When should you join the wholesale bandwagon? This is the real question this blog addresses. If you missed our post on how to figure out wholesale and retail pricing, and what strategies to adopt, then you should check it out.
You are a small business. You started your store as a hobby. You still have a full time job, a family that needs your attention and dishes that need doing. You feel like your business is more of a hobby. So should you even think about wholesale?
The truth is, if you are still in the mindset that your business is just a pleasurable hobby and you don’t have the time to scale it up, and are more or less content with the few sales you make per month, then the wholesale route probably isn’t the best option for you at the moment.
However, if you think your hobby is a legit business that can grow if nurtured well, then maybe it is time to take it to the wholesale level. Once you have become comfortable with your retail price point and know how to churn a good profit out of each sale; that is when you think about wholesale rates for your items using the formulas in our blog post Wholesale and Retail Price. How to Decide.
Here is a checklist of things to have ready before you plunge into the world of wholesale:
Do you have a firm understanding of the cost of materials for your items?
Do you have a grasp on your profit margins?
Have you tried and tested your retail prices and arrived at a firm number that works for your items and your business?
Have you made time to scale up your business to be able to take in wholesale orders?
Here some next steps to consider:
Research retailers you would like to approach.
Prepare a clear and legible table that includes your item names, item IDs (SKU), unit price and wholesale price. This will be a part of your catalogue.
Prepare a Look Book or Catalogue for your retailers and vendors.
Prepare a template for your invoices and order forms. There are a number of free templated readily available online, so don’t be afraid to use them as a starting point.
Develop an email for your retailers. While a generic email is a good start, remember to add a more personal touch in each of your emails. Make sure you sound genuinely interested to have your items stocked in their stores. An ingenuine approach is transparent and will never work.
E-mail the retailers and make sure you attach the Look Book.
Follow up with the retailers that respond to you and show interest, and then send them the catalogue.
And voila, watch the orders roll in.
But remember, there is nothing more disappointing for a retailer than an unprofessional vendor. Don’t be that vendor! Look and sound professional. Have everything in place, so that when an order does come in, you are ready to start fulfilling it immediately. Keep your retailers updated on the progress of their orders and let them know when you ship it out. Nothing bugs a retailer more than having no idea what is going on with a wholesale order they places days or weeks ago.
Don’t forget that orders will come in ad hoc. You may get a bunch of orders at the start, but then with varying quantities, these retailers may order at different times and different quantities. So make sure you have a tracking system in place. What we personally do is use Google Sheets and immediately document an order placed - noting the date, the order/invoice number, the items ordered and the quantities ordered. Do this immediately so you will save yourself a lot of trouble if the orders pile up on a daily basis. The reason we personally use Google Docs and Sheets for these is because they are easily accessible no matter where you are (as long as you have access to the internet). But hey, if you are more old school and find yourself better at noting down orders by hand in a book, then go for it. Whatever works for you and gets the job done.
Remember that you need to be fully prepared for any order and quantity that may come your way. An unprofessional vendor that can’t meet the demands of a retailer will most likely be blacklisted. Consider the checklist above and ask yourself the serious questions. If you haven’t put all of those issues in order, then perhaps you need to wait for the wholesale element of your business. We recommend all new and small businesses to think at a local scale first. If you are in Toronto, don’t worry about selling in Tokyo just yet (even if you think the Japanese market is your best bet). Start local, grow international. Slow and steady always wins the race.
While we all dream of seeing our products at retail outlets, the process of wholesale orders is no walk in the clouds.