How do you sell handmade goods to wholesale customers so that you can make a profit yourself without driving the cost so high that you lose sales?
I absolutely love Ryan’s work at Stitch and Saw, and he asks us:
“I would love to see a post of your take on wholesaling handmade items. When margins are tight and production time high it’s tough to figure out a good wholesale strategy that benefits the retailer and the maker.”
I sent this question out to our mailing list, and got some very thoughtful replies from small creative businesses like yours.
Don’t Wait For Business to Come to You
Amy from Bow Wow Couture says:
We have been wholesaling only for 2.5 years. I suggest that before you start to sell wholesale to retail stores that you first evaluate your current pricing. Your profit should be built in at the wholesale level.
Between the two websites we sell on and our wholesale business the lead time on our handmade doggie products is quite long, anywhere from 3 weeks to 1.5 months. We encourage our retailers to order early, and when new orders are placed we give reality based delivery estimates.
Something we learned over time is don’t be afraid to set minimum order requirements. If you were going to sell your products at a craft show or festival you wouldn’t display only $75 worth of items. Same goes for a retail shop – to give your products the best chance of selling to buyers there has to be enough to see! Before we set a minimum retailers would buy the smallest amount possible and we rarely heard from them again. After we started a $250 min (where the average price of a wholesale item is $11) we started to see frequent repeat business, plus each order got bigger.
Don’t wait for business to come for you – go get the people who don’t know that you exist yet. Look for stores that you think would be a perfect match and send them an inexpensive but well done package with a catalog/promotional materials with a sample product. Do a little research on their website or Facebook page and include a short note, mentioning something you discovered about them. The personal touch and thoughtful approach will set you apart. When we saw that wholesale was working really well for us, we started attending the three major pet industry trade shows. Didn’t mean to write a book, I just have so much to say from a “handmade product” perspective.
– Amy, shopbwc.com
Keep Costs Low
Lior from La Boîte says:
There is not one answer to this but I think the following points are important:
1) Improve your buying capabilities. Check for better pricing constantly to reduce cost. You make money by buying smart!
2) Study new ways to improve production time and cost.
3) Place your product in stores that are willing to practice a smaller margin while selling.
4) Create a secondary less expensive line that will later drive sales of more expensive items.
– Lior Lev Sercarz, laboiteny.com
Account For Your Production and Creative Time
Teri from Body Systems says:
Wholesale can be great if you have the proper terms & costs in place. Our wholesaling strategy has to be different then “regular” non-handmade businesses as we have to take in account the production & creative time. It isn’t a simple (costX2) situation. With super help from Lela at Lucky Break Consulting we now understand that pricing and therefore wholesaling our handmade bath & body products is unique. We take all costs including labor, research, overhead, materials, and any other set costs and multiply by 2 or 3 to get that wholesale price.
If we decide to do custom work, the buyer has to pay for our time…isn’t that what they are coming to us for in terms of our uniqueness in the industry? To make a profit but be able to provide a good wholesale program, we have to decide what our work is worth, and make sure to charge for all time/materials involved and then create terms like payment options, lead times, and such to create first a program that benefits you and your company and then it benefits the wholesale customer. I think they come to us creatives for our uniqueness & also the direct communication we have with the buyer. If they wanted mass produced stuff, then they can buy from overseas..but our products are unique just like our creative abilities.
– Teri Lang Patterson, body-systems.net
Plan Ahead For Seasonal Sales
Sarah of Sarah’s Silks says:
In general I work like this:
Brainstorm lots of ideas (I keep a sketch book with ideas and use Pinterest to gather ideas/colors), make prototypes, and cost them out: cost of materials, cost of the time to make them, a time trial of making 5 or so. If I don’t think they can sell for 4 times cost of goods, we don’t continue with that item. Or we revise it to be less expensive.
Out of possibly 3-4 items we choose 2/year to wholesale. Usually we do a couple of colorways of each item.
To get ready to wholesale you have to start early. I am deciding new products for fall in March.
In March we also decide on packaging needed for the product and work with our designer to get that ready.
We have a photo shoot in April. Including taking photos of the package prototype (item packaged as stores like packaging)
In May start production to have stock on hand by August.
In June we lay out our catalog, and create our price list/order form with wholesale guidelines, like minimum order size, requirements to qualify as a business to resell our things, and an agreement to follow our Minimum Advertised Price (MAP).
In July we print the color catalog and copy lots of price lists. We also print packaging needed for the product (hang tag, box, wrapper). By end of July we are packaging product, and sending out catalogs/price lists to our mailing list of stores and web sites. We also send them out digitally with MailChimp.
Around August 15 we are getting orders for fall/holiday, and filling them within a week of receipt. Some customers provide us with their UPS account to use for shipping, or we use our own and charge them.
For international orders we ship Express Mail, USPS as they give us tracking numbers and custom forms to fill out on the web site.
We basically sell our things at double the cost, this is our profit. Then stores/web sites double our price this is their profit, minus their overhead and expenses.
We usually require credit card payments but also have a system set up so customers can apply for net 30 days credit from us. We do have an occasional need to send out reminders to pay, but all in all our customers are also small businesses and are quite conscientious about timely payments.
The same process happens in spring, ideally starting in October, with a flyer or catalog going end of February, for spring/Easter sales.
– Sarah Lee, sarahssilks.com
Establish Relationships With Like-Minded Retailers
Asya from Gleena says:
That is a great question from Ryan, and I still struggle answering it for myself. Even though I have been doing wholesale for a few years. I found that the best strategy for me is finding like-minded retailers. I work with a few stores, and my best relationships are an ongoing conversation. We are invested in selling my work together, and I love hearing my retailers’ feedback.
I have also learned to be completely honest about my delivery times. It takes me a long time to fill an order, and the stores that understand that, understand the handmade process a little bit more than those that work with warehoused products. I have learned that I can only handle small batch production. Doing ceramics is physically demanding, and I have to keep that in mind when taking on an order.
Over the years I have raised my prices to the point where wholesale makes sense. Raising prices is scary, but necessary, and as you figure out what the great sellers are in your line, you can nudge the price up gradually to see if the item is still selling. As your prices rise, your business becomes more profitable, and maybe you start working a little bit less. Your retailers will also make more off your line, so it’s a win for both of you.
My strategy is always evolving, as I figure out what I like to make, for how much, and ultimately, what sells for what price.
– Asya Palatova, gleena.com
Ask the Readers
Do you have any wholesaling tips to share? Or questions of your own? Let me know what you’re wondering about in the comments, and we’ll see if we can get you some answers!