florist.
Greeting cards in a florist works well.
Mugs and pottery in a cafe.
But note, you will be responsible for checking on the stock levels, need to add or swap stock that is/isn't selling - for this to be a profitable option.
Sell Through & Stock Swaps.
There is no pressure to do either of these within your wholesale model - but the option is there, and Iwant you to be educated on these aggresment that exsist.
These could be tools/neogiations you use to encourage your buyers to place initial orders - as well as them to encourage to spend more.
A Sell Through % protects the wholesaler from being left with the slow-selling product. The agreement normally sits at 50-60%.
Therefore if a buyer places an order for 10 candles in a particular scent, but only 4 sell buy the end of the season - only a 40% sell through was achieved - the remaining stock would be up for negotiations.
However, if the same buyer sold 7 of another style of a candle - that is 70% and past the ST% - therefore it continues to be the responsibility of the wholesaler.
Again, this only profits the wholesaler - NOT THE BRAND. There is every possibility the wholesaler may stop "marketing" certain product in order to NOT meet the SL%. I'm discussing these arrangements because I want you to be educated. These agreements do exist, they are often the only way you can secure larger relationships with big dept houses (JLP, Harvey Nics, Selfridges). Why? Well, the PR you would get from being in these locations are often worth the risk. Do I believe these are viable options for independent businesses, no?
Stock Swap, is what happens with the items that didn't hit the ST%, you swap it out for stock that they did sell. This can be tricky because you then would need to have those lines available to swap out. And if you don't? That is where you end up having to place a return, or what happens more often is you hold those funds and carry it over to use that budget for the next selling season/campaign.
Again, I want you to be prepared and educated around the types of negotiations that you may come across within your wholesale agreement. But I can not stress enough - if it isn't going to support your business in the longer term - DON'T DO IT.
There you have it, an overview to building wholesale into your business. Feel prepared and excited by the opportunity to build a profitable wholesale business?
In the Wholesale Bundle for Brands - I have created 3 downloadable docs, which will set you up for success and allow you to start building wholesale into your revenue stream.
The Excite & Inspire Doc
The Order Form
It's through these tools that you will;
Seamlessly be able to approach and nurture new partnerships.
Credibly and authentically present your product in a way that converts, allowing you to be seen as the professional.
And give your buyers a seamless process to places orders from you.
Click here to purchase these 3 easily editable templates for just £17. Each template comes with a video tutorial walking you through exactly what info you need to include as well as how to make them bespoke to your business.
Need more bespoke support to set up or streamline your wholesale business? Get in touch; email@example.com