#LBCWantsToKnow >> August 2018: Wholesale
Each month, I ask my Instagram community to join me in a focused, crowd-sourced discussion on a specific subject. For the month of August, we rolled up our sleeves to chat about wholesale. If you’re serious about getting a foot in the door with shops for the all-important holiday season, then August is the month to make that happen!
What’s the one thing about wholesale that you wish you’d known when you started?
THE LUCKY BREAK COMMUNITY SAID:
whitneymanney: Net terms
bathedinglaze: The true cost of obtaining a retail customer versus wholesale customer.
mamasudsllc: How much I needed to raise my prices to make 💰
rockcreeksoaps: How important it is to build a relationship with my wholesale accounts and maintaining good contact and follow up with them. Also never be afraid to contact an account, they get busy, and won’t remember to order until it’s too late, and then they might shop around instead of stocking with you again!
standardwax: How hard it is to be nimble or make changes when you have 300 buyers counting on your consistency!
sassypantsdesign: Uhhh, Lucky Break! 👍💓🙏🏻🙌
MY THOUGHTS: These are some juuuuicy answers that had me nodding my head! I’ll weigh in quickly on each one.
- Net terms can be immensely tricky for newer makers, and I’ve learned that 90% of problems can be prevented on the front end by communicating professionalism, having strong systems in place, and not shying away from things like checking references before extending credit and sending payment reminders when the due date passes. Many of us are uncomfortable with money discussions, but I’ve found that buyers follow the tone we set and we need to start of on strong footing… much easier than trying to prepare things on the back end. Also, not every brand owner is in a position to offer trade credit, though buyers love those who can!
- The cost of obtaining a retail customer is generally higher than that of obtaining a wholesale customer, and the lifetime value (total dollars spent) by a wholesale customer is much, much higher. This is an often overlooked facet when clients ask me why on earth they’d sell their wares at “half the normal cost.” The fact is, selling at wholesale produces efficiencies in creation and shipment that drive costs lower, which means that it cost less to make and ship a wholesale product versus the same product sold at retail. So while you are selling at “half” ($24 retail, versus $12 wholesale), your profits aren’t exactly halved. Add in the higher customer acquisition cost and lower lifetime value of a retail customer, and wholesale looks more and more attractive.
- It’s true that selling in wholesale means that you need to know your costs intimately. While you might be able to eek by in direct-to-consumer channels without knowing where every penny goes, wholesale won’t provide you that luxury. Lucky Break clients frequently engage me to help further their brand development and raise the bar on their visual presentation, increasing the quality of their value communication in the process. The end result? You can charge more for your products and put wholesale within reach.
- Wholesale buyers often tell me that we pursue them like lovers until we get that first order, then we vanish like ghosts. Regular followup is *essential*, which is why I recommend both group communication (vis a vis a quarterly wholesale email campaign) and individual communication (emailing the account individually to check on stock and see how you can help). Getting that first order is hard, but the second and third orders should be much, much easier. Don’t ghost your buyers and allow those accounts to shrivel. You’ve worked hard to get the seed into the ground, and regular watering will yield big results!
- There’s an important pivot that happens when transitioning from hobby-business to business-business. The primary focus shifts from the making to the marketing and production, which can catch many product designers off guard. It’s awesome to have a robust lineup of stores carrying your work, but that also means that speed boat turns evolve into cruise ship turns, making change slower and more laborious. I think that’s why it’s so incredibly important to ensure that you’ve designed scale-able products, priced them correctly, and packaged them smartly from the get-go, though some evolution is expected and a natural part of business life.
- And to sweet Amy who said she wishes she’d known about Lucky Break when she first got into wholesale: kisses on both of your cheeks! I’m proud of our wholesale coaching services, from comprehensive education to line sheet design, and from store matchmaking to private consultations.
What methods do you use to collect wholesale orders?
What do you love or loathe about them?
THE LUCKY BREAK COMMUNITY SAID:
shopjanery: Since we’re a pet bed company, we use highly trained dogs to retrieve and deliver orders. Just kidding. 😁 I built a private portal within my Shopify site, using Locksmith to take online orders. However, I also accept orders by email, phone, order form, you name it. If they meet my minimums, I’ll take their order in whatever way is easiest for them!
saltwater_design: Order form, but most end up just emailing. I guess it’s one less step for them!
charliemadisonoriginals: I accept them by email. I’ve been struggling with figuring out a different option but haven’t found the perfect solution yet😉. I love @shopjanery’s Locksmith idea – I’ve been considering that too!
gavinluxe: Via email
sassypantsdesign: I’ve used order forms (various kinds, from simple to interactive) but most seem to prefer email, which is fine with me. My dream is to implement a separate wholesale ordering section on my website. It’s in the plans, after I get a mountain of other things done.
bougiequaintrelle: Website, email, or phone.
halfpintnaturals: I’m looking up Locksmith stat. I have a form that one shop uses out of the lot of them. Most email and call.
normalsoap: We currently get orders by email but would love a website as a part of Shopify for our customers to order directly from!
soapymomma: We take wholesale orders by phone, email, and through our website. After Etsy wholesale closed we added an app to the website that allows us to tag a customer as wholesale so that wholesale pricing is offered after our stockists have set up a wholesale account with us.
olivemyskin: Any way I can get them! What works best for all has been sending a blank order form with orders, then they fill it out for their next order, scan or take a phot and email to me. Working on a wholesale portal on the website. I don’t like phone orders though. Too much room for error.
MY THOUGHTS: I firmly believe that those brands that succeed in wholesale are the brands that make working with them painless and intuitive. That means understanding a buyer’s needs, establishing clear policies, supporting the stockist after the sale, and making the submission of those orders as easy as possible! Here’s a list of my preferred solutions (from most-desired to least)…
MOST PREFERABLE: A separate, wholesale-exclusive website with unique logins that you can assign and track. This allows you to tailor the entire experience to the wholesale buyer: displaying wholesale pricing, enabling ordering by the case, scaling shipping fees for larger orders, preventing checkout when cart totals fall below order minimums, previewing new collections before they hit the public eye, and providing a platform for the download of wholesale-specific marketing tools like shelf talkers.
An app that enables you to assign regular website users into a group of wholesale buyers. This enables online ordering, though it has its share of limitations. Essentially, you’re retro-fitting a retail site to work for wholesale buyers, as opposed to designing a wholesale experience from the ground up. Wholesale buyers log in to your website to see wholesale pricing.
Email. This is a convenient option for buyers that they can use 24 hours a day and it requires minimal investment on the front end from the brand owner. I appreciate that orders are written, which minimizes confusion. Ideally, you offer a branded order form to buyers who can complete it and return it, further reducing the chance of errors.
LEAST PREFERABLE: Phone. Some buyers (especially those who are new to your line) just want to talk it out. If that’s the case, establishing regular office hours will help. If that’s not possible, aim to get back to buyers within 24 hours. In any scenario, it’s wise to summarily that order via email and receive confirmation that it’s correct before you begin production.
Each of these methods enables you to harvest orders from wholesale buyers who are already aware of your brand. But what about those buyers who don’t yet know you exist? That’s where platforms like Faire (formerly Indigo Fair, Stockabl, and Wholesale Matchmaker come in! And I recommend that any brand that’s serious about wholesale invest significant energy into Instagram, as more and more buyers are using that platform to discover new brands.
Have you ever suffered through a wholesale nightmare?
What did you learn from the experience?
THE LUCKY BREAK COMMUNITY SAID:
bainamourbath: Had a client that would not pay for weeks and weeks until she was ready to place another order. Would come into my brick and mortar and treat my managers rudely. Needless to say, I sent her a divorce letter that she was not happy about. Although she bought a decent amount of product, sometimes it’s not worth the headache to deal with certain clients. I had to focus on who I wanted representing my brand and she was not it.
MY THOUGHTS: Amen and amen! There are some customers who aren’t worth having, and recognizing that is a powerful evolution. But if fifteen years as a full-time business owner have taught me anything, it’s that. I’ve gently dismissed wholesale buyers from my product-based brand (and consulting clients too, for that matter). It’s always a last resort for me, but some opportunities aren’t worth the stress they generate and time they consume. It’s important to have an arsenal of good customer negotiation skills and strategies at the ready and equally important to know when cutting your losses is the best available option.
This also hearkens back to something we’ve already touched on in this post: effectively managing trade credit accounts. I’ve learned that customers will get away with exactly what you allow them to get away with, some communicating that you’re a serious professional, establishing expectations, and drawing healthy parameters is key. It’s infinitely more challenging to fix these issues after they arrive than it is to prevent them from happening in the first place! With that in mind, remember that we train people how to treat us.
What strategies do you use to promote your wholesale stockists
+ make them feel like partners?
THE LUCKY BREAK COMMUNITY SAID:
normalsoap: We try to show them new products when we have them. We try to treat them with free product they can use … and thus fall in love with. Just a few nice things we try to make them feel special. Don’t forget a holiday card thanking them and telling them you look forward to the new year!
MY THOUGHTS:Those are some stellar ideas, and there’s no shortage of things that we can do after the sale to help our buyers feel like partners, increasing the chance of reorders and long, fruitful relationships. Some quick ideas…
- Wholesale-exclusive newsletters delivered at least once per quarter
- Hand-written “thank you” notes tucked into each order
- If you create consumable products (body care, candles, soap, makeup, specialty foods, etc.): Including samples of other products in outbound orders
- Offering marketing tools such a POP displays and shelf talkers to increase sell-through
- Direct contact at least once every 8 weeks to check in on sales and see how you can help
- Remembering your accounts at the holidays with a small gift
- Promoting your wholesale partners via a store directory on your website and through social media “shout out’s”
JOIN THE CONVERSATION
Be sure to stop by the Lucky Break Instagram, where every month we chat about all things business. I’d love to hear your thoughts and hope you’ll lend your voice. Search the #LBCWantstToKnow hashtag to weigh in! In September, we’re chatting about all things website.