Selling Direct vs. Wholesale

Are you a maker that is already selling direct to customers through a website, but you’re curious about selling to retail shops? Have you found your groove with selling your product, but don’t know if it’s worth it to sell at 1/2 price to your local shop? Are you scared about increasing your volume? Does the world of wholesale buying intimidate you? Maybe you are busy with artist markets and trunk shows and don’t think you have time to make product for shop…. I get it! It is hard to know when to add an additional sales channel to your business.

Here are some differences between selling direct to consumers and selling to retailers in 5 big categories.

Pricing
Typically, the wholesale cost of a product is 50% less than the retail price. For example, I sell my Blessing Beads® for $68 on the website and $34 to wholesale buyers. I do not offer every product to my wholesale customers! In order to determine if your product is worth selling at wholesale prices, start by adding up the cost of materials (including packaging), production time. Do this down to the penny! Time is hard to capture, but it is important. Next, determine what is a fair retail price. If 1/2 of that price isn’t a good profit margin for you, then do not offer that product to wholesale buyers. If 50% less of the retail price is worth your time, then go for it! Finally, remember to start with the end in mind. The end is a good retail cost to the customer. If the cost is too high, the product won’t sell.

Production
You don’t need to rush out and rent a huge studio space….but maybe soon! First, don’t let “mass” production scare you from selling at higher volumes. While I believe that producing a high volume of handmade designs is very different that out sourcing design to a factory, it can be done! You may already be producing lots of product for direct sales, but selling to wholesale buyers can increase your need for work space and employee help. You also need to consider your processes. How can you streamline your process so that you are more efficient at creation? At The Sercy Studio, we are constantly coming up with new ways to increase productivity but not sacrifice quality or design. For example we recently switched to a new clay product that cut the production in 1/2 ! If a certain style or design is hard to produce in large quantities because of time or cost, then it may not be a great design to offer at wholesale prices.

Design
You are creative! And that means you probably offer lots and lots of designs, styles and colors of your product. If you are selling at an artist market, it can be good to sell a wide variety of designs. But, you need to consider your design offerings when selling to wholesale buyers. Not only does your design need to make sense in terms of pricing and production (as discussed above), wholesale buyers don’t want too many options! Streamline your collection so that buying is easy. Additionally, you need to consider how your product is packaged. Do you have a tag? Is the packaging appropriate? Have you thought about your brand image? Retail shop owners not only want a nice looking product, but also a product with thoughtful packaging and branding.

Sales & Marketing
Wholesale buyers are typically different than your current customers. While some of your marketing can reach both groups, it is worth using different sales and marketing strategies for each group. Wholesale buyers are buying several months ahead. For example, I create my holiday catalog in the spring! I start communicating with my retail store customers about Christmas in May while I wait until October to promote Christmas to my online customers. As a general rule, promote seasonal products 6 months before the holiday. While a good website is helpful to wholesale buyers, you need to create a ‘catalog’ and order form. Your catalog can be a simple PDF of product images and descriptions or as fancy as a printed glossy magazine. Keep it simple to start!

Fulfillment and Shipping
At The Sercy Studio, we do not have inventory. We make our Blessing Beads® on a made to order basis. This means that we have a lead time of 4-6 weeks to fulfill wholesale orders. Just be transparent with your customers! It is not unusual for products to ship several weeks after an order is placed.
Is it just me or is shipping stressful? There are many carriers, methods, packaging etc. Oh and the time! It took me years before I acknowledged how much TIME we spent packaging and shipping. This is true for both direct and wholesale businesses. If you already sell online, then you have a grasp on shipping. If you don’t currently ship at all, here are some things to consider. Is your product fragile or odd sized? If so, take a few products and test ship. Talk to your local UPS, FED EX and POST OFFICE to determine the best way to ship your specific product. You will need boxes, cushioning, scale, label printer and shipping service. Wholesale buyers should pay for their own shipping! So their cost is products + shipping!

My hope is that by pointing out some of these differences, you will be able to confidently move forward and sell some of your products to the shop of your dreams! If you found this advice helpful, consider taking my full course on How to Sell a Handmade Product to Retailers (coming soon) or scheduling a call for one-on-one help.