abn

Working With Retailers: Lessons Learned

8 posts in this topic

Earlier this year, I was approached by a retailer who asked to feature my leatherwork in his shop. The retailer owns a well-known, independent gallery representing other area artisans. It's also located in a high-traffic shopping district. It sounded like a good opportunity and I agreed.

After a few months, a change in the retailer's business model ended our partnership. But I certainly feel I learned a few lessons that I'll share here in case anyone else considers going down the "retail path."

Lesson #1: Retailers take a big cut of the sales price.

Retailers generally take a 40-50% cut of an item's sales price. This means you need to price your items accordingly. If adding 50% to the price of your goods is not feasible, then retail is probably not right for you. Also, keep in mind that your pricing must be consistent. You can't sell a belt at your retailer for $90, but charge $45 on Etsy. The customers will figure out the cheapest place to acquire your goods, and your retail relationship will come to a swift and inglorious end.

Lesson #2: You should get a big benefit in exchange.

Why do retailers take 50%? Because they're supposed to be providing value to your business. This value comes in the form of enhanced exposure, access to the business's clientele, joint marketing, and the value inherent in not having to file state sales tax returns, process shipping or provide in-person customer service. Now, 50% is a huge cut, so the retailer should be providing all of the above -- meaning, significant value to you. They should promote your goods via Facebook, broadcast email and other means.

Lesson #3: Be picky.

You don't necessarily need to partner with the first retailer that expresses an interest in you. Be selective. Visit the shop and look around. Would you shop there? More importantly, does the business cater to your target market? In my case, the retailer seemed to be a good fit for high-end leather accessories. They also featured jewelry and vintage home decor. But if I were selling holsters, I'd definitely find someplace else.

Lesson #4: Build your inventory.

Be prepared to meet demand for inventory, plus refresh your stock every 90 days. Your goal should be to establish a significant presence in your retailer's business. This means featuring a good selection of leatherwork. Different colors. Different price points. As an initial delivery, I provided 17 items. I've been told by other gallery owners that you should change out your stock every 60-90 days to ensure folks continue to see new stuff, whether it's selling or not.

I hope this information helps anyone else who considers venturing into retail. I might also recommend the book, Craft Inc. by Meg Mateo Ilasco, which gave me plenty of initial pointers on working with retailers.

Best, -Alex

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Good info -thanks

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Very good info!

My wife is an artist and we deal with several galleries, both in and out of state and you hit the key points to watch out for right on the head. There are just as many bad galleries out there as there are good. The average take by galleries ranges from 30%-50% and seems to depend on where they are located.

If you go down the retail road be sure to keep tabs on what the gallery is doing to promote your work. I have encountered several occasions where the advertising and promotion was exceptional in the beginning, but stopped as soon as the gallery signed on another new artist. How well your product is marketed is directly reflected in your sales. If the sales drop suddenly odds are so did the marketing effort!

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good points ABN. I have my things on Etsy and in a couple of local shops and I just went to a craft market. Price is the same everywhere. Only makes sense even though I'll make more on etsy if they sell. These are good tips. Cheryl

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I've had similar situations with my holsters & belts. My belts are being sold at 4 of the 6 gun shops in and around Eugene, Oregon. I wholesale them at $25 for a double layer belt, roller buckle - for shooting. A couple of the stores resell them at $35, while another sells for $49.95. These shops also refer my holster work to gun buyers. I sell my belts through my leather shop to holster clients for $45 - and always tell them where they can buy them for less. They typically want to purchase directly from me at my price, as I made the holster.

One sporting goods shop offered me an end aisle for my holsters, saying he was going to let me in on the ground floor. Problem was I sell my holsters for around $80 and would need that much from him so he could tack on his profit. This would set me so high he'd never sell a piece! Then there were other issues. I had a strong feeling one counter guy would never tell his customers about my products. I've also never rec'd a referral from them. All flags and I decided to not engage. I'd also learned about another maker who had around $800 worth of holsters in this shop and never really got anything going. Lots of inventory, no movement. This goes directly to your comment Ambassador of the shop needing to take ownership and interest in getting your things moving.

To align with another of your tips, I was not as picky at first going into this. I should have looked over the stock and got an idea how long things had been sitting around.

And finally, building inventory while having customers come into my shop is difficult. Plus I'm sure this guy really wanted to go consignment in the end anyway. Too many hassles and life is too short.

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A few comments about the Volume of sales:

1.

Know your limitations as far as volume goes. I once had a major retailer ask me if I could do a line for them, but they were talking 50,000 handbags . Even though we do a sizable volume- there's just no way to scale up like that. If we even had tried we'd have had to abandon all our old wholesale accounts....and if they canceled in a year or two, where would be be?

2.

Another thing to realize with volume is that "economy of scale" doesn't always apply with leather work- For example if a customer wants 500 pouches all in the same color, I can find a batch of scrap or a few hides that I've gotten a good deal on and sell for one price. But, if a customer asked me to do 10,000 all the same color/same leather, we'd have to go about buying hides and the price per piece would be substantially more. It's entirely possible that 500 pouches would be substantially less per pouch than 10,000....

Just my 2 cents after doing this for a while...

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What companies are able to make 50,000 of the same product? Where are they located and what machines do they use?

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It depends on the product, simple pouches or bracelets, we can handle a number like 50K, but for handbags or wallets you'd be hard pressed to find a US company able to do that many in a reasonable amount of time.  There are factories in countries like India or Pakistan who can do those numbers.

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