As a designer selling your work there are an incredible number of business models you can adopt today. In fact, there are so many choices it can boggle the mind and leave you feeling a little overwhelmed. Running a fabric shop, I see and speak with designers who make big decisions on a daily basis. One of the bigger questions I get asked is how to sell wholesale, and if wholesale is the best way for designers to sell their products. Deciding between wholesale and retail is a big decision, and the answer has to be weighed up carefully.
So, What Is Wholesale Exactly?
To sell wholesale means supplying retailers with larger amounts of your product for them to sell directly to their customers. The alternative is “retail”, where you sell your designs on your own directly to the customer. This can be in your own physical shop or through an online shop, for example. You can, of course, do both! The main difference between retail and wholesale is in how you sell. When you are the retailer, you’re not such selling clothes to the consumer: you are selling yourself and your brand concept to the customers as well. When you sell wholesale, you are selling your brand the retailers, and as much as they want to see a brand concept that works with theirs, what they really want to know are the numbers: Price, size, materials, etc.
Weighing Up The Options – The Pros and Cons:
Pros to Wholesale:
- Bigger stores mean bigger orders, so you make more money upfront.
- Less time and money spent on retail shows, with lower return on investment.
- Less self promotion needed (well, once you’ve got the attention of the retailers!)
- No overhead costs of having your own physical shop – online and offline.
Cons to Wholesale:
- Bigger orders means more material costs. Sometimes you may not get all your money upfront, so will have to cover part of this expense.
- Getting the attention of larger retailers can be challenging.
- Large retailers are fickle – you can go from big orders one season to none the next.
- You only take home a fraction of the cost you could make for retail. For example, the retailer may buy your product for £2, and sell it for £10. To make £200, you would need to sell 100 wholesale units to the buyer. But if you sold the product for £10 yourself (retail), you would only need to sell twenty yourself – that’s only a fifth! – to make the same money!
- Wholesale trade shows are expensive, and usually abroad.
What You Need to Prepare
Before you contact buyers, you need to make sure you have three things ready:
- A clear selling point, and a sense of excitement. Before you can expect anyone to buy your products wholesale, you need to know what sets your products apart. Know your products like the back of your hand.
- Pricing needs to be clear and concise. When working with retailers big or small, they want to know what the wholesale price is so they can better understand what their profit margin will look like. Have a clear pricing plan. Will you sell in tiered-pricing, where the more you buy the more you save? Or a more classic approach with minimum purchase orders (also called minimum order quantities MOQ)? If you have a specialist product that takes an exact time to make, don’t kill yourself trying to make in bulk for cheaper. Don’t be afraid to offer something special to customers where you can.
- A well organised and informative line sheet is crucial! Perhaps the most crucial is preparing your line sheet, or range plan. For those unfamiliar with the term, a range plan or line sheet is a cross between an order form and catalog for all of your clothes and merchandise. This sheet will contain pictures of your designs and products, cost per item, minimum order quantities, sizes offered, colours, item number or SKU and materials used. It lays out all the facts of what you’re offering in one easy place. Be sure to have your contact info and recognisable logo at the top of every sheet. Check out a previous article we wrote on creating a line sheet and use these two free templates to get you started (click to open in a new window & download):
Check out this YouTube video talking you through a range plan template. Range plans are big business and you can even take courses in how effectively range plan like this one at the Fashion Retail Academy.
This is one of the key areas people struggle to get their head around and as I said really needs to be ready before you approach buyers. I’m sure you’ve seen Dragon’s Den or Shark Tank when the investors grill entrepreneurs over their poor calculations – you do not want that to be you in a meeting! There are three prices you absolutely need to know.
- The cost price – Exactly how much it cost you to make the item, including your time (make sure you have a clear hourly rate for yourself, don’t undervalue your time), materials and even things like transport and studio rent costs. You do not need to tell retailers or competitors this cost, it is just for you to know! Example: Per unit cost £25.
- Trade / Wholesale Price – This is the important one! The price you charge the retailer. It is your cost price plus your markup to make a profit. This is normally around double your cost price, however if your cost price is quite high you may feel you need to make it lower. Only share this with retailers, do not let this get out to the general public. Example: Per unit cost £45.
- Recommended Retail Price – This is usually around 2.5 to 3 times the wholesale price. It will ultimately depend on the mark up of the retailer. Shops have big overheads like rent, paying staff and business rates, so don’t be shocked by how high it is. If you are going to sell your work yourself, as well as selling wholesale you should stick to this price. If you decided to sell retail as well, do not undercut the retailers or they will avoid working with you again! Example: Per unit cost £115.
This article from the design trust has some great advice and calculators to get you on track!
Finding the right buyers in the wholesale world, means finding retailers whose image aligns with your product. If you have a product with a high cost price, you don’t want to be approaching budget retailers as you just won’t be able to offer enough of a profit margin. You will need to look at higher end boutiques or even bigger department stores. Remember places like Liberty, Harrods or Selfridges add new designers and stockists to their remit all the time too. While some might say to hold off on going after the big fish, in my opinion it can never hurt to try. Landing a major retailer can bring in major revenue, just be sure you’re up to the task. You don’t want to bag a big contract then not have the means to make enough products.
A great way to start is to cast a wide net. Try for some big names, but don’t undervalue smaller retailers and popup shops. While their orders will be smaller, they can provide loyal business, experience and can usually meet with you quicker. Shops in art galleries are often a great place to start for small designers and crafters. Also look to trade shows, (handily, we’ve written articles about the best Fashion and Interior trade shows around) and even finding businesses to work with on LinkedIn have all been useful tools to wholesalers looking for buyers. Be creative, and above all be excited about your products!