"Do you wholesale?" inquiries

Any retailers tried it?

[Tonearm]

I'm a retailer and I periodically receive inquiries asking if I wholesale. Have any retailers given that a try? I wonder if it would be worthwhile.

[HRoth]

I have. I was supplying brick-and-mortar stores with bulk widgets they packaged themselves. I found that these customers were more demanding than my retail customers, which I did not expect. Also, they did not spend all that much more than a good retail customer. I found net-30 to be a PIA to deal with.

I have had many more requests from b&ms and online stores that want to sell the products I make myself. They want to buy them at half off with no minimum. This is the norm in my niche but just not at all worth it for me. I sold to a couple of these folks at 1/3 off, $100 minimum, but most reject those terms, even though a couple have said they can actually buy at my retail and sell at twice their cost and still sell the products. I have, though, thought of putting together a line of products that would only be sold to stores and requiring a minimum of at least $50 and not giving any net terms. I think this would work for me. I've been shopping for packaging for this specific market.

I'd be interested to see how others have done with this.

[derekwong28]

We have regular wholesale customers and have taken orders from $500 to $10000. We insist on a minimum order of $500. Incredibly, these customers seem to be very loyal and less picky than our general customers. For a start, they do not seem to mind long delays that much and do not bargain much. For first time wholesale customers, we generally insist on T/T unless the amount is small. After that, they can pay by credit card if they want. Our markup price for trade orders is generally 10-15%. Shipping will be charged at cost.

The big problem with these wholesale orders is that they take up too much of our time. We have to spend half a day preparing a quote and calculating the shipping cost. Then we may have to spend a whole day preparing and packing these orders. But sometimes, we only earn less than $100 in profit. Therefore I do not really like doing wholesale orders that much. But as I said earlier, these customers tend to be very loyal and will place recurrent orders, that is if they know our prices are more expensive than other suppliers. I think the main issue for them is trust. Once you have delivered your first order, then they will not hesitate to buy from you again.

[justgowithit]

we only earn less than $100 in profit

I entertained wholesaling for a while in order to increase my purchasing power from my suppliers. My volume went up and I managed to get into a lower purchasing bracket.

Lower product cost translated to increased profit on retail sales.

[Essex_boy]

I used to supply a toy shop in the USA, id let them know when I was calling at the suppliers - deal was product at cost plus my expenses in getting the whole order (my pieces included).

Worked well for a while then they did a large chargeback which I lost, never done it since

[Tonearm]

Sounds pretty negative overall. I guess I'll stay away from it.

[hippypink]

thats why I have a $3,000 min. only serious people contact me now--no takers yet.

since margins are slim, I have to sell that to make my time worth it.

I know a guy that dropped wholesale, unless they are a really big name, because there is so much more profit when selling direct to public one at a time.

[GBoyd]

I did a mix of retail, wholesale and reseller for years. A few observations:
As a retailer you need to be getting your product direct at volume for the lowest price, or have sufficient markup to allow deep discounts. The other retailer wants to put a full markup on, while still selling at about your price. Nett 30 will kill you as other retailers use you as a bank, pushing out 40,50,60 days.
As an importer, I would take orders and add them to my own order, unless I had plenty of stock. I did not want to be out of stock for retail customers while some other retailer had my product. Small profit margin but beneficial in terms of volume and turnover.
As a specialist retailer I also had resellers, where a retailer would buy one or two to supply a specific customer. Often these were high maintenance and I would end up doing more work due to having a guy in the middle filtering. Low volume=low discount. Many of these relationships were mutually profitable over time.
Another level was where a "competitor" would join forces in order to meet a minimum order or other requirement and we would do a combined order. In this scenario neither party profited from the other and all costs were known and shared.

If another retailer can buy your product at near retail and sell it with a full markup, then you are probably undervaluing your product.

Wholesale is a different mindset to retail.

[HRoth]

"If another retailer can buy your product at near retail and sell it with a full markup, then you are probably undervaluing your product."

This has certainly been true for me. Hearing that a customer was buying my widgets at my retail and selling them for double in her shop gave me the confidence to start raising the prices on them.

[dpd1]

I've been approached a few times... I've turned them down so far, especially if they're an internet based business. Why would I sell my products at least 1/4 off to somebody who's just going to sell them on the internet... I can do that myself. Plus you've got to factor in retail packaging and all that, which most places will expect you to do yourself of course. But I've seriously considered it with actual stores. I figured at least that would be branching into a potentially new group of customers that maybe aren't big on the internet. My only fear is that stores that carry a very large catalog can afford to take very small profits on an item. So I would have to make some sort of deal that they wouldn't undercut my prices... Otherwise I'd lose on the wholesale discount AND on the customer sale as well. Considering that people will buy something from someone else because it's $1.50 cheaper than another guy, I think that's a pretty realistic scenario. I think wholesale works well going the traditional route and only selling to other retailers, but I don't know about trying to do both. It all depends on the niche and everything I guess.

On the reverse... I contacted a guy the other day to see if I could deal his products, as they complimented my stuff as accessories. He asked what I proposed, and I said... Well, I guess it depends on what kind of discount you offer for dealers. His response was basically... 'What discount?"... Ohhhh Kaay.

[vincevincevince]

I've noticed a lot of places are no longer offering net-30 as standard - it seems to be now more acceptable to provide net-10 in general, or even C.O.D. for smaller wholesale accounts. Perhaps net-10 means you can use those funds to clear your net-30 payments to the manufacturer? Then again, modern payment and banking systems are so much different than those just ten years ago that a company unable to meet net-30 is probably not actually solvent.

[GBoyd]

^^
cashflow and technical insolvency is a whole 'nother thing. Many small businesses are undercapitalised. The trick is to manage cashflow during the year so you look solvent on balance day. Being unable to pay nett 30 is different to not wanting to pay nett 30 and squeezing another month. As a small business I had a few large companies that would try these kind of tricks: "Oh, we made an error and missed your invoice. It will have to go in next months cheque run. The computer wont let us..." The answer to this is to stop credit till the overdue is paid. And flag them as nett 7 in future.

[lgn1]

It really not worth it. After a few sales, they will clue in and start buying directly from distributer directly, or they are so small they won't generate enough sales for the hassle.

One thing you can do, is to become a manufactuer rep also, and earn a commission for sending these retailers there way.

Few manufactuers will do this however, since it places them in a conflict of interest position, or you run into territory issues with existing manufactuer reps.