09 Jan

Wholesaling 101

A year ago if you had told me that in 12 months time I would be launching an 82 piece own label collection in Paris I would have thought you crazy! But here I sit with precisely two and a bit weeks to go where I’m doing just that. I’m a little frazzled, quite a bit tired but this is the most exciting thing I’ve done to date. I feel like I’m now steering the company in the direction I totally want it to go. I’m not trawling trade shows buying products from retailers anymore, I’m at the coal-face designing pieces and producing them myself.

Why did I go down this route? Multiple reasons. Primarily I was seeing things in my head that I desperately wanted in store, but not finding them at trade shows. So every time I would go to a show no matter where in the world I would come a bit frustrated with only finding maybe 2 or 3 new suppliers, which isn’t at all cost-effective. Now I am supremely fussy and our look is niche so don’t be put off thinking you won’t find products at trade shows because you will. I was just finding it harder and harder to find new things I was excited about.

I kept seeing ideas in my head and then not finding them. I was also a little bored with being copied, and thirdly I felt there was a gap out there that could set our business apart as so many interior stores feel and look so generic these days. I wanted to shake up the world of interiors a tad, just like we’ve done with our paint range I wanted to do the same with products! So all these factors kept rolling around in my head. Our business had also just had its most profitable year yet, up 24% on last year so I knew what I was buying was selling, even if it was others people’s stuff. Imagine what I could do with my own line! My homeware range for Debenhams has been one of their bestsellers ever since the first collection, so this particularly gave me the confidence to go for it. About this time last year I was on a plane on the way back from a terrible trade show in Germany when I said to Gem “Enough.” Enough of trawling the same old shows seeing stuff that isn’t setting our minds alight, let’s design our own range!

If I hadn’t been involved with Debenhams I probably wouldn’t have thought it remotely possible, but those guys opened my eyes to working outside of my comfort zone with factories in foreign markets. So if you fancy getting into wholesale pull up a pew, make a coffee and read this. Just to warn, it’s a long post so get comfy!

What exactly is wholesale? As a wholesaler you buy in bulk products from a factory that you’ve designed (or not in some cases). You can buy products already designed from factories directly hence the likes of companies like Alibaba or you give factories drawings of products you would like them to make. For anyone who doesn’t know Alibaba it’s a Chinese e-commerce company that connects businesses to factories via the web. You then sell these products directly on to retailers or distributors. Many retailers don’t work with factories directly because you have to have a big old wad of cash to enter into wholesaling. Factories have what is known as MOQ’s (Minimum Order Quantities) and between 300 and 500 pieces of EACH product is totally normal. Actually on some of the pieces we have in production right now the MOQ is 600 of each piece! Scary. Multiply that by the 82 pieces we have in production and you can see why I’m not sleeping so well!

Scary stuff.

So basically you as a wholesaler are to the business world what retailers are to the public. You’re not selling to the public directly, you’re selling to stores and online sites. Obviously its slightly different for us and people like Jonathan Alder and Kelly Wearstler who also have their own stores as well.

Choosing an industry Do you want to wholesale coffee, lamps, textiles, all/any of the above? Choose to work to your strengths. One problem is that factories specialise. A factory that makes ceramics won’t make textiles or lamps so to produce a range you’ll end up like us working with a ton of different factories. That means a ton of MOQ’s, let alone paperwork, s, admin, emails on and on I could go. Drill into your strengths – and don’t go into wholesale lightheartedly. With this kind of business it’s success or nothing, so you’re either going to loose a ton or make a ton of money – there is no half way. Wholesaling is so much less forgiving of ‘new’ entrants than opening a store or online presence, which in comparison is pretty easy. Not only are you throwing so much more money at it the logistics are mind boggling!

How to work with factories. There are various ways – Alibaba, local trade bodies, or find an area known for being the best in producing that kind of product. For example Stoke on Trent is known for making beautiful ceramics, hence that is where we get our dog lamps produced.

Also if you’re producing something like lighting it needs to be tested by recognised bodies so it confirms to required safety standards. And we haven’t even touched upon ethics yet or working conditions. A visit is really the only reliable way to truly know your factory. There are all sorts of tricksters and scammers out there but having said that you are more likely to have quality issues than scamming issues. Quality issues can never be completely eliminated, but they can be reduced if the factory has a Quality Management System (QMS) certification such as ISO9001. Got a headache yet?

 

How it works. You provide the factory with a drawing and ideally a model (although some factories have model makers on site) and then that gets turned into a product. Top Tip: if you’re working with ceramics they will shrink up to 20% in the kiln. I learnt that the hard way. The factory didn’t tell me about shrinkage, they assumed I knew and of course I should have, so I signed the samples off only to receive an order a few months later with everything 20% smaller than I’d wanted. Nightmare! Start over…

Samples. Factories will send you samples up front to sign off on (remember to keep a master copy) as a reference for both you and the manufacturers to know what the piece will always look like. Early days when I was naïve I didn’t keep a sample and one batch of products ended up being completely different from what I had ordered and there was little recourse. Never ever put anything into production without receiving samples up front. This is actually where we have had the most problems. Lights we’ve designed have come in with the wrong colour, with a different base then specified. “Why” I once shouted down the phone in utter frustration “Would you make me 5 samples totally different to what’s been drawn?” Answer: “We didn’t think the base you designed worked so we reinterpreted”.

Say what!

Bare in mind I’ve just paid a premium for the samples to be made and flown a load over the Far East. Wine please large glass!

Going forward with production. Generally you pay between a 30 percent or 50 percent deposit, wait 3 months and then when the pieces are ready pay the remaining. You will need to ship the products from your factory to your base via sea. You can either ship a full container or what is called an LCL (less than container load) and there are agents who specialize in this type of work and can help you navigate the complexities of customs, duties and all the relevant paper work. This takes beyond hours, trust me, as we’ve done all this in house!

Trade Shows. Trade shows are the best way to showcase your product to a wide international audience. It’s a strange surreal world, five days and thousands of buyers all passing by your stand ready to buy into your collection. It’s quite a large investment doing a trade show, it typically costs us between £20-£25K, which is quite a lot for 5 days. But you are being exposed to a large number of leads and from experience few other methods compete with trade shows for potential pick-up and exposure. You can of course reduce the cost by having a smaller stand, only having a small team out there etc. etc.

Challenges. Finding a good and reliable manufacturer takes time, as does understanding up front all the associated costs to get the product to market. We found all this out through trial and error, which I wouldn’t recommend as it’s costly. Never mind the frustration at some extended lead times, reinterpretation of products, language barriers, customers who hold stock up for who know what reason.

We’ve had to jet off the Far East a couple of times last year because face-to-face still works best. It’s a minefield, it can be frustrating, it makes you pull your hair out and shout out loud and it makes you drink more wine than you thought possible. And I’m not trying to put anyone off I just wish I knew now what I didn’t know then (make sense?). When you come out the other side like we have and when it arrives and it all starts to come together to form a collection it’s one of the most exciting thing on earth, at least to me it is!

 

business

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