Increase your Income with Wholesale
Wholesale can be a great way to increase your income and boost your brand recognition. However, what exactly is wholesale and how can you gain a few accounts? In a nutshell, wholesale is when you partner with a retail store to carry your product and generally you sell your product to them at a lower price point than your current retail price point. It is their responsibility to then price and sell the merchandise they have purchased from you.
Industry Standards
To start, there are industry standards that must be met. However, they vary greatly depending on the product. Some products are far more regulated than others. For example, these standards will impact your product packaging. As for labeling, verify that your product label meets all required industry standards. Do you have all the legally required gibberish? From your ingredient list to any nutritional information, manufacturing information, allergen information, barcodes and company contact information? Those are just some of the requirements for properly labeling your product for retail sale.
Pricing Guidelines
Let me back up a bit before I continue; wholesaling is not for everyone. It can be a fantastic way to build your business and brand awareness, but it will take a lot of work. For example, if you retail your product (let’s say a candle) currently for $15.00 per unit, and you have an all-in unit cost of $5.00 you should wholesale at $8-10 per unit. Your suggested retail price for your wholesalers should be comparable to what you sell your product for again in that $13-15 range. A wholesale relationship should be mutually beneficial. You need to make a profit and so does your retail buyer.
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Order Fulfillment
Another item to consider is how you will deliver your product to your retailers. It is everyone's hope with wholesale that the retailer moves quickly through your product, however, how quickly (and realistically) can you fulfill a retailer’s order? Consider where your deliveries are. If you live in one part of town and you have delivers all over town traffic, weather and fuel prices will now impact your ability to operate and make timely deliveries. If you are delivering to a heavy traffic area like downtown, you need to consider how you will pay for parking and how close you can get to the store to drop off your delivery. Parking or the lack thereof may also impact your delivery schedule.
Product Production, Storage and Credit Terms
Now let's take a look at the reality of wholesaling. Do you have the storage space to create your product and store large orders until you can deliver them to your retailer? If, you get a candle shop who wants a 3000-unit order, do you have the storage space for that? Can you afford to pay for the goods to make your product in advance without payment from your customer until after the product is delivered? Can you afford to offer credit terms to your retailers?
Many small businesses operate on cash on delivery only basis until they can build their business to a point where you can extend terms to net 14 or net 30. I always say make your retailers prove their credit worthiness. They do this by always paying on time without issue. Once they have proven themselves credit worthy, then consider offering net 14 or net 30 ONLY if you can afford to do so as a business. Can you go 30 days without payment for an order of 500 units or 3000 units? If the answer is no, do not offer credit terms.
Wholesale Marketing
With wholesale, you have to grow very thick skin. The best way to secure wholesale accounts is in-person talking with product managers in larger retail stores and the store manager for smaller stores. Luckily, the internet can help. For many of the larger stores, you can find a new vendor application online or an email address or phone number of the person you need to contact. Put together your best sales pitch and fill out those new vendor forms or start drafting those cold emails. Keep track of your contacts and follow up with a phone call if you have not heard back within a few days. Sometimes, just being a little bit persistent will put you ahead of your competitor who did not follow up. When you secure a meeting bring a sample of your product, a line sheet and your best sales pitch.
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You will need to ask a plethora of questions during your meeting. Questions such as, how will this account support your product? Will they feature your product in their weekly? If not, is this account active on social media? Will they promote your new product on their social media accounts? Will they link your product on their site? Will they allow in-store demos where you can stand in the aisle and push your product on their customers (in the best way possible of course)?
You need to be able to follow up with your retailers regularly and build a relationship with your retailer. Do not just assume that they will reach out to you when they need more product. Small accounts have fewer employees and are stretched thin they will not always make time to follow up with you. They will simply fill your empty spot with another product. Relationships are key, and it is up to you to build them.
An unorthodox avenue into wholesaling would be via county fairs, farmers' market, and expos. Click on the links to read more on each of those avenues. For more in-depth one-on-one help with wholesale click here.
