Just hearing the word wholesale can put such fear into craft people because it gives the indication of selling goods in vast quantities are heavily reduced prices - not so. Wholesale can mean selling 5 of one item or selling 5000! If you are interested in selling wholesale, like I am, what does it mean to you? Do you want to get a presence in a few local stores or independent stores natiowide or are you looking to compete with the big guns? What ever your aspiration, there are a few things you will need to know, and here I shall cover the basics (they really are the basics, you will need to investigate further!)
A line sheet displays the names, item numbers and prices of your products. Its also good to include contact information, sales and delivery policies, minimum order requirements, lead times and shipping costs.
Minimum Order Requirements
There are two types of minimum order to consider. The first is a minimum monetary value for an opening order and reorder and the second is a minimum purchase quantity per item. The minimum opening order will vary depending on what products you sell. For example I may set my minimum at £50 as my prices are lower than say a high-end jewellery seller who may set their opening order at £200. The minimum quantity requirements will tell a buyer that they need to purchase, say, 20 bars of soap in a particular scent or 5 quilts in a particular pattern. When you start out it is helpful to keep minimum quantities lower to encourage buyers to purchase and take a chance on you. It will also enable smaller shops to purchase. Be confident in the minimums you set because if a buyer wants your product they will adhere to your requirements.
An order form will allow you to easily take orders from your retailers. Be sure to have space for their name and company information, terms and the purchase order number. Larger companies cannot pay for their order unless it has a PO number. You may decide to combine the order form and line sheet into one document.
If you are asked what your terms are it means payment terms and is especially important with new account holders. Typically before a buyer has established themselves with you and has your trust you should expect COD (cash on delivery) or prepaid via a cheque, credit card or Paypal if international. When you have an established buyer and trust them you could offer 30 day net terms which will allow them 30 days to pay from the time the order has been received.
Lead Time & Shipping
Once you have an order you will have to let the buyer know when to expect their products. Calculate the lead time on how long it takes you to create the items and package them. As a general guide, manufacturers at trade shows will say a four to six week lead time. You will also have to give information on how the order will be shipped, shipping costs and who will pay for these.
When you sell your items wholesale, the buyer is buying your goods outright however it is good business practice to have a returns policy. You need to set a time frame in which to accept returns i.e. 14 days and the items need to be in a resalable condition in their original packaging. If like me, you do custom orders, it is advisable not to accept returns for these. Be clear about your policies.
You can have policies about pretty much anything but they can only be enforced when they have been started upfront. You might want to have a policy on cancellations of orders, especially custom orders, or how to sell your goods. You may even create a policy about promotion for example if a bulk order is placed, say, over 100 bars of soap, then a small discount is given.
That really did end up being a long blog post! Have you any tips on wholesaling?
Coming in the next Business Tips blog: Wholesaling Part 2.