Many bigger brands want a piece of the small business magic these days, with ethical shopping at the forefront of many consumer’s minds. Using wholesale for your products is a great way to expand your business and provides another revenue stream – but is it right for you?
Therese is a business mentor from the Small Business Collaborative, and an expert on all things wholesale. You may have caught our previous chat with her – click here for details!
Pedddle founder Nicki recently had another IG Live chat with Therese to find out more about using Wholesale:
How does a business know when they are ready to delve into the world of wholesale?
We often seem to think that we need to be super prepared to scale before we start – but sometimes you just need to take the plunge!
Make sure your products are ready to be sold in a retail environment – are they good enough for the top shelves? Are they easy to display? Is your brand name on the products? Logo is key, branding is key – make sure your product line is clear and you can tell it’s made by you!
Any tips for being prepared before approaching a retailer?
You can start small but make sure you have all the legal requirements sorted, look at public liability insurance and so on.
Don’t compromise your brand by risking letting people down in the long run – be prepared to say if something isn’t right for you.
Why is wholesale a great income stream for makers?
It’s not right for everyone – it depends on you and your product line, and your ability to scale. If your products aren’t something that can be mass produced, if they take time and you want to charge more, perhaps wholesale isn’t right for you.
However, you don’t need to wholesale each product that you make – perhaps just a certain selection of your products are right for bigger retail, and you need to look at having a reduced wholesale catalogue.
However, it’s plus points are:
- A streamlined process
- Marketing done for you – the retailer will market themselves, taking some off the marketing pressure off you
- You can set your own working times – you can tell your stockists when you’re on holiday and clarify exactly when you will be shipping, to work around you
- It’s another revenue stream – and the more income streams, the better!
- You can free up time to focus on other stuff – like your profit margins and increasing your bottom line
What types of wholesale opportunities are there? Are any better than others?
- Firm sale / wholesale – most people assume this is the main type of Wholesale. You need to have big margins for this, but it can pay off as there’s more chance of people buying from a larger trusted brand or shop, or even coming across it in the first place. The shop buys a certain amount of stock for a set price – but you usually earn less commission as a result. However, this is a much steadier way of selling wholesale and is perhaps the most well known.
- Rent a shelf – you effectively rent a space in the shop, to sell your products. There will then be no exchanges unless there’s damages, and no refunds – if they sell it, you get the money and if it doesn’t sell they put it on sale at end of season.
- SOR – sale or return – This is not Therese’s favourite way of trading as it can be difficult to keep up with, but it can help you start trading with someone if you’re only just starting to sell wholesale. It traditionally means that a buyer (e.g. shop) will buy your goods on a ‘sale or return’ basis. You will need to set out exact terms of agreement before they begin selling, and then you invoice them according to the amount of items sold. Invoice them on your terms, be it pro forma or on credit, and set terms such as they must sell a product within 3 months or they can return it to you, or exchange it for a different product, as long is it’s in perfect undamaged condition.
How many retailers is a good number to be selling to?
It entirely depends on your goals! Some people want to stay under the VAT threshold, some people want ten stockists – some people want hundreds!
Your goals can change as you progress in your business, but it’s always good to set a goal to work towards.
How do you go about finding wholesale opportunities in the first place?
Emailing retailers is a good place to start, to introduce yourself. Again, think about where you products would be a good fit, if there’s any local shops you admire and so on.
You could send product samples that you feel would fit well with a certain brand or retailer, but make sure it’s a good fit and showcases what you create well. Watch the IG Live chat below for more tips!