Demystifying Wholesale Systems
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When you’re first getting into the retail or wholesale game, things can seem pretty confusing. Between wholesale systems, getting retail ready, hiring sales reps, and beyond- there’s so much to know.
So where do you begin?
A bad first impression can be¬†difficult to overcome. Not only do you risk looking¬†unprofessional, but a poorly planned process has the potential to cost you more money than the sale is¬†worth.
The good news is, selling your unique creations to retail store buyers is not as overwhelming as it seems, especially if you’re properly prepared.
Here are a list of six simple¬†systems¬†to put in place before you visit your first retailers.
1. Develop Correct Wholesale/Retail Pricing
As a general rule of thumb, your wholesale price should be approximately 50% of your retail price. If it is less, you will have a difficult time selling your products wholesale. Often, it will take some work to make sure there are adequate margins for you both and the gift retailer.
Following is a rough formula to use when determining pricing for your products.
Cost of Good (plus time and marketing) X 2 = Wholesale Cost
Wholesale cost X 2-2.5 = Retail Cost
One of the biggest mistakes I see with new producers is that they work their pricing backwards, taking their retail price and dividing it in half to come up with a wholesale price.¬†Always start with your costs and work your way through the formula to come up with a wholesale price first, then double (or more) to arrive at a retail price.
2. Decide on Your Payment Terms and Minimum Order Requirements
Most retailers expect Net 30-60 terms, but I suggest you ask for credit card payments on the first order or two.¬† After that, you can extend whatever terms you would like to use, depending, of course, on the particular store you’re working with.
Minimum order amounts can vary from product to product.¬†Sometimes, it is reflective of the best use of your raw materials.¬† If you are unsure, most retailers expect between 6 to 12 products in a single design or type as a starting minimum.
3. Create Your Sales and Order Taking Materials
Full color sales flyers are an absolute must when selling wholesale.¬†Samples are great, but flyers can be¬†both¬†emailed or left with your buyers.¬†Each page of your flyer needs to include size, color, minimum quantity, terms, price, contact info, as well as photos of your products.
Order books are also useful, especially if you visit your buyers.¬† You can design your own order forms or use a sales order form book available at any office supply store.¬†The best option is to add a few extra columns to your sale flyer or line sheet to use as an order form.
4. Designate a Shipping and Fulfillment Area
Research UPS, USPS, and FedEx to see which company will be the best fit for you. Once you decide, open an online account where you can input your info and print shipping labels right from your computer.¬†This method saves you both¬†time and money once you starting doing a lot of shipping.
Set up a separate area in your office or home for your shipping supplies, so everything is right there where you need it. Keep your order boxes, peanuts, bubble wrap, and packing tape all on a large table where you can package orders quickly and easily.
5.¬†Set up Your Record Keeping Systems
Even if you only sell products via credit card, you will still need a bookkeeping system. In order to stay¬†abreast of your financial situation, you will need to find a system that will print invoices and packing slips, as well as keep track of your expenses.¬†Freshbooks and QuickBooks¬†are¬†both excellent¬†options.
6.¬†Develop a Follow Up System
Lastly, make sure you have developed a follow up system to check in with your buyers.¬†Once your product sells out, it’s your responsibility to make sure your products are re-orders.¬†Don’t expect your buyer to contact you.
Setting up a written or computerized schedule to follow up with each wholesale customer will help you keep track of when to contact your buyers.
Once you have all the above systems in place, you should be ready to approach your first wholesale buyer!
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