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SHOULD YOU BE WHOLESALING?

Helpful Perspective and Advice from Pros

by Barbara Brabec

Many craftspeople think they cannot wholesale because of pricing problems while others worry about their inability to fill orders if response from buyers is greater than anticipated. Will they have to hire outside help, and if so, will they lose artistic control of their products? Once they decide to wholesale, should they start by selling directly to shops or do a major wholesale craft show? Here is some perspective from craftspeople who have made the move from retailing to wholesaling and see both sides of the picture.

Some craftspeople begin selling with the idea that they will eventually wholesale their work while others simply "fall into wholesaling" when a retailer approaches them at a crafts fair and asks if they can sell wholesale. Others acquire their first wholesale accounts by selling from their own shop or studio, like woodturner Derek Andrews, who got five new wholesale accounts without even trying. "Buyers have found me," he says.

"Wholesaling gives me income in the months of no craft shows, especially the 'mud season' of January to May," says cloth doll designer Gail Platts, who moved into wholesaling so she could have year-round income. Gail set her retail prices with wholesaling in mind so she would be ready to sell this way when the timing was right. Her first accounts were acquired at craft fairs when interested retailers approached her. Later, she expanded her wholesale base by doing the Rosen shows in New York and Boston.

"Wholesaling is where it's at, financially speaking," says calligrapher Michael Noyes. "The benefit to wholesaling is that you multiply the sales force. I used to wonder why a craftsperson would pay twice the booth fee simply for the privilege of selling at half price. The answer is simple: At a retail show, selling of one's product is happening in one location by only one or two people. However, by selling wholesale, each additional sale means your product will be sold by an additional sales staff in an additional location."

Emily Pearlman has been wholesaling her pottery since 1987, having sold at retail craft fairs for seven years before that. Her involvement in a co-op gallery brought her to the attention of her first wholesale buyers, shop owners who were sales reps as well. "They helped me develop my line, and I've never regretted making the switch," she says. "I love having just about everything sold every time I open the kiln. Retail shows were getting to be a drag. If I made blue mugs, people wanted green. If I brought pitchers, they wanted platters. And they were always trying to get me to lower prices or give a discount because they bought two of something."

Getting Started

Should beginning sellers get their feet wet gradually by first trying to sell to a few shops or enter a big wholesale show?

"I started out going to shops first, then went to trade shows," says Gail. "Testing the local market a little before jumping in with all the expense and stress of a trade show is a good way to start."

"If you're ready for the big time, however," says Emily, "there is nothing like a major show to see how your work stacks up with others in terms of craftsmanship and pricing, to see the reaction of buyers to your work, and to gauge how well you have developed your line."

Of primary concern to most craftspeople is their ability to fill all the orders they might get if they went to a wholesale show. "That's always a worry," says Gail. "I have to constantly remind myself that I can always say no to an order if I find myself getting swamped."

Even for a retail show, the professional artisan has to know what he or she can produce in a given period of time and be able to set up a production schedule. Thus, selling at wholesale doesn't necessarily mean producing more; it only means having the right prices to make a profit on items you're offering at wholesale.

Pricing Perspective

Many sellers who once thought they couldn't wholesale because of pricing problems have learned otherwise. Sometimes moving into wholesaling is as simple as changing the heading on your price list, from "Retail" to "Wholesale." Most craftspeople are selling at discounted prices to begin with, and true retail prices are not the retail prices at most of the craft shows, but rather what one finds in stores. Once you take the time to do some price comparisons and see what quality craft stores and galleries are charging for fine handcrafts, you'll probably find that your retail prices are way too low.

As Derek Andrews quickly learned, the costs related to wholesaling automatically prompt price increases. "It costs me money to make a sale, whichever way I do it, and I had to raise my original prices, in some cases doubling them. In general, I find that sales are not that price sensitive. If someone really wants to buy something from you, they are probably willing to pay a fair price. Try not to pay attention to the moaning minnies who think your prices are too high; many are just looking for an excuse not to buy anything and most have no idea about the work that goes into handcrafted items. The bottom line is that you have to price for profit, and if the product doesn't sell at that price, then drop it."

Getting Help

The only way to wholesale without hiring outside help is to limit the wholesale portion of your business. That means you must make a production plan to figure out exactly what your capabilities are. "In wholesaling, so much depends on the products you sell," Derek emphasizes. "In my case, 90 percent of the cost of my products is in my time. Since I know how much time I have for production and know how much product I can produce, I know what my production limitations are. All I have to do is have the good sense to say no to orders I know I can't fill."

Derek doesn't want his wholesale orders to increase much more than 20 percent of sales. "That would mean chaining myself to the lathe churning out the same stuff day after day," he says. "I enjoy the challenge of finding more profitable markets and the time spent selling is a welcome break from the workshop."

Michael Noyes believes that the key to success in wholesaling is to maximize production. "To do that, you need to multiply the workers. Not every crafts business owner can find capable employees these days, however, so until you are set up for maximum production, you shouldn't do any wholesale craft shows."

When do you know you need help? "When you have more orders than you can manage without an additional pair of hands," says Emily Pearlman. "And by the time you have more orders than you can handle, you don't have to worry about having enough money to pay for outside help if you've priced your products right to begin with."

If your wholesale business does increase and you hire outside help, how can you retain the hands-on artistic control you feel is necessary without actually doing all the work yourself? Each business owner will develop their own method for doing this. Emily has given her two part-time assistants the unartistic parts of her work, like packing and mixing glazes. "I keep all the wheel work for myself," she says. "I've also devised ways of working so that the final piece retains my hand work; i.e. using press molds that I have thrown so that the final piece retains the same look."

As you can see from the above comments, wholesaling requires a more professional attitude, a greater appreciation for the worth of your products, and a businesslike approach to marketing. You may have to hire employees, take workshops to learn more about how to manage and market your business, make out-of-town sales trips, exhibit at trade shows and so on. It is at this point that hobby sellers are separated from the professionals, where many either back away or go forward in a totally new direction.

Special Tips

"Develop a coordinated line of products. Be careful that you don't offer so many colors and choices that buyers are confused." - Emily Pearlman

"Never wholesale anything you can't afford to sell retail at the same price. Be sure that you like to make lots of the items you decide to wholesale, and that the artist in you won't balk at being told to make 20 blue ones.'" - Gail Platts

"Be sure wholesaling is right for your business and type of work or you may end up managing a factory. Wholesaling works best if you have a great idea for a novel product that is fast and easy to manufacture." - Derek Andrews

"Keep trying new things and taking risks. Don't be afraid to make mistakes." - Michael Noyes

Note: The craftspeople featured in this article are also featured in Barbara's book, Make It Profitable, along with many other professionals in various fields of endeavor. For more information on pricing and wholesaling, see Barbara's books, Creative Cash and Homemade Money.

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