It’s pretty amazing to see something you’ve poured your heart and soul into sitting on the shelf at your favorite store. It’s an even better feeling when you hear how quickly it sells and see a re-order request in your inbox. If you have a product that you dream of seeing on your favorite store’s shelves I want you to grab a coffee (or a cocktail) and carve out some time for yourself to consider the following before jumping in:
WHAT DO YOU WANT TO SELL?
Depending on what you’re creating you may have one item or a few dozen that you want to sell. Start by determining what you want to focus your sales efforts on. If a buyer came to you today and said they can only buy one thing what would it be? Saying you want to sell it all right out of the gate can be costly and may spread you too thin.
WHO IS YOUR TARGET MARKET?
Similar to determining what you want to sell you need to decide who you want to sell it to. Every store with a door isn’t going to be the answer because not all stores are going to be the best match for your products. Decide who to target your sales and marketing efforts on now and your business will grow organically. Not sure where to start? Spend an afternoon visiting local stores to see what they have on their shelves. Your trip can include everyone from small boutiques to department stores–we’re dreaming big here! Make a list of your ideal accounts and dig a little deeper to see what they have in common. Maybe you’ll realize that local businesses with one location are where you want to focus your efforts or perhaps you’re a go big or go home kind of guy/gal and only want to focus on stores with 10+ locations.
IS YOUR MARKET ALREADY CARRYING A SIMILAR PRODUCT?
When you’re retailing to determine your target market you should also get to know your competition. Is there a brand already on the shelf selling a similar product? Is there a void in the store’s assortment that you feel your product would fill? Asking yourself these questions will help you to develop your wholesale strategy.
WHAT IS YOUR PRICING MODEL?
Ahh pricing. This is by far one of the most challenging aspects in developing your wholesale strategy. To set your pricing structure you have to know your target market and markup strategy. But how do you figure out your markup strategy when a google search is enough to make your head spin?! I’ve found that one way to make sense of it all is to work backwards following this formula that focuses on the target retail:
(Retail $-Cost$)/Retail $= Markup %
Say you see a notebook on the shelf at a store that costs $10.00. You have a similar product and feel yours should also retail for $10.
Keeping in mind that most stores will want to sell your product for a minimum of 50% more than what they paid for it (aka 50% markup) you can calculate that in order to meet their target retail of $10.00 you would need to sell it to them for $5.00.
$10.00 (their retail)-$5.00 (what you’re selling it for)/$10.00 (their retail) =50% (markup)
Now that you know you have to sell it for $5.00 you need to determine how much it costs you to make your product.
Some of the factors you should be taking into consideration include:
– Shipping fees
All of these are important in determining the price of your product. Just because you see a similar product on the shelf at a certain price doesn’t mean it’s the best price for you. You might add up your costs and realize that notebook you want to sell for $10 costs you $7 to make. Do some research and crunch some numbers to make sure you stay in the black!
ARE YOU COMFORTABLE SELLING YOUR OWN PRODUCTS?
Putting yourself and products out there is really hard. I’ve worked with buyers that have torn collections I’ve presented to shreds and it was tough to hear, and I wasn’t even the one who designed it! Be prepared for a lot of no’s, unanswered emails, lower price offers and radio silence. Over time you’ll develop your own selling style and formula that works best for you and your products.