Let’s talk about wholesale

by | Aug 7, 2020 | How-to & Tips | 389 comments

Wholesale Blog Post FAIRLING featured Image

Let’s talk about wholesale, baby! You have probably already heard of the famous wholesale market and how many brands and shops develop partnerships through that. But what exactly is wholesale and is this a great opportunity for both brands and shops to maintain their business and maybe even grow? Keep on reading because we will explain how to develop a partnership, how the whole pricing, shipping terms and requesting a partnership will work in further detail in this post.

Wholesale as a new opportunity for brands

Wholesale opens a new door for both brands and shops. Basically wholesale is a B2B, a business to business concept in which brands and shops form a partnership that benefits both of them. That being said, if you are a brand with unique products and are currently selling your products directly to customers, so a B2C, the business to customer concept, then wholesale can be a completely new opportunity for you to reach out to new customers and locations. 

Wholesale opens many doors for you

Wholesale is all about partnerships of a brand and a shop. The difference here from B2C is that you are selling your products to a shop so they can resell your products in their store. Cool, right? It is! The good thing about this is that you can gain a whole new group of customers and partnerships in many different locations. 

Local trade fairs

Starting can be hard. But there are a lot of different options for you to get a better understanding of what wholesale is all about in many ways! You have probably already heard of trade fairs, where brands present their products at a small stand and have business cards and information ready for interested customers and shop owners. Trade fairs are a good way to form a personal relationship immediately without sending a request online. In addition to that trade fairs are a great experience and an opportunity to give you inspiration from other brands and their products.

Online trade fairs

But with COVID-19 hitting us the possibilities of local trade fairs are very slim at the moment. But do not worry, there are online trade fair platforms as well that possibly have even more options to present your brand and your products to potential shop owners. Online trade fair platforms are basically the same thing – it is just online! The good thing here is that you can take your time with setting up your brand profile and image and can always contact the customer support of said platforms if you need help with anything. Since mostly everything is getting done online, online trade fair platforms are a revolution for wholesale in general! Sharing contact information, shipping terms and pricing is also more clear since every party can check the information in their pace.

Wholesale through partnerships with special pricing and shipping terms

So this whole wholesale topic caught your attention? Good! But before you dive right into preparing everything for your brand we would like to give you some helpful tips that you need to keep in mind. Especially the pricing and shipping terms of wholesale work a little bit differently from what you might be used to. Keep in mind that wholesale is a business to business concept and with that you have to work differently compared to direct customer business.

How does the contacting work?

So how do you start partnerships to begin with? This really depends on if you attend a local trade fair or are registered at an online trade fair platform. But usually the way to go is to always be transparent about your brand and products and always have all the needed information that shop owners need to know at hand. You can form partnerships with contacting shops that you think would fit your brand very well. Keep in mind to stay polite but to also make your unique selling point clear in your request. However it can also work the other way around and a shop owner will contact you first.

What you should always think of when negotiating with a shop owner

Firstly you have to get to know the shop, what kind of products they are already selling and what the shop is about in general. Introduce yourself with a kind, quick and thoughtful message. It always works very well if you use the shop owner’s personal name and describe why you love their store and why think that your brand would fit in perfectly into the store. It shows that you have done your research and are enthusiastic about a partnership. Always have all the important information at hand, your pricing, policies and shipping terms. Being prepared is always a good sign. And last but not least, stay up to date. Shop owner’s can be busy sometimes and will need some time to respond to your message. Make sure that you will not get discouraged from not getting a reply immediately. In addition to that if a shop owner replies that the timing is bad for them at the moment, then respect that but contacting them again at a later time will help them to remind your brand and a possible partnership.

Wholesale and retail pricing

To price your products for wholesale can be a little tricky and confusing for beginners. However once you understand how pricing works, it is actually pretty simple! First of all you need to elaborate your break-even price, which means the cost of supplies, overhead costs and labor costs for your product. So once you have done that you can think about the wholesale price, which is usually the break-even price times two or more. Furthermore another option is that you can add the desired profit directly to your break-even price. However you have to make sure that the prices are realizable and not too high. Otherwise shop owners will most likely not make a purchase. Following comes the retail price which will be the final price for a product once it is available for sale in a store. Usually retailers, so the shop owners, will sell your products in their store for double your wholesale price or more, depending on the store. So summarized, the magical wholesale equations are

  1. Break-even price = Supplies + Overhead costs + Labor
  2. Wholesale price = Break-even price x 2 or more
  3. Retail price = Wholesale price x 2 or more

The purchase order minimums

So you have warmed up with the wholesale topic, how to interact with retailers and how to calculate pricing for your brand. And now? Imagine you will get a request and a shop wants to purchase your products. How does that work and how does it work the best for you? Getting requests and having a constant overview of what retailers order, what kinds of and how many of your products will be ordered can be tricky. Nevertheless having an overview about your incoming purchases is very important. Besides that you have to work out the best option of purchase order minimums for your brand. The purchase order minimum ensures that there is enough volume to make wholesale pricing worthwhile for your brand and that a shop owner purchases and resells enough of your products to represent your brand. 

Find the best purchase order minimum for your brand and possible retailers

Finding the right purchase order minimum for your brand really depends on what kind of products you are selling and at which amount it will be worthwhile for you. Depending on your products the order minimum can vary from your bestsellers and new products that you want to get more popular with a lower order minimum to motivate shop owners to make a purchase for that product. Make sure that you set approachable minimums that are realistic for both you and the retailer. 

Payment terms

Payment terms in wholesale do work a little differently from what you might be used to from selling products directly to customers. The so-called net terms are common for wholesale. Net terms allow the retailers to pay a brand after 30, 60 or 90 days. This allows retailers to sell some of your products and recoup some of the payment costs for your products before making a payment. However do not jump right into net terms with a new retailer. Since you are extending credit to a retailer, you have to make sure that the retailer is trustworthy and will make their payment in time. A lot of brands work with 30 and 60 net terms after a few successful and trustworthy purchases from the same retailer. Another option of a new partnership for you can be the retailer paying half of the price of their purchase immediately and the other half after 30 days. This way you can ensure that you will get some of the costs for your products back immediately and that you can check the overall selling situation of your products in the shop. 

Be transparent about shipping terms and conditions

It is highly recommended that you will be informed about your shipping conditions, costs and terms for your brand before starting a partnership with a retailer. Additionally always make sure to send the retailer status and shipping updates about their order after they have made a purchase from your brand. We all know owning a brand or shop can be hectic sometimes, so sending a retailer a reminder when their payment is due is highly appreciated from both sides. 

Ready for takeoff!

So, do you feel ready to start getting into wholesale? We think you are! Building a lasting wholesale partnership can be hard at first and definitely takes time but there are so many possibilities that come with attending wholesale, so it is definitely worth it! If you are planning to get to know more about online trade fair platforms and are seeking more information, then check out FAIRLING which is one of the most popular German online trade fair platforms!

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