Ahhh yes! The wonderful world of wholesale. If you know anything about my background, I spent over a decade as a national buyer for some of the largest retailers in the US. So this topic is near and dear to me.
One of the channels that 37 Oaks educates and prepares small businesses to grow into is wholesale. If you have a goal of selling your product in large quantities to retailers and/or distributors; or if you have a goal of getting your product into the hands of the masses, then you are in the right place. As you can imagine, there is a LOT involved in the wholesale channel and it can be one of the more complex and expensive channels we teach (relative to e-commerce, storefronts, and pop ups). In my former corporate days, I saw plenty of businesses enter this wholesale journey ill-prepared and therefore did more damage to the business than good.
This is where 37 Oaks comes in. You don’t know what you don’t know. So we are here to help you “know it”. Checkout these 6 tips to prepare your business for wholesale growth along with the resources we have to help you through this process.
1. Outline Your Distribution Plan
Wholesale is a broad term. It's like saying, “I want to grow into e-commerce”. There are so many parts and pieces to these channels and thinking that one size fits all is a big mistake. All wholesalers are not designed equally. So before you dive into calculating pallet sizes and designing shelf displays, it’s best to outline a distribution strategy that best fits your business. Think of it as a “wholesale hit list” based on accounts that align with your brand. Some considerations are the size, locations, specialty, target audience and brand beliefs.
It's easy to chase the idea of being on the shelf in dozens or hundreds of stores, but if the account is not strategically aligned with your brand and goals, not only will sales suffer but so could your brand identity. If you are new to this process, we suggest watching these two 37 Oaks University On Demand courses: Introduction to Wholesaling and Introduction to Wholesale Distribution Partners. This will provide a good foundation to jumpstarting your wholesale journey.
2. Define Your Product Offering
Some brands we work with have one product, others may have 20. If you are new to wholesaling, you probably want to pitch an account with a narrowed and focused list of products. This may not include all you have to offer. You want to make it quick and easy for the Buyer to say “yes”! Once your top items prove themselves in stores, it will then open the opportunity for more items to follow. By only pitching your top sellers, this eliminates any confusion or noise for the Buyer and helps them quickly and clearly understand what you do; why it's different and why it needs to be in their store. Although it is tempting to pitch a wide assortment of products, being surgical and strategic is the name of the game.
3. Prepare Financials for Negotiations
We need to stress the importance of understanding all the financials related to growing into wholesale. Of all of the distribution channels we teach, this can be one of the more costly. There are a lot of cost considerations, but overall you want to outline your cost of goods and any expenses associated with getting the product from you to the customer. This can include categories such as shipping, logistics, marketing, brokers, co-packers, packaging, production costs, etc.
Knowing these costs helps you understand your “floor”- or how low you can go during negotiations. Since there tends to be many parties involved, this is a heavily negotiated channel and they each want to make sure their financial goals are met. Don’t enter these conversations without knowing the potential impact of financial negotiations on your business.
4. Marketing & Promotional Plan
One of the biggest misconceptions of retail is once you get on the shelf, you are all done! You have made it! But, you will constantly hear us say in our wholesale courses that there is a big difference between getting in and staying in. Retail is a very competitive industry, and there are plenty of brands vying for space in stores. If your products do not perform well, then all the hard work you spent to get in can go down the drain. You are definitely in a partnership with retailers to drive your sales, so you have to go into the process expecting to do your part.
How will the customer know that your product is available at a specific retailer?
How will you drive attention to your product on the shelf?
How will you communicate your advantage when positioned right next to a competitive brand?
You play a role in the success of your brand in stores. Each retailer will have different marketing & promotional platforms, programs and opportunities you can tap in to drive sales and increase awareness. To learn more about general marketing and promotional options in wholesale, checkout 37 Oaks University On Demand course: Introduction to Retail Promotions.
5. Prepare Manufacturing & Supply Chain
In wholesale, you have one chance to make a first impression. One of the worst things you can do is have a Buyer trust that you can deliver, and when the time comes, you don't. When you sell products in mass quantities, you have to produce in mass quantities. Your manufacturing process & supply chain cannot be an afterthought.
You will need to consistently produce at a level of quality, and in a timely manner. Are your manufacturing capabilities and supply chain up to par? If not, start outlining needs and costs now. You don’t want to think you can do all of this on your own and you definitely don't want to wait until the last minute to get all your ducks in a row. To get a general sense around scaling production, checkout 37 Oaks University On Demand course: Introduction to Scaling Production.
6. Prepare to Pitch
To get products on shelf, you typically need to go through a Buyer. A retail Buyer is responsible for getting the right product to their customer, at the right time and in a profitable way.
These meetings do not come without pre-work and persistence. There are plenty of brands vying for space on shelf so this process may take time, especially if you don’t have existing connections.
Don’t get discouraged as it is just a part of the process. Just prepare. Research the account; see what competitive products they already carry and make sure you understand who their customer really is. The more informed you are, the more successful you will be in these meetings.
Once you secure the meeting, now it is time to pitch. There are many key points you want to communicate and specific business development collateral you want to have. But, we want to specifically stress the importance of having a strong and clear value statement. This defines what makes your business unique. Buyers have options and an amazingly crafted, strong and objective value statement will not only help you stick out in the Buyer’s mind, but will also help you stick out in the customer’s mind.
To learn more about these topics, check out 37 Oaks University On Demand Courses:
Introduction to Wholesaling
Introduction to Wholesale Distribution Partners
Introduction to Retail Promotions
Introduction to Wholesale Business Development Tools
Defining Your Unique Value
Wholesale is a great channel and has its place in a business strategy. There are different levels to it, and it may be for some and it may not be for others. But either way, you owe it to your business to understand the advantages, disadvantages, considerations and expectations. Stay connected with 37 Oaks so we can help you through whichever channel decision you make.
Terrand Smith
Founder/CEO
37 Oaks
37oaks.com
Download this FREE Resource Guide to get started on your wholesale journey!
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