Home » Ask The Entreprenette, Sales, Sales Reps, Wholesale

Will buyers pay upfront?

4 May 2011 13 CommentsBy Sarah Shaw
Hi Sarah,

I am interested in taking my business wholesale to stores. Is it possible when pitching to larger stores to ask for a percentage of the order upfront and the remainder 30 days after delivery?   I am thinking about getting a rep. Is this something they would be willing to ask on my behalf?  Help!  I really want to take my business to the next level outside of online sales.

Thanks,
Shermaine Davis    www.desertsierranaturals.com
 
Dear Shermaine,
 
I am thrilled that you are going to expand into wholesale sales. This is a great way to increase your revenue and get more brand recognition.  Very exciting!
 
In my experience, stores are not willing to pay anything up front.  That is not to say they won’t, it’s just not “regular” business practice. I’d suggest building a solid foundation with smaller stores and get very comfortable with your cash flow before venturing out to the big guys. Having a solid relationship with hundreds of small stores is a very stable and secure way to build a brand. You have a lot more access to the buyers, and they tend to be more loyal than the big guys that are driven by weekly sales requirements.
 
I am a big fan of sales reps, so I say go for it. Again, they will most likely refuse to ask for a deposit from their accounts so again, just let them know that you prefer to build a foundation of small stores before stepping into the big ‘ol deep sea.
I built my $1M handbag line with the help of about 1200 boutiques under my belt before I ventured out to dep’t stores and larger chains. You can do it too!
 
Good luck,
 
Sarah
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13 Comments »

  • Melissa said:

    Really good question and helpful answer to boot! Cheers :)

  • AdaPia said:

    Sarah,
    This is great advice! We’ve been thinking of going into wholesale as well for our products and wanted to begin by building our store list. On the subject of sales reps, are there any directories, sites or other sources that you would specifically recommend for accessories and lifestyle products like handbags, totes, umbrellas, etc.? And when would you recommend going to a trade show? It’s a big financial outlay that not everyone can afford, especially in the beginning. I’d love to hear your thoughts and advice on that as well.
    Thanks so much for your time!
    AdaPia

  • Andy Mathis said:

    In the wholesale business of handmade items, it is common to get a credit card payment for the initial order, and then set up net 30 terms on future reorders.

  • Reija said:

    This is a great question that I had as well. I’m working on getting into small boutiques as well at the moment so this information is great. Hopefully in the future I can contact the bigger stores as well. Thank you Sarah!

  • Nancy said:

    One thing I’ve recently done is to offer store a discount if they pay at the time I ship their order but that’s as far as I go because wholesale customers are not open to paying up front. I do require a new customer to pay upfront (pro forma) on the first order and that is standard practice.

    Unlike Sarah, I do not like sales reps. I’ve worked with a number of them over the course of 8 years or so and found a few pitfalls. First my work is handmade by me, the reps I’ve had just were not capable of presenting my work the way I can. Second, buyers of handmade works want to meet the artisan, that’s a whole part of the buying handmade ‘thing’. Third, a sales rep takes 15-20%…so you are selling wholesale and start with about 50% of your retail price, the rep takes 20% leaving you with 30% from which to pay for your time, materials and overhead and let’s not forget profit. (rep takes 20% of the wholesale price so this calculation isn’t exact but merely an example.) Not much of a profit margin there either way. If you are having your product mass produced overseas, cheaply, perhaps this model will work for you but if you yourself are creating each piece as I am, well….it hasn’t proven beneficial for me….

    Hope that helps,
    Nan

  • shermaine said:

    Sarah,
    thank you for selecting my question!

    I totally understand about smaller stores first. I will definitely make sure to have this conversation when interviewing reps. Thanks so much!

  • Jennifer said:

    Hi Sarah and Shermaine!

    Great question! Great answer, Sarah.
    I am on the path of growing my brand with small stores and salons.
    I don’t have a rep at this point, but would like to have one.

    I DID once get a large order from a major retailer. It was very strategically planned on my part. I took out a line of credit and had it ready to buy the components and pay the filling company if the order came through. It did come through and they were willing to pay within 30 days with a 2% discount on the entire order. I went that direction.

    Thanks for the great forum to explore new ideas and ask questions, Sarah!

  • Jennifer Covello said:

    Thanks for this great tip Sarah! I too am in a few smaller upscale retail stores and building a great relationship with these store owners is key. I’d love to get into the larger stores but think I’ll need to do more work to get into more smaller stores first as you did.

    PS – would love to know how you accomplished 1200 stores for your handbags. Did you have a rep? Cold calls? Thanks!

  • Karen at PaperFancy.com said:

    Hi Sarah and Shermaine,
    What a great question! I do totally agree with Sarah on this one. When I had my wholesale stationery business I did first sell through small gift stores and stationery boutiques. I did find that even those small companies would not pay up front. They actually paid 30 days or over for most. Unfortunately, a few never paid which will not ruin your company if it’s $100 vs. $10,000 of a large department store order. So, I agree to keep it slow and small at first.

    Good luck with your business!!

  • Djivan said:

    Thank you Sarah and Shermaine,
    Since I’m in the process of taking my product to stores, I found this blog so helpful and it taught me something very important..

    keep up with the great work Sarah!!!

  • Allison Izu said:

    Thank you so much for asking this question – I am still in the process of looking for a reputable sales rep too. I’ve been through at least 5 in the last 2 years, so it’s tough to find people who know what they are doing out there.

    To answer AdaPia’s question, i’ve also purchased a couple of “sales rep directories” which is basically an email list of showrooms, but its difficult to work with showrooms when you are starting out,so i dont recommend purchasing these lists.

    If anyone has expertise on finding a good sales rep, please share . . .

    Mahalo – allison

  • Heather Allard said:

    Hi Sarah,

    Back in my product selling days, I used to offer my wholesale accounts (and invited my sales reps to do the same) a small discount or free shipping if they paid up front with a credit card – it was a total win-win because they saved money and I saved time having to hunt down payments.

    I also created a wholesale shopping cart on my site where pre-qualified wholesalers could place their own orders using a credit card. Again, total win-win.

    Hope this helps!
    Heather

  • Margo Schlossberg said:

    Hi There,

    I have found that stores are so risk aversive that they want to see if my product will sell first before they make payment thus I have been having to sell on consignment which is time consuming and difficult for cashflow. Curious about your thoughts and advice on this situation.
    thanks all and Sarah great advice.
    Margo

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