To Wholesale or not...

nicoled · Joined: 02 Jun 2004 Posts: 9 Location: St. Paul, MN

I've finally opened a business selling custom-made clothing for dogs. I make each peice as it is ordered - rather than pre-making any stock. I've been open about 3 weeks and have already gotten wholesale inquiries.

My question is: should I consider wholesale-ing or not? If I do wholesale, I would be taking a major cut in profit to sell my items. On the other hand, I could consider it like advertising - spending money to make money. But, I am already advertising on my own and more "advertising" isn't in my budget!

Should I stay exclusive, or open up my business to other vendors? What are the pros and cons?

Thanks! And, let me know if you see anything funny with my site, too!
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Sew Charlie
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DivineMsEm · Guest

I just wanted to let you know that your site looks great, the coats are wonderful and the dogs are so cute. It all looks fantastic tome!

nedramadeit · Joined: 07 Apr 2004 Posts: 37 Location: Portland, OR

Hi SewCharlie!

YEAH! I'm so happy there's someone else out there that makes dog stuff. I would love to swap business cards with you, people are always looking for
new doggie coats and I want to refer them to you.

Here's my take on the wholesale thing. It's awesome that people are asking for it and if you build your price structure around being able to do wholesale (wholesale price is half your retail or very close to it), you can afford to fill some wholesale orders. Being in stores can help give you a lot of exposure and validity.

This last year I was very gung-ho on the wholesale market and have found that it's not very profitable for me to do a lot of it. It's great for me to be in a few stores, but I decided to change my focus and energy on direct sales. If someone wants to buy wholesale, I'll still love to work with them, but I'll won't pursue it like I did.

Anyway, I'd love to talk more on email. I'm sending you right now!

-Nedra
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Nedra Rezinas
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loveplusone · Posted: Dec 09, 2004 6:12 pm Post subject:

hiya,
I am a big believer in wholesale. Most of my money comes from it~ actually right now i feellike i am designing for the stores that buy my stuff!!

you do have to cut your price in half ~which sucks but like you said, if you put your hang tag on it you are advertising and not spending any money on advertising~ plus you know you are reaching your market because hey , they just bought your goods!

the big plus though is the slow times on the web~ thats when wholesaling comes in handy.
sometimes i get resentful though about how much work i do and then i only cover my costs and don't pay myself~ so its really your choice~ but i think as long as its not to to much work, i say go for it!
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www.loveplusone.net

kittygurl · Posted: Dec 11, 2004 3:17 am Post subject:

Hi:

I am just like loveplusone when it comes to getting resentful about filling wholesale orders. But, I have to keeping telling myself that wholesale orders make up the bulk of my income. Because I require them to have a minimum purchase each time they order their orders are much larger than retail orders I get online. I get lots of retail orders around $20 in a week, but one or two wholesale orders in that same week averaging $200-$300 each beats the amount I make in retail by a long shot.

In addition, I mark all my merchandise with my URL. That way if the retailer does not have what the customers want they come to me directly.

Once the new year comes it's not unusual for companys to increase their prices. You may want to up your retail costs a bit so that when you sell wholesale you aren't taking such a beating.

Good luck and let us know what you decide

:shock: [/url]
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nicoled · Joined: 02 Jun 2004 Posts: 9 Location: St. Paul, MN

Thanks for all the advice. I've decided, that for now, I'll just contiue to do retail. I'm getting a lot more orders than I expected so I am in no rush to expand.

I think in the future, I may change the production factor and wholesale will be a lot more feasible and profitable!
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Sew Charlie
http://www.sewcharlie.com

Alisha · Joined: 22 Sep 2004 Posts: 10 Location: Baltimore, MD

Nicoled,

Ok... I am going to bring a good deal of weight onto myself with what I have to say to you... But this misconception must be cleared up.

You, in fact, do NOT have to cut your prices in half to wholesale. If you are cutting your wholesale prices in half and not making enough to cut the mustard... there is something wrong with your pricing strategy. I really don't mean this comment to be against you or anyone else on this forum, but teaching wholesale craft sales is my full-time day job.

Now that everyone's mouth is ajar... I'll explain a little further.

To price your work you should be arriving at a wholesale price FIRST, then marking up AT LEAST 2 times for any retail sales you do (online OR at fairs). If the quality of your work is high and you are at a good quality show, you should be taking the wholesale price of your work times 2.3 in your calculator to arrive at the retail price. 2.3-2.8 is the standard craft markup. The retail markup is higher if you sell to someone who has an actual storefront. Online stores tend to have a lower markup than phsyical stores due to their lower overhead.

The reality is that MOST craftspeople just starting out (within the first 4 years) get this wrong. Partially they get this wrong because they are buying beads and materials at full (already marked up) retail price from a local store. Of course they would be challenged to make money this way! Your WS (Wholesale) price includes paying for supplies, overhead (lighting, rent, etc), PAYING YOURSELF, and adding a profit cushion that goes back into growing your business. Your retail markup pays for shows, marketing and sales, and your time spent trying to retail your work (separate from creating the pieces). This is of course over simplified here... but, hey, I can only type SO fast! HAhaha.

Ever wonder why you hear the Small Business Administration say that 95% of small businesses go out of business within the first 5 years? Pricing too low... yep... this is the culprit in the craft industry.

So, raising these problems, how to I suggest you start the year with the a strong pricing strategy??? I would begin with looking at how others price. This is by no means the most FUN part of having a craft business, but it's crucial. Why not look at successful models before making your wholesale decision? WS isn't right for everyone, but it should be feasible for everyone to take a WS order every now and again.

I will also wave the fee for you (NicoleD) to register for The Rosen Group's visiting artist program, since you raised this great question. Just call or email me and I will give you more details. You would have to be in Philadelphia in February to take advantage of this, but you would learn more about PR, pricing, display, and craft sales during the few days than you could have ever imagined.

If this is not a realistic possibility for you (Say, if travel is NOT in your crystal ball), consider picking up a copy of Crafting as a Business by Wendy Rosen. (James Dillehay also wrote a good book on craft pricing, but I find it to be too complicated for me to "enjoy".) About halfway through the book are 4 pages of pricing formulas (from complicated to easy) and more solid descriptions of everything I'm referring to here.

My last comments... I LOVE LOVE LOVE your work and your site!! Thought you might want to look at [a href=http://www.americancraft.com/artist/Market_Insider/September2004.html]the lead story[/URL] in our newsletter a few months ago. :) You are meeting a HUGE, and HOT trend right now. I wish you HUGE SUCCESS!!!

(And, again, sorry for running counter to the advice you may have received. I wouldn't have been able to sleep though if I didn't set the record straight. I have just seen too many people go out of business from this awful myth that continues to perpetuate. Really, when you think about it, it does make sense. The same pricing rules that apply to any retail industry applies to craft... even DIY craft! To think otherwise just undercuts all the hard work you are putting into things! When it's all said and done you should have more familiarity with your WS price than your retail, which will change each year with market need.)
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Alisha Vincent
~ Art of Craft ~

SUPERNATURALE THE BOOK!