I’ve been super busy doing workshops lately. I’ve already told you about the Twitter workshop I did a couple of weeks ago. Today I’m sharing all the juicy stuff from a Wholesaling workshop I just went to. It was run by the local Etsy Street Team and they had a panel of 5 Etsy sellers and a gallery owner to answer set questions from the co-ordinator as well as answering questions from the audience.
Here is some of the juicy stuff they shared.
Most said they worked out the pricing by trial & error and practice.
Wholesale buyers expect to buy at half your retail price. When one lady was first approached about selling wholesale, she realized the half price meant she was pricing her products too low.
Value your time. Include both the cost of your materials/product and the cost of your time. Some work at $20/hour as their time charge. Time to create & package your product + your material costs then x 2 = your wholesale price. Remember the time it takes for emailing, packaging, buying your product/supplies, administration tasks as well as the time it takes you to design things when working out your time costs.
Some people will want to pay more. Some people will want to pay more for your product than you may be thinking. Talk with your stockists – they may suggest paying more than you thought.
Work backwards. What income do you want? How many of your items can you make/process/handle in a week? How many are you likely to sell (in a week/in a year)? So what would you need to sell it at? Is that reasonable?
Increase your prices. The gallery owner said statistics say if you increase your prices by 10%, you will only lose 2% of your customers. Don’t be scared to put your prices up.
Consider the psychology of your buyer. If your products are priced over $50, people will stop and think before making a purchase. At $20, they are more likely to buy straight away or impulse buy.
Added value. What can you do to bring extra value to your product?
Working with wholesalers
Keep your wholesalers happy. Don’t compete with your wholesalers on price. Don’t undercut them. It will be awkward if they see you at a show or market doing this. Also keep in mind, many wholesalers find you this way. They will expect to pay half the price you are selling it for.
You don’t have to wholesale everything. One of the ladies has some products that are exclusive to her. Items she will not wholesale, even if she is asked. She wholesales approx 80% of her range with the other 20% exclusively for her to sell. Some ladies create what they called “market fillers”. Products that made them a profit at the markets but would not be profitable to wholesale.
Minimum orders. Having a minimum order is very important. Makes it easier for you. Consider smaller businesses who may not be able to afford a huge order. Be open to negotiation based on each business. Some girls have a larger first order, with smaller re-order quantity.
Consider your range. What would be a good order of your range? 10 of your creative thing at $ each is a good way to calculate a minimum order.
Relationships. Building relationships with your wholesalers is just as important as building relationships with your customers. You need to trust your stockists to respect your brand and your products.
Spread out your stockists. Give them exclusivity to their area. Reward them for taking the chance on your products. If your product is being sold in other stores close by, it is not good for sales and no-one wins. Many stockists won’t tolerate you stocking other stores that are their competitors.
Wholesale vs Consignment
Time investment. Wholesaling is less follow up and works better for most girls on the panel. Sellers take much more care with your products if they have paid for them as a wholesaler, rather than having them on “loan” with no commitment as a consignment arrangement.
Consignment can be a good option when starting out. Businesses may be more willing to try you out if on consignment. You can start out on a consignment basis and convert to a wholesale account further down the track. Doing consignment gives you a chance to “test” your products. You can swap out products if they aren’t selling. It can also give you a chance to show a bigger range of your products which can result in more sales.
You don’t have to say yes just because someone asks. Don’t compromise on your business model. If you say no to consignment, they may choose to do wholesale. If a stockist wants to pay a very low price, say no.
Lead times. Have a designated lead time. It gives you a chance to order or make your product as well as preparing their order. Also gives you time if you get a few orders at once or large orders. Many wholesalers expect there to be a lead time.
How and where wholesalers find you. Many girls were approached by wholesalers at markets. Other got leads from Etsy. They say it is important to have a good online presence. They found Twitter and social networking worked the best. If you have a lot of followers, that builds your reputation in the eyes of potential wholesalers. Many of the ladies were surprised with how people found them and where they hear about you.
Trade fairs. One lady on the panel decided she wanted to get her business going quickly and with larger orders so she did a trade show. She said it was a huge investment but she got a large number of wholesalers across a broad area quickly doing this. Is hard and fast – it is all done quickly at the event, is not relaxed like a market. You need to be organized if you are going to do this.
Presentation. How you present yourself, your stock and your samples can make a big difference. They should all be in line with your brand. This then helped them to build word of mouth. Have your style and product range clear. Be confident. Be ready to answer questions about pricing, wholesale arrangements etc. Always carry business cards.
Selling yourself and your products.
Convey what you do. Your style. Show it in your products, your stationery, your website/Etsy store and your business cards.
Packaging counts. One lady spends money on beautiful packaging because it lets her increase her prices. She shows the packaging on her Etsy store & website as part of the product photos. She may pay $1 extra for the packaging but can charge an additional $5 for her products. Her big tip – It gives extra “perceived value”.
Markets. Give your stall depth and height. Don’t have everything lying flat. You’ve got 3 seconds to get their customers attention. Change things if they are not working. Mix things up. Listen and be open to ideas about your products, marketing and packaging. Brand everything – have business cards out for people to take, brand the tags on your products – people can look you up and contact you even after the event. This will make you stand out from other stall holders. Display things differently to everyone else. If your product is something you can wear, wearing it at a market will help you sell more. Have a large sign with your business name – they may be more likely to remember you and your name.
The business-y stuff.
Tax. Know about tax rules for your area. What you can and can’t claim. What you need to include or consider in your pricing. Tax you need to pay from your income.
Buying stock and supplies. If you are selling your products wholesale, you should be buying your stock, packaging supplies etc at wholesale prices, not retail.
Business registration. Know what you need to register – business names, tax file numbers, bank accounts just for your business.
Stay tuned. I’ve got another workshop coming up – it’s a social media workshop. This time it’s being taught by someone who has built their creative business using tools like Twitter and blogging. I will report back to you soon – promise.