Selling Wholesale

[AndyL1]

Hey all,

I was recently approached to see if I would be interested in selling some items wholesale. I've never done this before and it seems like a good idea for me right now. The vendor wants just small runs for now, about 10 pieces per month, so it's something I can definitely handle. And since it's small runs, I feel it's a great way to get my name out there without too much effort. This particular vendor has three different websites that they manage, all selling similar themed items so traffic is fairly large.

One thing I made clear too is that I have to have my brand on all my products and not theirs. This was very important to me. They are fine with that as well.

Any words of advice or things I should know? Should I take payment up front like I normally do and then make and ship? Seems like a good way to cover my end.

Thoughts and opinions greatly appreciated.

Cheers,

Andy

Edited June 5, 2013 by AndyL1

[Cyberthrasher]

Any words of advice or things I should know? Should I take payment up front like I normally do and then make and ship? Seems like a good way to cover my end.

Well, Buddy, I don't have any experience in it, but from my point of view that's what I would shoot for. Otherwise you're basically doing a consignment deal and hoping you get paid for the work you've done. Aside from that, definitely make sure you have everything in writing. No handshake deals here. Then I would also make sure that the company is holding up their end of the bargain and not labeling it as "theirs" on any websites but sending it out with your logo on it. Something like this I feel is very important to make sure that both parties are working together to promote each other. If you're not getting any benefit out of it aside from guaranteed sales, then there's not a lot of point. I've seen the way people jump on your stuff on your page - It doesn't seem like the guarantee of small lots would be something you have to worry about too much (unless my eyes deceive me with how well you're doing there).

[AndyL1]

Thanks for the insight. Yeah I would have to negotiate either full or partial payment up front and then the balance upon shipping. I don't like the idea of consignment at all or getting paid per piece when they sell.

I received a more detailed list of what they would like. At first I thought it was ten individual products, like 10 wallets. But they would like 10 different products in multiple quantities. So like two bag styles at six each, three wallet styles at six each, etc. Quite a lot! Still something I can handle as they would not need everything until October when the Christmas rush starts.

I do fairly well with this on my own. It's not replacing my day job by any means, just a fun hobby that makes some extra cash. Growing this into a bigger business is still on my mind and I think this may be a good way to get huge amounts of exposure.

[Cyberthrasher]

I do fairly well with this on my own. It's not replacing my day job by any means, just a fun hobby that makes some extra cash. Growing this into a bigger business is still on my mind and I think this may be a good way to get huge amounts of exposure.

Exposure and advertisement is the way to take off and make it your one gig man!! I keep seeing people who have paid for advertisement and do crappy work that are making tons of money - JUST because their name is out there in people's faces so the consumer thinks it MUST be good. I'm constantly thinking about how to grow into a full time business and things like this just keep pushing me further and further toward it. At some point you're going to have to take that leap from "extra cash" to "Crap! now I have to figure out how to make SURE this will pay all the bills!!" Lucky for me, I'm a LONG way off from having to make that decision with my miniscule sales right now.

The whole thing still sounds like you can handle it, especially with a time frame like that. It's all stuff you already make, right? No new templating needed? If the deal's good, I think you should go for it. What kind of track record does the company have? Check to see if there's any kind of not-so-good feelings you can get through some research on them as a business.

[Longview]

Hi Andy,

I grew up on a ranch in South Dakota (my father raised horses and did a lot of rawhide braiding, saddle and leather repairs. Hence, I worked with leather since I was a child. During the ‘70’s, I supplemented my income doing leatherwork selling at craft shows.

I continued to pursue the craft as a hobby during my work years. I’m now living in Alberta Canada. I retired in January 2012 and decided to do leather work full time. I’m presently selling at craft sales and on my website. As well, I’ve been doing a fair amount of wholesale. I have found that the retailers generally want to purchase at wholesale pricing. I’m not sure of how wholesale pricing works in California but here in Canada, the retailers expect to pay 50% of retail. I have developed a pricing formula (based on my years in business) that I use to set my retail pricing and also allows me to sell the products wholesale. I have set up a simple spreadsheet that calculates material costs in the project (including a waste factor for leather) and labor. I then put a 40% margin on the raw cost (Raw Cost being material plus labor). Example: If my material cost is $10.00 including waste and my labor is $7.50, my raw cost is $17.50. Divide by .6 to add the 40% margin equals $29.17. This would be my wholesale price (I may round up or down). My retail would be set around $58 to $60. This formula allows you to cover your overheads. Rest assured the overheads grow dramatically when you begin doing leatherwork on a full time basis.

I prefer not to do consignment (if I do, I get 60% rather than 50%and have a contract that ensures I’m paid monthly for all items that are no longer in stock at the retailer.)

I do not give terms on wholesale sales, I am paid before shipping and pricing is FOB my shop.

Hope this helps,

Don

[NVLeatherWorx]

_{If you sell wholesale to anyone you need to make it clear that they can not sell the item at retail for less than you would or have advertised. If they want to charge more that is fine but they CAN NOT sell for less. This keeps a potential customer/customer from seeing your work out there at a cheaper price from somewhere else. You also need to go with your gut on the concept of having your name all over it. It is your work and yours alone. I have turned down several such requests due to the retailer wanting me to brand the product under their name even though I have done all of the design work and handcrafting of the products. I have made my life easy by not doing wholesale or consignment. Regarding payment, 50% up front with the rest being invoiced and due prior to final assembly. Put it in writing and get a real signature on the agreement. Make sure they understand that the upfront portion is non-refundable and that all future orders will be done the same way and subject to your acceptance. No long-term agreements, do them on the basis of them placing an active order when they need product.}

[Cyberthrasher]

Along these same lines, I was reading an article the other day that was extremely similar and I thought of you immediately as I was reading it. A successful boot maker who was just doing small numbers was contacted by a major retailer to start carrying his items. When asked how they discovered him, they said they were looking around on Etsy for "American Made" craftsmen. Since then he's become quite successful. So, some real good can come from this if both parties are in it for success.

[AndyL1]

All VERY good advice guys! I'm still just having email conversations with the reseller at this point. But it's been a week since the last correspondence so I hope they haven't changed their mind and flaked. We'll see. I could take it or leave it to be honest... It's not like I need to sell wholesale.

Thanks to all of you for the great input. Makes my decisions that much easier.

[NicoleAlaine]

I agree with Cyberthrasher, definitely payment up front, and definitely make sure you can handle the workload. I have done some wholesale and been really happy with it. I still make sure that I price my products so that I can wholesale them someday if I decide to do so again. Right now I have limited time and so restricting myself to making full retail and selling fewer things makes sense for me, but once I am ready to really grow my business it will probably be wholesale that will allow me to do that. The exposure is great! I always used a business card for a tag (attached with string) so they could put the price tag on it. That way the customer knows I have a website, blog, etc that they can buy directly from (and you don't have to share profit with a wholesaler). Just make sure if you do this that you are charging the same online as your buyer is selling for in store (or on their own site). Undercutting your wholesalers won't make you any friends Of course if your buyer is selling online they might not want to include a business card of yours, so a makers mark would probably be a good investment.

Good luck!