Wholesaling physical products to boutiques is quite different from retail, but if you’re reading this – I am sure you know that. If not, maybe you should start here where you can figure out if wholesale is right for your business. Having your wholesale terms and policies on lock is key! When you have an actual terms of agreement and policy in place it actually makes things easier for you and for your buyer. There’s no room for misunderstanding and it’s great when everything is directly to the point. This allows you and your buyer to operate as efficient as possible.
Guidelines for wholesale terms and policies
Have a minimum first order and a re-order value
Having a min. order purchase amount will help you find the right buyer who is serious about your products. Too low of a minimum may not include enough products to fully stock a shelf, leaving your items looking sparse on a shelf. Too high of a minimum could scare buyers away because it may be too big of a commitment for them. I recommend at least a $200 dollar min. and a $100 dollar re-order min.
Have a minimum quantity per item
Do you need a minimum quantity per item? When you have a minimum quantity per item it can help you when you plan out your batches. For example: Say you are making a batch of soap and a loaf can make 8 bars. I would make my minimum value in increments of 2 so that I would never have one bar left over. But to make a shelf look full, I would say 4 is a good minimum to have for a scented bar of soap.
Having your pricing on point is important and a major part of your wholesale terms. Almost all retailers expect to buy at 50% off your retail value. They also expect to be able to mark up your products for profit at x2 or x2.5 at a minimum. The better your buyer sells, the bigger the re-order. The reason you should sell at 50% off retail is because you should be selling larger volumes of your product which could potentially lead to buying supplies in bulk so that you are about to still make a decent profit on wholesale prices.
Shipping, FOB and Options
Knowing how to ship and the best options will save you time, money and relationships in the future. First off, what is Free on Board (FOB)? FOB is when/where ownership of the goods transfers from the seller to the buyer. For example: You are shipping through your local post office. You can put in your terms FOB: (post office address). This says that once you drop your items off at the post office, the ownership then transfers to the buyer.
Personally, I ship a lot of 15 pound boxes and over via UPS, I found that they have the best rates for me. You can also set up business accounts with UPS, Fed Ex, etc. to where you can possibly get better rates on postage and have an account that they can bill for shipping.
I hope this helps get the ball rolling and explains some of the important things you need in your wholesale terms! Best of luck in your business adventures!
XX – Signed,