Sell More Stuff: Wholesale 101-3
Part 3 of 3: Wholesale Operations!
Hi to all my new subscribers!
I’m so happy you’re here. I hope you find tons of value in this newsletter every week, and you take away actionable steps to grow your fashion business to $1MM and beyond!
We are in the last part of our Wholesale 101 Series. This series is meant to give you a primer for how to “do” wholesale, because it is an important element for many of us to get to the $1MM mark.
I broke it up into 4 parts: PREPARATION, SELLING 1, SELLING 2 & OPERATIONS. If you haven’t read the first 3, feel free to go back and do that!
Please note, this is far from comprehensive. We could talk about wholesale for weeks, maybe months…. If you’d like me to dive deeper, I’d be happy to do that in subsequent newsletters, just let me know in the comments!
OK - here we go. Part 3-1: Wholesale Operations.
(DL: I’m breaking this up into 2 parts, as it gets LONG and I don’t want you to get too overwhelmed. Both this week and next week’s part will be available in full to free & paid subscribers!)
Wholesale is not just about getting the sale. That’s only the first part of the equation. The second, and arguably as important part is being able to fulfill the order properly, therefore ensuring future orders to come! This is especially true when working with majors such as Saks, Nordstrom, URBN etc.
Smaller stores and boutiques will not have as much of a logistics process, but I know we all want to get into majors, so I’m covering it here. READY?
PURCHASE ORDER:
Congrats! You’ve received your purchase order from a wholesale client. This is where they outline what styles, sizes, colors, start ship dates, cancel dates, payment terms, price paid etc. This is THE document you want to get from your clients to confirm the order.
Some key elements to a purchase order you want to pay attention to
Start ship dates & cancel dates: these are the first and last days that the client is willing to accept the goods. Make sure you are able to ship the goods within that window, especially if the styles are still coming in from the factories, and not yet at your warehouse. Many retailers will reserve the right to cancel orders if you don’t ship by the cancel date, which would suck!!! BONUS TIP: if it looks likely that you are going to miss the cancel date, reach out to your buyer to give them the heads up. They will sometimes extend the window for you.
Payment terms: hopefully you’ve negotiated payment terms prior to the store placing a PO. If it’s a brand new client, for Alala, we often prefer to charge a credit card upon shipment, or need to receive payment prior to the order shipping. This won’t fly with major retailers though, and they will likely put you on Net 30, sometimes Net 60 or 90 terms. This means, you are not getting paid until 30, 60, 90 days after you send in your invoice. Invoices typically get sent when the goods are shipped.
Discounts: again, by the time you’ve received your PO, you likely will have already discussed discounts with your client. Sometimes a big store will ask for a discount on the wholesale price, either to earmark that for marketing, or just because they can. These should be reflected in their PO as well.
Shipping: usually the retailer will cover shipping costs, but make sure you clarify this with them and that it’s stated on the PO either way. Shipping certainly gets expensive if they’re purchasing a decent amount from you!
If you are receiving a PO from a major retailer, chances are they will ask you the following question: ARE YOU ON EDI?
WHAT THE HECK IS EDI?!
EDI stands for Electronic Data Interchange. It is a standard way of exchanging information such as POs, delivery confirmations, invoices etc. to and from your wholesale client. Most large retailers are on EDI and many require you to also be on EDI to do business with them.
OK so how do I become EDI Compliant?
There are companies that will help translate the documents that come through for you. SPRING SYSTEMS and SPS COMMERCE are two that we have used at Alala in the past. They typically need to also be plugged into your WMS (warehouse management system) which takes some time to set up.
So make sure you give yourself as much time as you can to get set up on EDI, as it is a critical part of growing wholesale, especially with majors. If you’re a small brand, they might give you a one-time pass, but you’ll need to get set up eventually.
Also, EDI costs $$. So make sure you are aware of the costs here too. There are set up fees, and most likely some integration fees with your warehouse as well.
BARCODES:
File this one under things we see every day but we never think about, right?!
Yup you’ll need barcodes on your pieces - most likely on the garment tag itself and also on the polybag.
You can get official barcodes from a company called GS1, or if you want to wing it before you invest (coz GS1 barcodes are $) you can make up your own SKU numbers. However if you′re working with top retailers, chances are you′ll need to shell out for GS1. Because yes, yet again, barcodes cost $.
I pulled this pricing list off GS1’s website, and you’ll need a unique barcode for every individual SKU you have. SKU meaning 1 style, 1 color, 1 size.
So one tshirt style in black, in XS-L will be 4 SKUs. The same tshirt in white, XS-L, will be another 4 SKUs.
Once you secure your barcodes, you’ll also need to make sure tags are printed properly and attached to your garments and polybag stickers as well. Alala uses FINELINE to print our tags, which then get sent to our factories to attach as part of their finishing process. These days, some retailers might even require you to use an RFID tag.
PHEW. are you tired yet? That was a LOT and I have a whole other part to cover next week encompassing Operations: Routing Guides and Chargebacks.
Wholesale operations are super important, and I’m sure that it all seems a bit overwhelming, especially if you haven’t experienced it before. Trust me, it gets easier the more times you ship, and having an AMAZING warehouse partner that has experience shipping to majors will really alleviate the burden on you. So choose your warehouse wisely (a whole breakdown on that, coming soon!)
I’m sure you guys have questions, so please leave them for me here if you’re a paid subscriber.
OK NOW GO OUT AND MAKE SOME MONEY!!!!!!
Great post again thank you! one more question for you what would be a 'healthy' business split of wholesale vs D2C/direct retail in your store you would say? I understand that it depends on margin, overall volume and at which stage the company is at. seems like wholesale at the beginning is more like a marketing/brand building tool right?thank you!