Getting Started in Wholesale

So you're looking to break into wholesale, but not sure where to begin. Sound familiar?

Fret not, I've got you're back!

Laying the Groundwork

Let’s start with some of the fundamental logistics you’ll want to think through:

• Determine the types of products you’ll be selling.
• Identify your clientele or shoppers.
• Decide your business structure. Are you envisioning a brick and mortar store, an e-commerce platform, or an events-driven concept? Will you want to establish yourself as an incorporation, limited liability company (LLC), or sole proprietorship?

Once you have your strategy solidified, it's time to: 

• Give your business a name!
• Apply for a business license. You’ll want to research your state and county-specific policies and procedures. Your County Representative’s Office and the State Department are great resources and can assist you with this process.
• Apply for a Sales Tax / State Resale Permit; again this will differ by state, so be sure to research your state and local laws specifically.

Setting Pricing & Promotion

Prior to buying, you’ll want to have a sense of your merchandise pricing structure. Be sure to:

• Evaluate your profit margins needs and price points for your market.
• Ensure your suppliers and cost of goods align with the margins you’re aiming to achieve.
• Determine a schedule for your major promotional sales; thinking through monthly, quarterly and yearly timing.
• Map back to your business model. Take into account if you are buying in-season or pre-season, and plan accordingly.

Planning an Assortment

As you start to plan your product assortment, look to your data! If you have figures depicting sales history by season or category, item or size, start there. Analyze the numbers and lean into the trends.

If you don’t have your own historical statistics- that’s okay! Most just starting out don’t have access to that information. Instead, look to market trends. Research and shop your competition! When doing so, keep these questions in mind:

• Is there a major trend for the season that you want to capitalize on?
• How can you differentiate yourself from your competitors?
• How does your price point compare?
• What are other major retailers doing?

It’s important to have a vision as you’re cultivating your assortment! Look at your overall collection:

• Are you seeing a comprehensive and cohesive assortment?
• Are all of your different product categories well represented?
• Do pieces complement one another when displayed, encouraging your customers to purchase the entire set?
• Do the pieces you’ve selected reflect your trend data?

Once you have an idea of your product assortment, it's time to see how those plans fit into your budget. Put parameters in place for how much you can spend and allot accordingly for any special products or buys you may want to make.

Another key step when planning your assortment is forecasting the lifecycle of an item, or how long you intend to have the item on your sales floor. It is important to account for seasonality which will help you determine how many of each item you’ll by. What is the sell-through rate you need to achieve profitability? You want to ensure that you’re staying relevant, so how often do you want to bring in new items?

Tracking & Reacting

There are a plethora of programs available to you to help track and analyze sales. Those reports should include: On Hand (OH), On Order (OO), Sell Through Rate (ST%), Cost, Retail, Sales Average Unit Retail (AUR), Gross Profit Ratio (GP%), Onsite/In-store Date and Markdown Date.

Set yourself up for success in the seasons and years to come by tracking performance of your assortments.

• Pull weekly sales reports to see how a category and items within that category are performing.
• Determine patterns of growth, maintain and decline by category.
• Use the data to make adjustments (pricing/promotion/reorder) depending on top sellers and slow sellers.

Plan to be reactive! Are you currently selling an item with an above average sell-through rate? Monitor closely, and possibly re-order to ensure you don’t miss a sale - don’t forget to account for delivery times! You will need to leave yourself enough time to see through the item by the end of the season; you don’t want to buy back into a markdown.

Whether your business is clothing, accessories, home decor or another industry - these same principles apply!