Have you dreamed of getting your product on the shelves of your local stores? It can be simpler than you think, as MINT member Liza Johnson explains…
As a producer and a retailer, I have seen both sides of this transition and wanted to offer my observations and learnings to help you on your way. This guide is focused on getting the product into local stores, rather than large national chains, but many of the steps are transferable.
Let’s break it down into chunks.
Firstly, be sure of your “why”
Why do you want sell your products wholesale?
There are many benefits to selling in bulk, but is it right for you and your business?
Now might be the right time for you if:
- you want to increase revenue in your business
- you have the capacity for extra work and a clear plan for how you can scale your existing production to meet new demand
- You are still in the developmental or experimental stage of setting your brand or product
- you have a fully costed and tested product
So, if you want to grow your business and you are confident you have a great product, then wholesale can be a very successful way to expand your customer base and your business. It is also a fantastic way to move away from selling at markets or moving from e-commerce to direct sales.
Do your maths
Producing products might be your passion, but if you have not got your pricing right then you can lose a lot of money when you start wholesaling. You want to make sure you don’t fall into the trap of
being a busy fool, ie. selling a lot of products but making no profit.
Here are some pointers on knowing your numbers:
- Retailers need to make a profit on your product and they also need to pay their staff, rent, rates, utilities, marketing etc.
- For food products, retailers look for a margin of about 35 – 40%
- For arts and crafts items the retailer margin should be 40 – 50%
- You need your products to be profitable when sold in bulk
- You are very unlikely to sell your products wholesale and retail at the same rate
So, let’s stop there are look at an example…
- You have a product that sells for £8 retail
- Your retailer needs to make at least 35%
- You need to sell wholesale for £5.20 maximum
- Your product costs £4 to make
- Your RETAIL margin is 50% and your profit is £4
- Your TRADE/WHOLESALE margin is 24% and profit is £1.20
In this scenario, your retail margins are great, but your wholesale margins are tight. So let’s continue with the pointers…
- As a general rule, the bigger the store the more discount they will look for
- Wholesale prices are often based purely on retailer margins (ie one retailer may say “we need to make 50%” and another might be happy with 35%) so every wholesale customer could be on different rates
- Stocking your product into a supermarket chain or similar will also usually mean you have additional costs for marketing, promotions and Point Of Sale (POS) material
- Make sure you cost all the elements of the product, including stickers, ink and any packaging
- Cost up your staff time, even if you don’t yet have staff – perhaps you will soon
- Time yourself making 50 or 100 or the product and then divide the time to get a more accurate figure
- Don’t forget packing time and admin, overheads etc – it’s not just about material costs
How to work out margin and markup
Margin and markup are two very different things. Markup is what you add to a cost, margin is what you make from a sale.
- Your product costs £4 to make
- You want to mark it up by 50%
- £4 multiplied by 1.5 (150%) = £6
Margin is a more meaningful metric…
- Your product costs £4 to make
- You want gross profit to be 50%
- £4 divided by 0.5 (50%) = £8
It gets slightly more complex for other margins – so if you want profit to be 35% you need to divide by 0.65, 40% would be divide by .60 and so on.
Before you start contacting stores
You need to get yourself and your company retail-ready.
- Review your social media – your own personal and business accounts. Don’t forget these are business to business sales you are now looking at so make sure your company has a page on
LinkedIn that clearly highlights the product - Make sure your branding is clear and consistent across all channels
- Make sure your product, labeling and packaging are all legally compliant, you are insured and registered with appropriate bodies
- Get some brutally-honest feedback. You are unlikely to get this from friends and family
- Find other business owners you respect and ask them to mystery shop and review your product
- Get some professional product photography done – you will need these for promoting your products
Get ready for paperwork
When you do approach retailers, they need information to make a decision. Getting it verbally from you is great but they will need to have ‘sell sheets’ to refer to. These should be simple to read, on-brand and contain all the information they need to say “yes” to becoming a retailer of your products.
Make sure they are in a format that can be emailed or printed, use canva or a similar program to make them visually appealing. The sheet should be no more than 2 sheets of A4 and should include:
- Wholesale price and suggested retail price
- Discount tiers: 100 units, 500 units, etc.
- Product benefits and high-quality photographs
- Testimonials from wholesale customers
- Rating and reviews from direct customers
- Patents and any other intellectual property rights
- Minimum ordering quantities, free shipping levels and any promotional offers
- Ordering, website, social media, and contact details
Depending on your product and business you may also wish to produce custom POS materials, training guides for staff, reorder forms, customer information sheets or many other items. If you are not confident in graphic design this can be outsourced.
I realise that this all seems like a lot of work, but done right it only needs to be done once and hopefully will help you to see your stock on the shelves of many stores.
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Liza Johnson is a MINT member who sells online via several channels, including her own websites, eBay, Amazon, Etsy, and in stores – including the Discovering Durham shop which she co-runs. Liza is a firm believer in spreading your business risk across multiple revenue streams and her main business is The Tea Enthusiasts.