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Selling wholesale
have you ever done it?
Bubzeebub




msg:650815
 2:59 pm on Jan 20, 2005 (gmt 0)

If you have a product and decide to sell wholesale, what are your terms? Do you or did you extend credit and have other businesses fill out a credit app? Also, what are the terms? Is there a return policy?

I'm interested to hear what or how other people do it.

 

JonR28




msg:650816
 3:15 pm on Jan 20, 2005 (gmt 0)

We love to do wholesale. We brand our company name on the tags of the widgets we sell. We charge about 40-50% of retail value but since we sell so many it still makes good money.

Bubzeebub




msg:650817
 3:25 pm on Jan 20, 2005 (gmt 0)

Are your widgets generic widgets or custom widgets?

jwurunner




msg:650818
 5:39 pm on Jan 20, 2005 (gmt 0)

Hi,
We just started selling wholesale. As of now our terms are credit card but we may open up small lines of credit in the near future. All wholesale customers are required to fill out an application so we can verify they are not a consumer looking for a deal.
For our wholesale customers we offer a 90 day return vs the 30 day for consumers.

If you plan on extending credit, make sure you research the customer and check their trade references.

CernyM




msg:650819
 5:49 pm on Jan 20, 2005 (gmt 0)

We primarily sell retail, but do have some wholesale customers.

We do not offer terms, do not accept returns or exchanges, and have reasonably high minimums in place.

Bubzeebub




msg:650820
 5:55 pm on Jan 20, 2005 (gmt 0)

so Cerny....the businesses buying wholesale don't object to the inability to return the items? Also, are there any requirements or paperwork you need to see in order to sell wholesale? Do they have to show you tax ID forms and the like?

JonR28




msg:650821
 8:42 pm on Jan 20, 2005 (gmt 0)

Are your widgets generic widgets or custom widgets?

They are custom widgets. We make the products ourselves.

topr8




msg:650822
 9:18 pm on Jan 20, 2005 (gmt 0)

we sell widgets wholesale and retail.

... imo especially when you start out, do not offer any credit

unless you want to spend significant time trying to collect your debts!

... or returns for wholesale customers (it is normal for a wholesale buyer to expect seconds and damaged goods amoungst the order - eg you should specify that orders are 95% perfect or whatever, meaning that the buyer should expect 5% of the goods to be imperfect in some way, you would need to accept returns for damage beyond this, but ensure that the percentage you quote will cover you)

Bubzeebub




msg:650823
 10:29 pm on Jan 20, 2005 (gmt 0)

I don't get that. 5% damaged goods in transit you mean? Yes, that would, or should, be an expected return/credit. However, is it customary for a retailer to purchase goods wholesale and then return it (saaay...a month later) if it doesn't move off their shelf?

opiesilver




msg:650824
 1:50 am on Jan 21, 2005 (gmt 0)

No, they have a maximum of 48 hours, I give only 24 hours, to report shipping damages. After that they assume all responsibility.

sun818




msg:650825
 1:59 am on Jan 21, 2005 (gmt 0)

> return it (saaay...a month later) if it doesn't move off their shelf?

Not really. Maybe once or twice as an exception, but not as typical behavior. Bigger companies will accept returns with a restocking fee, give you store credit in return for those items, or give you a similar replacement. Some places will credit you the current selling price as opposed to what you paid for it then.

Typically, I don't buy in bulk unless I am very confident I can move the product over time with a profit. You get better pricing buying in quantity, but you also have to assume the risk of the product not sell or depreciating over time.

jwurunner




msg:650826
 2:04 am on Jan 21, 2005 (gmt 0)

Some of our policies:

1) 90 day returns. We built a cushion into the pricing to cover for this. Since most of our customers are small businesses, we do not want to over burden them with inventory. We were small once and understand. A new guy may buy wrong until they understant their customer buying habits.

2) Low quantities and broken cases. Again small sized customers why risk overloading them.

3) Shipping issues. Part of the deal with our customers is for them to file all damage claims. We package well and figure at the pricing we sell them at this level of service(i.e. filing claims) can not be offered. If an item is lost we will reship and file the claim.

4) Warranty/Defective issues: As with the above, at the price they pay they need to deal with the defectives and have the manufacture help them directly.

Hope this helps more

topr8




msg:650827
 2:47 am on Jan 21, 2005 (gmt 0)

>>I don't get that. 5% damaged goods in transit you mean?

no i don't, goods damaged in transit is different and should be covered by insurance (or not) but in any case returnable.

i mean if you are manufacturing goods there is a degree of error,

... for instance at one time we were selling inflatible widgets, sometimes the valves were faulty (as a product of the manufacturing process) we guaranteed that 95% of all the widgets supplied would be fine.

(in actual fact less than 1% were faulty but we covered ourselves by saying 5% margin of error)

or say you are selling hand crafted dolls, some are not finished as perfectly as others because they are hand done by different people ... thats the way of it.

the reason for this is that returns of single items are expensive to manage, obviously if a whole batch was faulty it was returnable, but if just one out of a case was then we wouldn't take it back.

... the price reflects this!

obviously it depends on the product, if you are selling diamond rings then you would probably need a 100% perfect rate.

tolachi




msg:650828
 3:12 am on Jan 21, 2005 (gmt 0)

Wholesale can suck.

People ordering small quantities as low profit margin. Needing to fill larger orders that impact your ability to sell to higher profit margin retail customers.

Do not give wholesale the sweetheart customer service you may give retail.

CernyM




msg:650829
 3:26 am on Jan 21, 2005 (gmt 0)

so Cerny....the businesses buying wholesale don't object to the inability to return the items? Also, are there any requirements or paperwork you need to see in order to sell wholesale? Do they have to show you tax ID forms and the like?

Not accepting returns is the norm in my industry (apparel). Some larger retailers can negotiate return rights with some vendors, but its not worth the hassle to us. Other industries work differently though. In bookselling, for example, manufacturing accepting returns is the norm.

Besides that, part of the reason for the discount is because they are shouldering some of the risk. When I sell my goods retail, I take the risk that it won't sell and I'll have to discount it. When someone else sells my goods, they need to take that risk.

We're pretty loose with respect to paperwork. In-state vendors must show us a valid resale certificate. We usually ask out of state resellers for theirs, but since we're not responsible for collecting sales taxes outside of our state, its not a big deal if we don't get it. (To us, anyway, I'm not a lawyer.)

flobaby




msg:650830
 4:11 am on Jan 21, 2005 (gmt 0)

I do wholesale, selling my own product to a niche market. Because the typical business I deal with is mom/pop size, I don't have a problem not offering terms or credit, they're used to that.

As for returns, my items are often sold personalized, and in that case it's on my order form that "we're sorry, but no returns on personalized items". If it was a quality issue, though, or I goofed on the order, I would happily accept the return (only happened once, knock on wood).

And the personalization allows me to ask for the money upfront before I fill the order. Works real well.

fiu88




msg:650831
 5:40 am on Jan 21, 2005 (gmt 0)

1993-2001 we were 100% wholesale.....I would only do it again with
1.A proprietary product
2. Credit card, wire transfer,or COD for payment...
Since 2002-present , we have become 90% retail with the odd wholesale account....
Wholesale is good for volume, but you need decent margins , even more so if you choose to extend credit...Give all the Net 30-60-90-120 terms you want , as long as you have a healthy (30% +) margin...

sun818




msg:650832
 9:30 am on Jan 21, 2005 (gmt 0)

> extending credit

Banks extend credit. You are not a bank.

Bubzeebub




msg:650833
 3:16 pm on Jan 21, 2005 (gmt 0)

where could I get a wholesale form? Know of any good templates out there?

fiu88




msg:650834
 3:52 pm on Jan 21, 2005 (gmt 0)

>>Banks extend credit. You are not a bank..

Thats not how your wholesale customers view you!

tolachi




msg:650835
 5:15 pm on Jan 21, 2005 (gmt 0)

Listen to fiu88 and sun818 (how do they come up with these names?). We got burnt for about $15k from one customer about 10 years ago.

Playful Melissa




msg:650836
 5:34 pm on Jan 22, 2005 (gmt 0)

Having just started in the wholesale market this was a great thread in validating my decisions:

1. I have a propritary product
2. I don't do credit - I will do COD on special cases only. I will do 10 day credit limit with a credit card to back it up only.
3. In dealing with distributors and wholesalers etc I'm stuck by my guns on the pricing and the quanity requirements. I am all for seeing that they need to make a profit as well but I have to make money first.

-Melissa

CernyM




msg:650837
 3:04 am on Jan 23, 2005 (gmt 0)

2. I don't do credit - I will do COD on special cases only. I will do 10 day credit limit with a credit card to back it up only.

All small companies are uesd to dealing with credit cards and COD. If a small company can't manage their cash flow well enough to pay up front, anyone who has granted credit is going to always be at the back of the payables line.

A good rule of thumb is that if they company doesn't require three people to complete a purchase decision (i.e. requestor, authorizor, payor) then they shouldn't be bothering you for credit terms. When a company is large enough to require purchase orders to get anything done, you may be forced to grant credit just to get through their internal processes.

gpilling




msg:650838
 3:44 am on Jan 23, 2005 (gmt 0)

In my company we try to stay away from credit with our wholesale customers--- we have our own product that we manufacture, and we have been experiencing 100% sales growth per month for the last 7 months,... so the conservation of our capital was REALLY important to us.

In all my projections, the one major thing that could kill our growth was waiting for the money. In my experience, the credit card finds hit the bank in three days, UPS COD takes 21 days, and 30 day accounts take 45-60 days.

As for retail - we love retail customers! Why wouldn't we? same work selling, more money to us! But of course the wholesale customers can make it up in volume. Just don't let them use your money. I have found it reasonably easy to talk wholesale accounts into paying with credit card by talking about air miles, or the protection they get from buying with one.

And we have found that even big customers respond to our demand for instant payment - like the US Government (with VISA) and large auto dealerships with checks issued the same or next day after the sale.

As for returns, our wholesale clients can return anything the like -- as long as they buy 2 for every one item that they return.

Bubzeebub




msg:650839
 3:26 pm on Jan 24, 2005 (gmt 0)

How difficult have you all found wholesaling products to be otherwise?

Bubzeebub




msg:650840
 2:25 pm on Jan 25, 2005 (gmt 0)

come on people....let's talk wholesale

beauzero




msg:650841
 2:28 pm on Jan 25, 2005 (gmt 0)

we have a segment of our business that is wholly wholesale.

We used to have a problem with credit and non payment most of the time. The web has changed that significantly. Most of our non payers were small customers with orders in the 100-1k range. btw one thing we have done is not limit our minimum order. it has allowed us to get into the "drop ship" market. the order comes to us through a reputable source...we drop ship to the customer. Great middle ground between b2c and b2b. our margins generally come out much better due to "standard" shipping and handling charges that are higher than bulk orders (go by semi).

We always request a copy of either a tax exemption or a copy of their state tax id docs. If MT, DE, or OR you just have to get a copy of their business license (those states don't charge sales tax? not sure if that is the correct list).

just my 2 cents. hope it helps.

Bubzeebub




msg:650842
 3:01 pm on Jan 25, 2005 (gmt 0)

if you do this kind of "drop ship" sale then it's like you're almost selling retail. If you sell 3 items to someone/company then you still require the tax ID?

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