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Wholesale Questions

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Forum topic by Gixxerjoe04 posted 05-18-2015 02:34 PM 1280 views 0 times favorited 15 replies Add to Favorites Watch
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Gixxerjoe04

835 posts in 1043 days


05-18-2015 02:34 PM

Was wondering who sells their stuff wholesale? I had a woman contact me about selling some stuff wholesale for her to sell in her store, there’s also another store that I have to call back about selling to. Both have the 50% wholesale price for what I would get and it would be doubled for retail. I sell stuff at craft shows and on my etsy page, my prices are what I think are reasonable, high enough to make money but too high where people wont buy. Now if I sell my stuff wholesale, what I make would be cut in half at my prices which isn’t worth it. Do you all raise your prices some to be able to sell wholesale and still make alright money on your stuff, but where the retail price isn’t too high where people won’t buy? I think it would be pretty cool and beneficial to be able to sell at another store and get my name out even more. But if I sell my stuff wholesale, where the retail price is like 30% more than what I sell it for, people might go to my site after they purchase from the store and get pissed. Just not sure what to do, or how to go about figuring it all out, so any input is appreciated.


15 replies so far

View BroncoBrian's profile

BroncoBrian

435 posts in 1425 days


#1 posted 05-18-2015 02:46 PM

You just found the scale problem.

You need to know what your real cost of good is. That might take some work. This is not material cost. It is materials, utilities, labor at a normal rate, and parts/tools costs. You should be able to double that for wholesale pricing, double again (maybe a little less than double) for retail.

You margin will be much better when you sell directly, but scaling a business like that is unlikely unless you have a new product line or a major competitive advantage.

Good luck.

-- Bigfoot tries to take pictures of me

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Gixxerjoe04

835 posts in 1043 days


#2 posted 05-18-2015 08:51 PM

Thanks for the advice, guess I need to look into it a lot more and run some numbers to figure out if it’s worth it. Had another place email today who met me at a show and is opening a shop, they charge a monthly fee and take a commission but not sure how much that is. It would probably be worth it if sales are good, but who knows how that would be.

View Bill White's profile

Bill White

4456 posts in 3427 days


#3 posted 05-18-2015 09:39 PM

Given your circumstance, I would decide whether I wanted to wholesale or retail. Kinda hard to do both unless you want to be like Lee Valley. They have their Lee Valley brand as well as the Veritas brand sold by others.
Same scenario as Grizzly having the Grizz brand and the Shop Fox brand sold by others.
Have you considered dual brands? That way you could maintain your main identity as well as a wholesale brand.
Bill

-- bill@magraphics.us

View JAAune's profile

JAAune

1646 posts in 1783 days


#4 posted 05-19-2015 03:01 AM

Wholesale is tough for the average woodworker. You have to think in terms of manufacturing to pull it off. If you aren’t counting seconds during the building process then you haven’t even come close to achieving the necessary level of efficiency.

Check out the FastCap videos on lean manufacturing to see what I’m talking about.

You’ll probably need specialized machinery (build your own if you can’t afford to buy), lots of jigs and a standardized process for each item.

-- See my work at http://remmertstudios.com and http://altaredesign.com

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huff

2828 posts in 2751 days


#5 posted 05-19-2015 10:54 AM

Gixxerjoe04, Check with fellow lumberjock, (Puzzleman). Jim sells a lot of his stuff through wholesale accounts.
He has an awesome business and great marketing and selling knowledge and skills.

-- John @ http://www.thehuffordfurnituregroup.com

View bigblockyeti's profile

bigblockyeti

3668 posts in 1187 days


#6 posted 05-19-2015 01:19 PM

Whatever you do, make sure you’re not loosing money on the deal. Offer only simpler to produce items that don’t include expensive materials. Require minimum purchases & make jigs to speed and simplify production.

View Yonak's profile

Yonak

979 posts in 987 days


#7 posted 05-19-2015 02:07 PM

joe, my business is entirely manufacturing, sold to a re-seller. I have streamlined my operations so that I can make pretty good money even though my customer sells at double my price. I have an agreement that I won’t compete with him.

When the time comes that the agreement with my customer ends, I think about selling them myself, but then I think about the cost and effort of retailing, the advertising, the packaging, the time, and I think I may want to look for another re-seller to sell to.

If I were your potential customer, I wouldn’t want you to be competing with me and, especially, undercutting me. If you already have a retail and pricing system set up, selling to a re-seller could upset the apple cart.

View BroncoBrian's profile

BroncoBrian

435 posts in 1425 days


#8 posted 05-19-2015 03:57 PM



Had another place email today who met me at a show and is opening a shop, they charge a monthly fee and take a commission but not sure how much that is. It would probably be worth it if sales are good, but who knows how that would be.

- Gixxerjoe04

Does not sound like a place a business should start. YOU pay THEM so they can make money off of YOU? If you move forward, let them give you 3 months free to prove they can sell your product. Then if they do you can make the economics work for both of you. They can sell very little and make rent from a lot of sellers. That is a crummy business model.

-- Bigfoot tries to take pictures of me

View Puzzleman's profile

Puzzleman

411 posts in 2410 days


#9 posted 05-19-2015 04:12 PM

Gixxer Joe. I sell mostly wholesale and some retail. Started out doing 100% retail, but found the grind of doing all the marketing over whelming. About 10 -11 years ago I started to transition to wholesale. Now my mix is 85% wholesale. Having the extra business has helped as it has reduced my overhead per product cost. I also have increased sales tremendously since I started and for the last 4 years have had increases of over 20% year over year.

Concerning pricing. I know what my costs are exactly and charge enough so that I make at least a 10% profit after all expenses. My wholesale price is more than 50% of what I sell my product for. However, I do not put my name on any of my wholesale products, so it cannot be traced back to me. That customer belongs to the vendor, not me. I do not want to steal their customer. From my experience, vendors know how to sell to their customers and that benefits me as I would rather be making stuff. I do put my name and info on my retail products. I do have a website but it is for my personal customers. I sell to many stores, catalogs and websites with my products, so I do not do SEO or PPC for my website. I let the vendors do all of the marketing so i can do what I like.

If want more info let me know.

-- Jim Beachler, Chief Puzzler, http://www.hollowwoodworks.com

View Wildwood's profile

Wildwood

1886 posts in 1601 days


#10 posted 05-19-2015 04:26 PM

You need to make sure dealing with a true wholesale deal and not consignment! Beauty of true wholesale deal have no cost to sell, you get paid on delivery of the product.

Consignment deals you wait until item or items get sold and hope there is no inventory shrinkage. Inventory shrinkage is where owners, employees or customers walk off with product and you do not get paid! Consignment selling can be both good and bad depending upon location, foot traffic, and people dealing with.

Done both and prefer doing wholesale less work & worry!

-- Bill

View Betsy's profile

Betsy

3338 posts in 3362 days


#11 posted 05-19-2015 05:51 PM

I’ve been approached about doing wholesale and the deals I’ve been offered would make money for them but not so much for me. Since I make my boards for fun and sale them so I can make more and have a little pocket change wholesale does not make sense for me. Also, if you are doing this as a side venture and you have a job outside woodworking like I do, the wholesale bit is a hard thing to do without making a hobby into a second job.

I had a lady tell me she could sale 100 of my boards a month – HA! There was no way – I went by her store for a look see and it was a little mom and pop convenience store that they sold crafts out of the backroom. The moral of that story is, if you decide you want to try wholesaling – check and double check who you are going to do this with. You don’t want to get stuck in a deal that is busted from the start.

Just my two cents.

-- "Our past judges our present." JFK - 1962; American Heritage Magazine

View Puzzleman's profile

Puzzleman

411 posts in 2410 days


#12 posted 05-20-2015 11:26 AM

Betsy, If she says she can sell 100 boards a month, have her buy 100 boards. Some of my vendors that didn’t impress me much in the beginning turned out to have a lot more volume that I expected. The reverse happened also.

With wholesale, I look as it as a retail order but in volume. If someone says they can sell 100 of an item, have them buy it from you. Do not do consignment. It is the kiss of death as the vendor has no incentive to sell. If they have their money in the stock you sold them, they will try to sell it as they need the items turned from inventory into cash.

Concerning who you do wholesale with, if they buy it from me and pay me for it, they can do what they want. What do you care if they can only sell 10 boards a month if they buy the 100 from you at the start. Your only concern is that they gave you an order for 100 pieces and you fulfilled that order and they payed you for the order. If a retail customer buys 5 boards for you and says they are giving them to friends, do you follow up to make sure that they did. No, you do not. You are happy that they bought 5 boards from you. What they do after with them after they buy them from you is not your concern. Same with wholesale.

With wholesale you are not in a marriage with the vendor. It is a business relationship. They buy in volume. You sell in volume. You get paid. End of story. What you should be concerned about is price and customer service. Those are things you can control. Those items will insure that the wholesale customer will return with another volume order.

-- Jim Beachler, Chief Puzzler, http://www.hollowwoodworks.com

View thechipcarver's profile

thechipcarver

178 posts in 1044 days


#13 posted 05-20-2015 11:38 AM

Here is the way I see it. You set the retail and wholesale price. You tell them what you will sell it to them for. If someone buys in large amount, you might consider a price break. But you call the shots.

-- While teaching a class, a gentlemen once asked me: "When chip carving an intricate design, what do you do when you are almost finished and the wood breaks off?" I replied "Cover the kids ears."

View huff's profile

huff

2828 posts in 2751 days


#14 posted 05-20-2015 12:38 PM

I believe a lot of woodworkers get confused between selling wholesale and selling through consignment.

Consignment; you put inventory in their store, but you don’t get paid anything until they actually sell it. They have nothing invested in inventory,so they have nothing invested in you. Consignment shops want to pay wholesale prices for their inventory, but only after the item is sold.

They watch their inventory turns just like a retail store does, so if something just sits there and doesn’t sell, they want to get ride of it and replace it with something that will sell. The advantage for consignment shops is, they don’t have anything invested in that inventory, so they just tell you to move it out or replace it with something else.

Wholesale; is an agreement between you (the manufacturer) and the seller (the individual or company that is going to sell your product retail).

Usually a minimum quantity is required to be purchased at a time to qualify for wholesale pricing. The retail store expects to buy at wholesale prices because they are buying in volume and you (the manufacturer) can sell it for a wholesale price because you’re selling in volume….....but you better be set up to manufacture in volume or you will be losing money.

So the biggest difference between consignment and wholesale is simple;

Consignment shops gives you a venue to display and have someone else sell your product for you, hoping they will have the traffic and the right clientele that will buy your products. It’s a great place to get exposure (if you find the right one). You may have to build in volume, but you’ll only get paid as each item is sold.

Wholesale, you will have to learn to build in volume to cut your manufacturing cost, but you will be selling in volume and getting paid for that volume.

Both expect to buy at wholesale prices, so you have to decide which way you would rather market your products, but to put it bluntly; consignment shops are more for the hobbyist that doesn’t know how to market their products or doesn’t want to invest their time to market it themselves.

Truly selling wholesale is for the professional woodworker that wants to sell their products in volume. Manufacturing and selling wholesale is a business and can only be treated as such.

-- John @ http://www.thehuffordfurnituregroup.com

View Puzzleman's profile

Puzzleman

411 posts in 2410 days


#15 posted 05-22-2015 04:27 PM

Another note. You mention that you feel you prices are just right. That may be true for you.
But they are the ones going to sell it. They approached you. They think they can sell it.
So let them.

Don’t get hung up on what price they are selling it for. Their customers may pay more than what you charge retail. They know their customer better than you do. They know what will and won’t sell and at what price to their customers. You don’t. Tell them the price and terms. If they think it will work for them, then let them buy. If they walk away from the deal, then it wasn’t meant to be. You don’t lose either way.

-- Jim Beachler, Chief Puzzler, http://www.hollowwoodworks.com

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