Wholesale Dilemma

[Brenda (OH)]

For the most part I have mainly focused on retail when pricing my products and the past couple of weeks I have been reviewing my wholesale policies. I know that the rule of thumb for wholesale is cost X2, but does anyone go against the norm and use a different percentage or formula?

When I crunch numbers cost X2 doesn't seem like alot when I am used to retail pricing. It may just be my mindset I understand that larger quantities make up for the $$$ but in my area and with the slower economy, store owners / retailers are opposed to the minimums I have established, which is 4 case minimum with atleast 3 of the same scent. More store owners are open to consignment rather than wholesale commitment right now.

Any words of advice or a different formula that works for you? I'd appreciate any advice I can get . . .

[Nanasnecessities]

I think you minimum is fine. It doesn't pay yo to make them if they order less.

You will have to decide if you should charge more, I have a tiered pricing structure. I sell them cheaper the more they order as I can get the supplies cheaper and employees if needed for the larger orders. You could try it that way. Most people will tell you to take the cash in hand over consignment or at least get a nice contract if you decide to do it.

[LynnS]

With me being in Ohio I so understand what you are talking about.I hve no local wholesalers but did have a couple out of state.Those dwindled for some reason or another.The one lady did make candles and loved mine but she went to another type of candle. I haven't heard from her since fall.Maybe this fall things will be back to normal with her.The other wholesale brought a minumum.She was seeing how they went in a upholstery shop.As we know might not be alot of traffic but she has purchased 6 times.These people contact me and I really don't go for a minimum. Started out as $100 but changed that. Alot of these wholesalers want to see if they sell for one thing.

Like you have read I am starting consignment and feeling better about that.I am sure most places don't have the money to put up front.The economy is affecting EVERYONE. Small business the worst.

With my 2 consignment places I priced different.One lady priced them for what she wanted to make and the other place I priced them. I need to talk to the one place because they might want to go up higher. Neither place has much business UNLESS they have a function going on. And those can be very large.

One who decided on consignment had purchased wholesale but now going with consignment.This might be for candles since there are so many candlemakers as we all know. She said she had a few more things coming in this week for a event going on.

I guess I cannot give you advise but you are seeing what I am seeing and have been working on. I bet alot on here have had wholesale drop some and maybe some are getting more.It depends where you live and since we both live in Ohio we know with all the car plants shutting down we are in for a long haul. I know first hand my husband works for Chrysler. He has top seniority our he would have been gone a long time ago.

LynnS

[Candybee]

There could be any number of reasons why your accounts dwindled; cost of shipping, slow sales, etc. that have nothing to do with the quality of your candles.

In this recession to retain customers or make new ones I think you have to think outside the box and edge more towards customer service.

I re-evaluated my retail and wholesale prices, minimums, etc. and came up with a new set of pricing. I also made no minimums for retail accounts but instead have a price structure that gives discounts or price breaks for larger sales. I also looked at what my retail accounts usually spend and have a discount starting at around that level. Eg.; if they normally purchase about 20-25 items I offered a discount for 25 or more items and started my price structure at a level that was closer for my store accounts to achieve and still save money.

Another thing you can do is offer incentives like free shipping or a discount on shipping for dollar amount purchases. You could also offer their store free advertising or sponsorship on your website, or at craft fairs or markets, etc. This will also let your customers know that they can find your products there.

I agree consignments aren't the best but they have some advantages-- especially in todays economy. Its a good way to get your product out their and start building trust with your customer. Once they get to know you they will start ordering and become a paying customer-- if not, then its a signal to move on. Its how I started and it worked for me and like I mentioned in this economy you should consider all resources.

I just think that when times are bad like this you have to come up with new ways to retain your customers. Rethinking your pricing, customer service, and offering new or more incentives will help.

[David Fields]

My two cents... Everyone's problems and perception of the problems are different. Here's mine. First, we've been in the biz for 12 yrs. Have a retail store and sell lots of wholesale. We learned a long time ago that consignment and no or very small minimums and reorders do not work. Wholesale customers who can only afford consignment or low mins almost never amount to any significant business for you. Customers, for whom it is not a concern, rarely order at your minimums. We have not noticed much of a drop in wholesale orders this year; most are up. Money begats money. Larger customers don't ask for special favors or something that you don't normally do.

[Abbiepql]

I agree with David - wholesale accounts and me just don't jive. I am forever trying to educate the store owners and managers, they try to NOT follow the rules, sneak in orders below minimums, etc. They expect me to "bend" the rules since all the other "big guys" like Yankeeme WON'T. I LOVE my private label customers as they have a mindset much different than wholesale - the candles have "their" name on them and they work hard to sell them - they have a vested interest other then "money". As for consignment, I replaced every wholesale customer (except two) I got rid of last year with a consignment shop and I am a very happy camper. I stock them as "I" see fit (no more candles being picked that they managers like but won't sell), they take orders for me when I am out of stock, I make more money than wholesale, they are as close to having my own store without the headaches as I have found. I guess it's all in the way you work the numbers, but I am done with wholesale for the most part...and my biz has picked up since I dropped them all as my BP has returned to normal!

[chevcher]

Agreed- the shift in the economy has certainly changed things for alot of us.

When I first started 13 years ago, I bent over backwards to please people.

For some insane reason I thought this would be benificial to my business-not so much

I ended up getting ripped by so-called customers that wanted to bend the rules of wholesale minimums.

I have changed things quite a bit over the years as far as minimums are concerned. I also pick and choose which teritorries I sell within and make sure I don't have stores too close to each other.

Luckily, my current wholesale customers know how to place an order. I've had some in the past that were a complete nightmare

Since I make several differnt products, they usually pick 6 fragrances and order in groups of 3 eg: room sprays,8 oz jars,16 oz jars,tarts.

One thing I'm doing is cutting my scent list WAAAYY back, it's just insane for me to have all those fragrances.

Not to mention,that helps me keep my costs down.

I have only a couple consignments, friends of mine whom I've known for several years that have awesome shops.

I had some bad experiences with consignment back in my early days that involved the police- very ugly

But I wouldn't poo poo that option, just be very careful .

As of now,I am thinking outside of the box on some new sales and marketing ideas.

I've been on so many business sites ,and have taken so many notes it's as though I'm in school again .

best of luck to you :smiley2: