Wholesale or Not Wholesale That is the Question.

At some point you will be approached to sell your work wholesale.  It will usually be applied to your lower priced items, the price value will be 50% or half of retail, and the person is going to want large quantities of your work.  For this post I will use my wine bottle toppers as an example.

What is wholesale?

In a wholesale situation a middle man comes in between you and your customer.  This breaks the connect between the artist and the client.  In many cases it may not be obvious who the artist is or where they are from.

Does your product fit this type of selling?

If the customer needs to know the special features of your product then this method will require more work.  Promotional material explaining your processes, wood selection, finishes etc. would have to be delivered to sell your product in your absence.  Some of my wine toppers are turned from exotic woods.(as above)  Adequate labels will let the customer know which wood was used.  I also have wood with a unique story from my farm.  Producing labels or tags for each type of exotic wood takes time but is not overwhelming.  However if each bottle topper has a unique story then the time to write, layout & produce the information is going to increase the cost of producing the product.

For example saying that a bottle stopper is made out of Vine Maple is different than saying the Vine Maple grows on my farm and was harvested last year when I was bringing in my annual fire wood.

The key point is that if the story behind the product is crucial for the sale then wholesaling the product will likely lead to a decline in your sales.  No one knows your product better than you do.

 What are the right conditions for wholesale selling?

In addition to the story the product is usually lower priced and ubiquitous, that is, one bottle topper is equal  in utility to any other similarly made bottle toppers.  In my mind it is a mass production, manufactured type of process.  I know in turning out wooden products each one will be a little bit different from all of the others, but wine bottle toppers all keep the wine fresh.  This is the other end from individual custom work.

 What are the financial parameters of selling wholesale?

Basic Scenario.  I sell bottle toppers for $15.00 therefore my wholesale price would be $7.50.  In wholesale arrangements they should pay you up front for your product.  This is good for cash flow.  If the product does not subsequently sell the wholesaler is taking the risk.

This impacts you because you are making less money on each topper but hopefully selling more.  I have covered some of the issues of pricing in an earlier article “The nuts and bolts of pricing your work “.  The key point is to use the wholesale price of $7.50 to evaluate your toppers.  If my wood costs $2.00 for the top and $ .25 for the bottle insert, then I am only making $ 5.25 for my time.  This would mean, in BC, to get minimum wage,  I should be able to produce each topper in ½ hours start to finish.

How can I adjust the financial parameters?

You could set your rate at 60% rather than 50%.  This would give 40% to the retailer of your work and each topper would give you a revenue of $ 9.00, or an extra $1.50 per topper.  Some retailers may not accept a 40% share but remember it is your business and you set the rates.

You could sell wholesale at your retail price.  This would mean that my topper selling in Vancouver would be $30.00, double the wholesale price of $15.00.  Someone buying directly from me would pay only $15.00.  This price differential could be a disadvantage if I lived in Vancouver.  Why buy from the retailer when the artist is cheaper?  The retailer may also not want to sell bottle toppers for $30.00 because that is just too high of a price for a smaller item.

These are some of the ways you can adjust the wholesale relationship.  It is your business and you need to make it work for you.

What do you have to do to make wholesaling work?

The biggest impact on you is that you might have to produce many very similar items.  For some people entering the shop and producing the same item day in and out is no big deal.  Others like the variety that wood turning offers.  Once you have the relationship you also don’t know when the next order will arrive.  Plan ahead in terms of minimum/maximum amounts to be ordered and the expected time of delivery after the order is made.

Is wholesaling right for you?

For me the biggest issue is return for my time and effort.  Selling 100 bottle toppers for $750.00 sounds like a great idea, if I could do the production in about 50 hours.  I know there are production efficiencies to be achieved in the repetitive production process but it is too easy to be squeezed really tight if you don’t think carefully through the wholesale opportunities that come your way.

Are you selling wholesale?  What challenges have you faced?

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