When you offer a consumer product, you have to decide whether you want to sell in stores or just online. My company started online for the first two years, then started to move into stores after establishing our brand and a strong following.
To help you decide the same issue, here are a few pros and cons about going into wholesale:
Quicker movement of your product
More cash flow with larger orders
Greater consumer reach
Cuts your margins in half
Expends a lot of time for managing and communicating with stores
Offers less control of branding
Acquiring a store is a greater investment than acquiring a single consumer.
A consideration is that you don’t have to go into large numbers of stores. If you’re worried about brand protection, you can establish a great relationship with one chain and offer an exclusivity agreement. Either way, if you’re ready to go into stores, here are some steps to follow:
Establish your terms. There are some specific terms you need to have ready when a store asks you for them. Here are the questions stores will ask:
What’s your minimum opening order? Minimum reorder? You can set these minimums based on units ordered or dollar amounts. But, when you’re selling at wholesale cost, you want to establish a minimum so you can cover the cost with volume.
What’s your turnaround time? From order placed to delivery, know when your customer can expect your products.
What are your payment terms? We used to invoice the store after the order arrived, but after getting burned a few times, we changed our terms to payment due when ready to ship. After the payment clears, we ship to the customer. Some larger retailers require a “net 30” agreement, where you get paid 30 days after the customer receives the product. It’s up to you whether you can wait that long and cover production.
How do you ship? Do you offer insurance? Decide how you want to charge for shipping (domestic flat rate, by weight, etc.) and what carrier you want to use. Also, decide what you’re going to do when the package gets lost or damaged (that will happen, trust me). Establish an agreement with the store before indicating whose responsibility the damage/loss is after the package has been shipped. You can offer an optional insurance add-on (for an additional fee) to cover any lost packages or damages.
Exchanges and returns? Decide how you want to handle product breakage or instances when the customer is unsatisfied with the product. I suggest offering some sort of exchange window the customer can use when its order is delivered.
Create your line sheets. Your line sheets, your first impression with the store, should contain the following:
- Company overview
- Terms (see the explanation of terms above)
- Order instructions
- Product catalog, with:
- Wholesale price and MSRP
- SKU number and product name
- Sizing and variations
- Any additional product details
Optimize your site to show you do wholesale. On your site, be sure to include a wholesale tab so people know you offer that. Include a contact form for stores to fill out with details about themselves — information that allows you to send line sheets if you think they’d be a good fit.
Once you’ve started to gain stores, you can also put a list or a map in where people can find your product in store locations.
Reach out to local buyers. Now that you’ve set your terms and have your line sheets ready, start with local companies where you see a fit for your brand. Try to get a name of a buyer and schedule a meeting where you bring samples and discuss the brand.
The first few stores Headbands of Hope ever got into materialized because I walked in with headbands and asked to speak with the buyer. I was so confident they would sell that I offered stores a consignment agreement to test them out (producing payment for me only when the products sold).
If you’re looking to get your own foot in the door, you too can offer consignment. However, to cite my personal experience, I found that, as my company grew, it was harder to track down orders and checks on a consignment basis so today we do orders only.
Attend trade shows. Trade shows are an investment, but can be a big ticket to lots of stores and major retailers. As a fashion brand, we attend America’s Mart and Accessories the Show. Stores come to your booth and learn more about the products and write orders at the show (if they like your products).
Once you’ve secured stores, help them sell your product. The more they can sell, the more they will buy from you. Offer display materials or even Skype-in to their sales staff and talk about major selling points. Create a newsletter list for just your stores so you can cater your communication and news about your company to their language.