This is the second part of a two part blog, the first part "Can I Afford To Wholesale?" can be found here. So if you have decided that you can afford to wholesale your products, you need to know what to do next...
Price Your Products
The general calculation is: Cost x 2 = Wholesale Price
Some things that you need to factor in to the cost price if you are wholesaling a finished product;
- Product cost
- Freight from factory to your HQ
- Duty charged at the border if importing
- Cost of labels, swing tags and packaging
Some things that you need to factor in to the cost price if you are wholesaling a handmade product;
- Raw materials
- Time to make the product
- Cost of labels, swing tags and packaging
Other things to think about, are;
- Whether you will charge your wholesale customers freight
- If you will charge freight how much it will be and whether you will have a free shipping threshold
- What your initial minimum order threshold will be (in dollars or in units) and what follow up orders will be
The reason to consider those things is because if you are going to offer free freight for example, you need to factor this into your pricing, and the minimum order quantity will allow you to calculate how many units this cost needs to be spread over.
Eg: if you decide to offer free freight to wholesale customers, and you think that the cost to freight an order will be approximately $80 on average, and your minimum order quantity is 200 units, add $0.40 into your calculation.
Mind Your GST
Always assume that your retailers will be registered for GST (whether you are or not) and communicate your prices accordingly. It's best practise to show wholesale price as excluding GST and retail price as including GST.
To calculate the margin percentage for your retailers, make sure you deduct GST from the retail price:
(Retail Price ex GST - Wholesale Price/Retail Price) * 100
Put Together A Catalogue
Now that you know what to do with GST, you can put together a price list. If you are using Shopify for your online store you can install an app like Catalogue Machine to extract the info from your store to put together a wholesale catalogue.
Alternatively, if you're feeling flush, you can get a designer to put together the document for you, but you will still be required to collate all the info like product descriptions, images, pricing and margin.
Make sure your catalogue includes all the information your potential wholesale customer needs to know, like minimum quantities, turnaround times, payment terms and any other terms and conditions.
Make It Easy To Buy From You
Your wholesale customers are probably business owners too...make it quick and easy for them to order from you. The best case would be ordering online, if you're using Shopify you can add a wholesale collection that requires a login to access.
Alternatively, depending on how many wholesale customers you are planning to have and how much time you would like to save yourself, you can invest in an app like Wholesale Gorilla - there is a 30 day free trial so you can see if it will work for your business before you commit to the monthly fee.
If you don't want to offer the convenience of ordering online for your wholesale customers, put together an Excel spreadsheet that contains all the info you need to fulfill the order but calculates the totals also (especially important if you have a minimum order value or quantity.
Look After Your Wholesalers
Wholesale customers can be great for business – they help you to turn over stock faster, they help with cashflow and they help to increase brand awareness.Here’s some hot tips from a wholesale customer (me);
- Make it clear on your website that you are looking for wholesale customers – encourage people to get in touch for more info but ensure you ask for all the info you need upfront (using a contact form with all the info you require from a wholesaler is a great start)
- Try and be speedy in your response to wholesale enquiries (I think the record was 10 weeks between me sending an enquiry about wholesale and getting a response)
- Be polite if you are declining wholesale applications and give a response that is generic and positive. I asked to wholesale a product once and was told “we aren’t looking for retailers like you”. What does that even mean? That brand also lost me as a customer
- Have a stockist page on your website that links to your wholesale customers (choose “open link in new tab” when linking to their website though). If you have sold out of a popular, best selling item link to your stockists page and encourage your website visitors to try and buy from one of your wholesale customers
- Promote your wholesale customers on social media and in your newsletters
- Communicate with your wholesale customers and let them know what new products are coming and when. Considering offering a discount for pre-orders to not only help with cashflow but to help with building hype for your new range or product
- Provide high quality product images for your wholesale customers to use on their website and social media – make it easy to show your products looking amazing. Add these images to a Dropbox or G Drive and share this with your stockists
If you are considering looking for wholesalers, or are looking for wholesalers but feel like they should be easier to find please get in touch - I can help. Depending on where you are at in your business journey, an Ecommerce Coaching Session or a Business Starter Session might be best (but we can work that out together).