How Do I Sell My Products Wholesale to Retailers?

Posted Saturday, May 07, 2011

EtsyKids is proud to introduce our first "Knowledge Share" feature prepared and presented by Debbie -BabyChickDesigns / http://www.babychickdesigns.com/



How Do I Sell My Products Wholesale to Retailers?

Have you ever been approached about selling your products wholesale? Many Etsy sellers have never thought about doing it or have thought about it, but have no idea where to start! Most Etsy sellers migrated to Etsy because they wanted an online venue to sell their handmade items...and didn't think about selling them in stores or have a business model set up for selling to stores. My company, Baby Chick Designs was started by myself and my very talented artist mother. When we started it, we wanted to sell our products both online and in stores. So, I've done a lot of research on the subject and have been successful in getting our products in stores. The information below is by no means the exact right way to go about it, and I am still fine tuning my sales approach...but hopefully it will help get you started in the right direction, or in the least, help you to determine if selling your products wholesale is for you.

What types of stores do I approach?

This depends on what you sell and who your target customer is. For example, we sell art for kids rooms. Our artwork designs are high quality giclee reproductions of original artwork. We sell canvas wraps, fine art prints, personalized growth charts, and kids placemats. Most of our artwork is in the $50-$100 range, so I had to look for stores that carry that price point for kids artwork. (In other words, Wal-mart was out of the question.) So, I focused on high-end baby boutiques that carry artwork, nursery furniture, layette, etc. You will find this out quite easily when you start to approach stores, the ones that buy your products will be able to sell them, the ones that don't buy it will feel like they can't sell it. It might be hit or miss until you figure out your target customer and type of store that is best for your products.

How do I price my products for whole:

This is the million dollar question that most Etsy sellers struggle with. They price their items for Etsy...and that works well for them. But when they go to sell their products wholesale, having to cut their prices in half makes them too low and doesn't allow for much profit. Reason being, is that retailers will not like it if you are selling your products at a lower price than what they are selling it for. Typically, retailers take your “wholesale price” and double it. So you have to figure out a way to offer a wholesale price that allows you to still make a profit, and will not “price you out” of the competitive market. If you are selling a low price item, selling it for a couple of cents less won’t matter…or a couple of dollars less if it’s a high cost item. But any less than that may upset a retailer whose agreed to sell your products. Here's what I suggest if you are an Etsy seller who is running into this problem: (1) Re-evaluate your Etsy prices. See what the competition is doing. Can you raise them a bit without risking a drop in sales? (2) Look at your entire stock or product line and determine if you can offer a particular product line specifically for retailers, maybe a more high-end product that will sell nicely in the stores for more money. That way, you don't have to adjust your Etsy prices. For example, Baby Chick Designs only sells our fine art prints (which are a lower price point) on Etsy. We don't sell them to the stores because we wouldn't make any money. We sell more of our gallery canvas wraps and personalized growth charts in stores.

When you decide on your product line for wholesale, do some competitive analysis. Go to the stores, see what prices similar products are selling for. Then, start with that price. Let's say you sell jewelry. You want to sell a certain product line that you think should sell for $100 in stores (and you've done your research and competitors are selling in the same range.) So $100 is your suggested retail price, then half it, so $50 is your "wholesale price." Then subtract the cost of making the product, let's say $20. Then you are left with $30, your profit. If this is acceptable to you, then you have your wholesale price and suggested retail price. Some sellers use the (x4) formula. Taking the cost of your product and times it by 4. This would be your suggested retail price. Half of it would be your wholesale price.

Is working with e-tailers or online retailers the same procedure for wholesale?

In my mind, the answer is no. Online retailers are re-sellers. They are purchasing items from manufacturers, like yourself, and re-selling them off their website. Similar to a brick and mortar store, but there are differences. Most online retailers are NOT going to buy products in bulk order from you. They don’t have a store front to hold your products. Instead, they will ask you for product photos, product descriptions, and a price list, and upload that on to their site. When someone orders your product, the online retailers will email you the order and you will be expected to fulfill the order, meaning making the product, packaging, and shipping it straight to the end customer. This is called "drop shipping." So, I consider most online retailers to be "drop shipping" accounts, not "wholesale accounts." However, you should always ask before sending your Price List. Some online retailers may own a physical store, and may buy a bulk wholesale order.

My pricing is different for drop shipping, because I am doing a lot more of the work in terms of packaging and shipping. Instead of a 50%-50% split agreement for wholesale accounts, I might do a 60%-40% or even a 70%-30% agreement, where I make back 60%-70% of the retail price. It will have to be up to your discretion based on the size of the retailer, if you feel you will get a lot of business from them, etc. I have a separate Price List for drop shipping and I email this list after I discern that I'm dealing with an online retailer/drop shipping account. Remember, the only reason you are providing discounted "wholesale" pricing is because a store is buying in bulk, making it worth your while to drop your prices. A drop shipping agreement is not doing this.

Should I do "consignment" agreements?

I generally do not do consignment agreements. I've done one or two in the past, and didn't make any sales. It's my opinion that if a store wants to do a consignment agreement, then they are not sure if the product will sell. Stores only pay for what they really think will sell. However, if you really like the store, the owner, and they are giving you a good consignment agreement, for example, like 60%-40%, or more...where you are getting more than 50%, than it might be worth a try for the first sale. Then, you can move to a "wholesale" agreement after you've proven that your product sells in their store.

What materials will I need to sell my products wholesale?

  • Wholesale catalog or catalog list with all of your products (with photos of them and product titles and product codes.) You can make up the product codes yourself to use as a reference for your accounting and for the stores to use when ordering. This is not a UPC. Most stores will not require a UPC code. Tip: Do NOT include the wholesale prices in your catalog. This is for the Price List only. The reason for this is that you might need to update or change your prices at times, and you don't want to have to re-design a whole new catalog. Also, retailers will use your Wholesale Catalog in their store to show customers additional items that you sell that they don’t have in the store, so you don't want the end customers to see your wholesale prices. Make an electronic version of your Wholesale Catalog in .pdf form so it can be emailed to retailers in addition to giving it to stores in person.

  • Wholesale Conditions and Sales Terms - This can be added to the last page of your Wholesale Catalog. It can include the following: Order Minimums such as Minimum Opening Order (either a flat rate amount like $200 or can be a minimum number of items, like a pack of 6 onesies.) Minimum Re-Order (this is usually less than the opening order.) Terms and Payment (What type of payment you accept such as credit cards/checks; when payment is due.) Shipping and Delivery (time it takes to ship the product to them and shipping companies used UPS, FedEx, etc.) Return Policy (be specific here so there is no confusion.) Pricing information (might include your right to change your prices at any time, any special pricing for personalized items or different sizes/colors, etc.)

  • Price List (include product category, product name, product code, size, color, wholesale price, and suggested retail price.) Include any other variables that the stores might need to know. This can be an Excel spreadsheet that you update when needed and make an electronic .pdf version so it can be emailed to stores along with your Wholesale Catalog.

  • Samples of your products. Choose your most popular products and a good variety of products from your shop. Take as many as you can when showing them to the stores, without looking like you are carrying in your entire line. Make sure you take variations, for example, most of our work can be personalized, so I always make sure I have personalized samples to show. Let the buyer/owner choose what they want. You can make recommendations, but don’t assume you know what sells unless they ask your opinion. Store owners and buyer usually know what will sell best in their store.

  • Order form. You should be ready with an order form that you will fill out in front of the retailer. It should include the store name, address, contact person (buyer), phone, email, space for their credit card number, what they are purchasing, number of each item, any color/size variations, etc. You don't want to have to leave without getting all the information needed for the order. I only accept credit cards and checks. I don't usually accept COD (charge on delivery) unless it's a major retailer. However, most retailers will not want you to process the credit card until the day you ship the order. So, get the credit card number the day of the order, hold it, and then process it the day of shipping. Tell them this is what you do. Email them a receipt and include a packaging slip in the box that states what is included in the box. Be careful not to write the credit card number on the receipt (except for the last 4 digits) because of possible credit card fraud.

  • Website. You should have a working website that shows all of your products in case you are selling over the phone and the retailer wants to quickly see your product line. Have a Wholesale webpage with a form where retailers can request your catalog and price list. Then, you can email them the Wholesale Catalog and Price List if they are interested. Remember to inquire if this is an online retailer/drop shipping account or a regular Wholesale account. Usually you can tell from looking at their website. If you can upload the Wholesale Catalog to your website, that's even better. But never include the Price List online, because again, you don't want end customers seeing wholesale prices. And, you will want to have different e-tailers drop shipping prices vs. brick and mortar wholesale prices, so it's better not to show prices online for retailers.

How do I sell and market to retailers/get new Wholesale Accounts?

There is no easy answer for this. I will list a number of things I do to get new accounts and it may take some trial and error to find the right formula for your business.

Direct Store Sales & Communication:

  • This is usually the first step a company takes when starting to venture into the Wholesale market. It's the least expensive route to take but can be a lot of work for one person. However, it's the best way to learn how to sell your products and find out what works and what doesn't work. Once you’ve had success with local stores in your area, you can entertain the idea of some more expensive and hopefully profitable selling approaches like trade shows and professional sales reps/showrooms.

  • Call the stores. Be confident! Try not to be nervous. Practice your speech before calling or visiting a store. For example, Hi, this is Debbie at Baby Chick Designs, we sell art for kids rooms. I wanted to find out your buyer's name so I can send them our Wholesale Catalog and Price List. What is the best way to reach them? If you happen to get the owner or buyer on the phone, ask them right then if you can make an appointment to come show them your products in person. Keep your introductions short and sweet on the phone.

  • Visit the stores - do a walk-in to see if you can catch the owner/buyer, have your samples/catalog ready, if they are not there, find out the buyer's name, phone and email, and call them later to set up an appointment.

  • Email the stores your new collections, specials, etc. Using an email marketing software like Constant Contact is a great way to make your emails look professional.

  • "Like" the stores on Facebook and periodically write on their wall or Twitter account

  • Print advertising and website/blog advertising – look into the various trade publications that the stores you wish to have accounts with might subscribe to. You can periodically purchase advertising on these publications and websites/blogs and see if that yields any wholesale accounts.

Trade Shows and Markets:

Research the different trade shows that retailers attend. Which one would be right for you? There are some huge market trade shows in NYC, Dallas, California, and Atlanta that thousands of retailers attend. Each has different product categories. Most have "temporary booths" that you can buy for one or more shows. These usually range in the $1,000-$2,000 range for a temporary booth but you will be exposed to hundreds or more retailers at one time looking to see what the new products in the market are. You can also try to get your products into a "permanent show room" that will show your products year round. This involves an annual fee for the showroom and a percentage of each sale, like 15%. You will have to review your wholesale pricing again to accomodate the 15% going to the sale rep. We did this last year at the Dallas Market Center. We had some success, but it was not worth the showroom fee because we felt that the sale representatives didn't do a great job of selling our products. We are looking into attending a more category specific trade show like the ABC Kids Show where we would have our own booth and sell ourselves and the retailers attending would be specifically buying in the kids/nursery category.

Employ a Sales Rep:

You can hire a sale rep for your product line that will travel to stores and try to sell your products. You can either pay them a salary to represent only your company or try to find one that represents several product lines and pay them a percentage of the sale, like 15%. Most sales reps work for permanent show rooms, and this usually involves an annual fee, plus a percentage of each sale, so make sure you review the fine print on the contract if you go this route.

One last tip: If a retailer asks for exclusivity in selling your products, think about this very carefully. Selling is a numbers game. I never give exclusivity with our products, but, I will honor the rule that I will not sell to another store within a mile or so of their store. I only offer this information if someone asks. Usually they do not ask.

And finally, one great perk to selling your products to stores is that once you make some retail relationships, you might pick up some great ideas for new products. Some of our wholesale accounts give great constructive criticism and tell me what’s “hot” in the market, what’s selling, and what’s needed in the marketplace. Many of our new products have materialized specifically from a request or custom order from one of our wholesale accounts.

I hope this information helps you if you are venturing out into the Wholesale Market. Remember, start small, continue to learn, be prepared with your materials, and be confident...usually your products will sell themselves!


Debbie Weinstein
Owner & Sales/Marketing Manager
Baby Chick Designs, Art for Little Ones
info@babychickdesigns.com
http://www.babychickdesigns.etsy.com/ (Etsy store)
http://www.babychickdesigns.com/ (Company website)

23 comments:

Drew said...

Great tips! Thank you so much!! Heather (Pink Stripe)

Debbie Weinstein said...

I'm happy to answer any questions about the post if anyone has any!

Debbie at Baby Chick Designs

StudioLuvette said...

This is a super helpful post, clarifies a lot about wholesale vs. dropship. thanks!

woolies said...

My biggest problem wholesaling is pricing. I have to find boutiques that are willing to sell my Woolies for the prices they are worth!
Also - how do you find a sales rep? I had one - turns out she was a thief and stole my sample products, as she did to many others too.
Great article, thanks!

Ginnie's Gems said...

Great tips! Thanks for all the info with your experience.

Debbie Weinstein said...

Woolies,
Sorry to hear that you had a bad experience with a sales rep. I'm looking for a good one myself. Probably the ones that are the most reputable are associated with a permanent showroom. I would look in your area of the U.S. for for the closest "market" and see what showrooms sell your line of products. You can start there. Major wholesale markets are NYC, Dallas, Atlanta, and CA.

Good Luck!

Jolie Bébé said...

Great advice, thanks so much!

Matt Beaudoin said...

Wow, that is the most thorough explanation of wholesaling I have read. I have quite a few wholesale customers and much of what you said is consistent with how I operate, but the drop ship/online retailer arrangement was well described. When a drop ship customer is sent your way, do they send pdf's of the shipping tags? How is the money handled between you and the other online store? This aspect is completely new to me.
matt

Caroline said...

Great artile Debbie!! Do you have any more insight as to whether it's smarter to just wholesale to retailers instead of selling your products online on your own website as well?
Thanks!

JamiesonDesigns said...

Thans for providing this wonderful advice.

Betty and Todd 2 said...

I've been approached a few times and have always been put off due to pricing of the items. This information has been very useful. Many many thanks.

Laura said...

Thank you Debbie, wonderful info and tips.
I´m carrying a few wholesale customers, but I just had one that want to buy a considerate amount (booties) she is asking for "wholesale price" and wants to make 3 or 4 payments every 2-3 weeks until she finish paying. She said it´s ok if I ship partialy, the same as the payments; I´m not sure if I should consider this purchase as wholesale purchase, she is not paying the complete order upfront. What do you think?
Laura

Dollar Store Merchandise said...

You've got a very good topic here. I'll be sharing your page to our clients. They'll learn a great deal from this subject and the comments.

KidzWizPadz said...

Do you have any comments on the legalities of selling to/ working with retailers? Many I've talked with require that you're approved by the CPSIA (especially for all children's products). All of the materials I use are approved but I've not been tested by a lab. Have you run into this with retailers at all? Thanks!!!!
Sarah

Bethany said...

I was just looking for information on this the other day! Great find, thank you!!

birdbags said...

Thank you so much for the tips, guidelines and easy to follow advice! I will certainly use this article as a starting point for my business as I plan to market to some brick and mortar shops this Fall.

THANK YOU THANK YOU THANK YOU!
I will be sharing with all of my entrepreneur friends.

All best, Sarah
www.thebirdbags.etsy.com

Coco said...

Excellent article with great information. I wonder if you could speak a little more about your experience with minimum quantities from customers to place wholesale orders. I also sell fine art prints and wonder what my minimum wholesale order quantity should be. Should I make tiers for the discounts? How many items would you say a boutique might try to acquire and how does that compare to a larger store(s). Would love to hear more about this from you :) Thanks!

Cheated! said...

Fantastic thank you for such a great article!
If an online retailer wants me to mail pieces to them do I charge them? Do I charge wholesale or full price?
Or do I charge after a deal is made?
Thank you!
Bridget

Lily Pillins said...

I have been thinking this same question and this article has answered my questions. This is so informative and I now know what factors will really have to be paid attention.

pastelesta said...

Thanks for this post, really helpful. Just need to pluck up courage to do it!

Anonymous said...

Thank you! Thank you for this information... this has been the most helpful info!

Kgs said...

GREAT Information!! Very helpful!!

Kirstie @ A Jar of Pickles said...

This is an amazing blog post, thank you so much! will definitely be referring to it as I start my wholesale process.

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