So, I’m very excited about this month’s module on selling wholesale. Wholesale has been such a big part of my business for the last 5+ years and it’s only with wholesale do you get those $1,000 orders. I’ve even gotten wholesale orders at $8-9,000. It’s seriously an amazing feeling. In this short and quick lesson, I just want to introduce to you why you should consider doing wholesale and then we’ll go through some prompts that you can ask yourself to see if you’re ready for wholesale or not. Let’s get started.
Now, why would you want to do wholesale? What’s so great about it?
First, you get to broaden your distribution network. So up to this point, perhaps the only place you’re selling your products at are online on your website, maybe on Etsy and maybe you do some craft shows throughout the year. Being online is amazing because you get a chance to reach virtually everyone who could be interested in your products by just being at your computer. But there’s something different about selling your work in brick and mortar stores.
Interestingly, there are still a lot of people who prefer to shop in person. Some people are just not savvy enough to shop online or they’re not comfortable with it. Some products need to be seen, touched, smelled or worn before buying. And sometimes there’s a birthday party happening right that same weekend and you know you’re not going to get product shipping to you on time if you ordered something online, so you have to go shop at a local store. There are just some shopping experiences you can’t replace with online e-commerce. Distributing your products in a new area that is wholesale opens your brand up to the exposure of a whole new market that had never seen your work before.
Along that same thought, wholesale also adds a new level of diversification to your income. Your retail online sales are not related to your wholesale sales.
Marketing and getting customers and orders for online sales vs wholesale sales are very different. To do well selling online, you do PR, social media, Facebook ads and email list building. With wholesale, you send out email pitches, you go to trade shows. Very different strategies. And you’ll find that in some months, wholesale orders come flooding through but retail orders are super slow and vice versa. It helps make your income more consistent and stable, which is one of the biggest challenges of being your own boss.
And of course, you get to make money! Who doesn’t like that? The whole idea of selling wholesale is to sell your products in bulk. Where you would normally sell maybe 1 or 2 or 3 of your products to a single online customer, you would sell at least a dozen if not more of your product to a brick and mortar store. The dollar amounts that come in from wholesale orders are usually very large. While most of my retail customers pay $45 on average, a brick and mortar will spend at least $300 on my jewelry. And it’s so nice to have that influx of $300 in your bank account for that one day.
One thing I never knew would happen was that the more I sold my product to retailers, the more I saw my business growing. Maybe it’s a less direct correlation, because you could say my overall business is growing because of doing more Facebook ads, or something other than wholesale. But I keep getting emails from customers and hearing what people are saying. They say they found my work at a store. I’ve had customers who continue buying from me online say this. I’ve had press and media say this. I’ve had other stores want to carry my work because they saw it in a different store. Having your products on the shelves of a local store isn’t just great because you made that wholesale order, it’s also great free advertising from all the foot traffic that store gets!
Tiny Hands has become more and more of a household name that people are so familiar with because of my wide distribution, not just online but also offline.
So now that I got you all excited about selling wholesale, the question you have to ask yourself now is if you are ready for it.
There are two really big things to look out for before you do wholesale. First, is your prices. If you aren’t set up with pricing your products correctly following our pricing formula, that is, if you’re not marking up twice, then it’s going to be really hard to sell wholesale because you’re going to make hardly any money.
Just as a refresher, if it cost you $5 to make your products including materials and labor, your wholesale price is twice of that, which is $10. And your retail price is twice of that again, which is $20. For some of us who sell one of a kind products or very labor intensive products, wholesale may never be in your picture and you’ve known that from the start when we talked about pricing earlier in this course.
When you sell your products wholesale, you’re going to be expected to charge 50% of your retail prices. If your retail price is $100, your wholesale price is $50.
As long as you’ve marked up twice, and you can still make a profit selling your product at $50 wholesale price, you’re in good shape to do this.
The second biggest thing is production. Do you have the systems in place to make your products in bulk, quickly and affordably? If you don’t yet, but you know you have to hire people, that’s fine. We have an entire course on this coming up next month where I’ll teach you how to find production help. But if you’re thinking that you don’t want a team and you want your business to stay small, then that’s fine too, but just realize that wholesale may not be as fulfilling for you. Because when you get a wholesale order, you have to make multiples of the same design over and over again and that can suck some of that creative juice out of you. And if you’re doing wholesale yourself without the extra help, it’s likely that you’ll start to feel burnt out quickly, and we really want to avoid that.
A third consideration is if you sell products for the intended use of children or if you sell jewelry, you’ll have to be seriously thinking about testing your products for safety and getting them certified. For example with jewelry, there are certain laws we have to meet, like California Prop 65 where you have to certify that your products don’t contain harmful chemicals or materials that can cause cancer or birth defects. There are labs you can send your product to for testing but it costs a few hundred dollars for one test. Now I know this is a lot to take in. These are usually questions larger retailers will ask of you. If you deal with mostly mom and pop, smaller gift stores and boutiques, they most likely will never bring this up. But the moment you work with Land of Nod or Target, they’re going to want to see some certifications because at that point, you’ll be selling your products at such a large scale that it can really be a huge problem. So if you’re just getting started with wholesale, you may not have to worry about this right off the bat. However if you’re selling kids’ products, you’ll want to start this process sooner rather than later since it is a more sensitive market.
Now, I’m not a lawyer, so this definitely doesn’t count as legal counsel. I highly recommend consulting with an attorney, especially one that’s more privy to the world of handmade and small business so they don’t overcomplicate things for you.
All right, so here’s what you can expect in your next month with me in this module.
I’m going to help you create your wholesale program. From coming up with your wholesale minimums and terms to packaging and pricing.
Then we’ll create your line sheets and order forms. I’ll be showing you a walkthrough demonstration for how exactly to do this without spending any money.
Then we’re going to figure out how to find stores and how to pitch to retailers.
And we’re going to wrap up with sales reps, showrooms and trade shows. These are way more advanced wholesale topics, but definitely important to be thinking about early on.
Now, what we won’t be covering is how to scale up production. So if it’s just you making product all by yourself right now and you know you need to help, or you’re not sure it’s right for you, we’ll cover all of this and more in next month’s module. That doesn’t mean you should wait until next month to start doing wholesale. You definitely want to do the wholesale work as we go along with the course and start now, so don’t wait until you have your team hired and ready to go because finding wholesale stores and getting them to buy can be a long process.
Lastly, as I briefly mentioned, because I’m not a lawyer, we’re not going to be covering the whole topic of testing and getting certifications and labeling for your products. This is just way out of the scope of this course and not something I’m very familiar with myself, so I’m not qualified to teach it.
OK, so having said that, I can’t wait to get you started on the first lesson where we create your wholesale program.