Sell More Stuff: Wholesale 101-3.5
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 5 parts: PREPARATION, SELLING 1, SELLING 2 & OPERATIONS 1. If you haven’t read the first 4, 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 3-2: Wholesale Operations Deux
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.
Last week we covered in OPERATIONS PT 1: Purchase Orders, EDI and Barcodes. This week we’ll cover Routing Guides and Chargebacks (fun! not.).
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?
ROUTING GUIDES:
When the retailer issues the PO, they will also send their routing guide to you. Routing guides are usually a large PDF that will instruct you on the correct ways to route, ship the goods to them, process invoices etc. For the big guys, they will likely have a vendor portal for you to log into to follow all these steps and make sure you’re compliant with their instructions.
Routing guides are CRITICAL to follow. If you’re at a warehouse that already ships goods to these retailers, that’s a great bonus, since they will be familiar with the many intricacies of each one.
If you’re not, and even if you are, MAKE SURE you read the entire guide and that your packing team also reads every page of the guide and follows it to a T. It’s your responsibility (and your teams) to know these instructions and understand them clearly. This becomes very important later, so keep reading.
Some of the things in the routing guide include:
Goods packing instructions: some retailers will want your goods on hanger, some will want your goods flat packed. Barcode labels and tags will need to be on a certain place on the garment (back neck, under left arm etc.) and on polybags (bottom right corner of bags etc.) too. If your goods are packed differently coming from the factory, you might need to pay your warehouse to re-pack, re-tag and re-label them, OR negotiate with the retailer to accept them the way they already are packed.
Box packing instructions: some retailers might want only one style one size in a box. Some might be ok with a mixed box but require paper liner separating each size within the same box. Printed EDI labels must be placed in a specific position on the boxes as well, for example, long side top right hand corner.
There might also be specific box sizes that they require you to use — these are all things to discuss with your warehouse or fulfillment partner to make sure you’re doing it right. The correct labels must be put on the right boxes as well, which needs a lot of coordination and clarity especially if you’re shipping a lot of boxes to your retailer.
Shipping vendors: major retailers usually have contracts with large trucking companies, and will want to send their trucks to come pick up the goods from your warehouse. You won’t be able to just slap a UPS label on them and send them out. Instead, you or the warehouse will need to contact the trucker and set up a pick up time within your ship window, so you’ll need to make sure the goods are ready to go within the few days that your ship window is open for.
Approvals: sometimes retailers will also want to approve shipments before they are released to truckers, so you’ll need to email them once the order is ready to ship, receive an approval, before releasing the goods.
EDI documents: once you get into EDI, you’ll realize there are codes for each of the documents you’re required to send. 820s, 846s, 890s etc. I honestly don’t remember all of them, but you’ll need to get familiar with all the document exchanges that are required for every different retailer. For example, a PO might be an 820 document, and you might need to send back an 821 which is an acknowledgement of receipt of PO. Invoices will also be transmitted electronically through EDI and that might be an 840 document. (I’m not sure on the exact numbers, but you get the gist!) Your EDI provider will be able to assist you on all this, but it’s definitely a learning curve at the beginning.
WHY DENISE ARE YOU SAYING THAT THESE ARE SO IMPORTANT TO READ AND FOLLOW?
Ahem ahem…. let me introduce you to the sneaky, penny pinching, death by a thousand cuts world of ….
CHARGEBACKS!!!
AKA the bane of every small brand’s existence when dealing with retailers.
Within your lovely routing guide or your vendor manual (an equally large document to read through), you will most likely notice a section outlining chargebacks.
Chargebacks are deductions that the retailer will take on your order if you don’t follow their routing guide instructions to a T.
Reasonably, you’ll understand that a retailer wants to receive all goods a standard way, because they need efficiency in that process across all their vendors in their multiple warehouses. So yes, it’s critical to follow the routing guide.
BUT, I think that it’s also a way retailers get away with not paying you the full amount owed to you. And, as a rite of passage, I do think every brand will experience some form of chargebacks dealing with majors, and there’s almost no avoiding that.
Let’s take a walk down memory lane, shall we. Here are some of the things that we’ve been issued chargebacks for at Alala:
Item slipped off hanger during unpacking
Barcode label unreadable
Box sticker placed in wrong position
Polybag sticker cannot be scanned
and the list goes on and on. Each chargeback might be $10, it might be $100. And so even if a retailer placed a $10,000 PO with you, and you shipped them in full, after chargebacks, you might end up with only $9000.
Yes, you can dispute chargebacks, but they make them purposefully very confusing, and also difficult to prove. How can you prove that the item did NOT slip off the hanger when it was taken out of the box at their warehouse? Answer is, that you can’t.
Chargebacks are a way of life in the wholesale world, and just like we need to account for some lost packages, or misplaced inventory at the warehouse, we also need to account for chargebacks.
PHEW. are you tired yet? 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.
The other key is to have an AMAZING warehouse partner that has experience shipping to majors. This will really alleviate the burden on you to monitor and manage every single interaction.
So choose your warehouse wisely (a whole breakdown on that, coming soon!)
I’m sure you guys have questions or requests for topics, so please leave them for me here if you’re a paid subscriber.
OK NOW GO OUT AND MAKE SOME MONEY !!!!!!