photo by Bench Accounting Bench.co
You Already Know that Wholesale Is….
Wholesale is when a retail store purchases your manufactured goods directly from you to resell to their customers. 50/50 split is the standard split in the wholesale game. This means that you sell your goods to a retail store for 50% of your suggested retail price. After the retailer purchases wholesale from you, there should be no restrictions placed on the resell price as the product now belongs to the retail store and the retailer knows their customers the best. This will allow for the retailer to maximize all the tools they have on hand including holding sales events and still make a profit.
Why 50%? Simply because you as the manufacturer are not risking anything when you are selling wholesale. The retailer is the one who is risking everything. After your product is delivered to the retailer, the wholesale manufacturer’s job for that order is complete. On the other hand, the retailer’s work has just begun. It is the retailer’s job to set the prices for items they purchased wholesale, bring customers to their store, and to make the sale.
Getting Ready to Go Wholesale
A few housekeeping chores need to be done when you decide that wholesale is the way you want to go with your business:
- Pricing – absolute most important thing of all. Either you have your items priced right for wholesale or your business will fail. There is no in between. If you keep your retail prices low and your wholesale pricing does not allow for you to make money on the wholesale level, your business will fold.
- Product Catalog – you will need to create an awesome product catalogue. Your catalog will only contain photos of your product line and the manufacturer product code/UPC code that matches the photo.
- Product Line Sheet – organized line by line, this product sheet contains all the necessary information that you need to provide to a retailer who would like to purchase your items. Vital information in a product line sheet is product description, manufacturing code/upc code, suggested retail price, wholesale price, minimum quantity purchase. One line per product.
- Wholesale T&C Sheet – wholesale terms and conditions that lay out the complete wholesale purchase policy. Includes your minimum purchase pricing, reorder purchase minimums, quantity purchase minimums, return policy, exchange policy, delivery lead times and dates. Make sure to include any other pertinent information that a store needs in order to purchase from you (such as payment terms)
- Wholesale Order Form – make it easy for your retailers to purchase from you by having an order form ready. Order form includes product, product code/upc code, wholesale price, minimum quantity and an area for customer to fill in how many of each they want to purchase. Have an area for totaling the order available at bottom of sheet. Get retailer to fill out in front of you or have them fax/email the order form to you.