281 | 5 Myths about selling wholesale with Katie Hunt
Selling wholesale can be a valuable and lucrative strategy for businesses of all sizes, but there are a few myths about the process that can discourage some entrepreneurs from exploring whether wholesale is a good fit for them or prevent some brands from pushing further into wholesale and expanding the revenue stream. Listen in to hear 5 myths about selling wholesale and the truths behind each!
Today’s episode is brought to you by our Is Wholesale Right For You masterclass! During this free, on-demand masterclass, we’ll walk through 12 questions to ask yourself to determine if you, your products, and your business are ready to sell wholesale. I’m sharing my own tips for you to move forward confidently with your next steps.
5 Myths about selling wholesale
Being in the industry and surrounded by so many creators and product-based businesses, I hear a lot of thoughts, expectations, and myths around wholesale. Let’s break down five of the most common myths I hear for entrepreneurs about selling wholesale!
Myth #1: Wholesale is only for large, established businesses.
While it's true that some wholesale buyers may be more interested in working with established businesses, this doesn't mean that you as a small or new business can't succeed in wholesale! The Proof to Product community is actually made up of thousands of brands (of all sizes) who are selling their products to stores big & small.
Many wholesale buyers are open to working with newer brands, especially if they have unique or high-quality products. Independent brands can really stand out in the wholesale market by having a cohesive product line and established sales tools, particularly a catalog with wholesale terms & conditions — which are things we will teach you at Paper Camp.
The truth is, selling wholesale as a small business can absolutely be done!
Myth #2: Wholesale prices leave little profit.
While it is true that wholesale prices have lower profit margins than retail prices, it is important to acknowledge that the two sales channels are very different.
On the retail side, you sell individual products to individual customers, so your profit margin per piece is higher, but you’re selling less of those products.
On the other hand, wholesale is a volume game. Wholesale buyers must purchase large quantities of your product and spend a minimum dollar amount with you for you to honor the order.
Additionally, you determine your wholesale pricing based on your production costs, desired profit margin and the going rate for similar products on the market. You can determine before you start selling wholesale whether a certain product category is a viable product to wholesale or if it is something you should keep on the retail side of your business.
Myth #3: Wholesale is the only way to sell to retailers.
While wholesale is the only way I’d want you to sell your products to retailers, it is not the only option. Consignment is another option—this is where retailers sell your products in their stores and then they pay you after the product sells.
When selling wholesale, the store will purchase your products outright and they’ll take on responsibility for merchandising, marketing, and selling your items. With consignment, you offer to manage merchandising, inventory management, and even payment collections.
Please note: I have never seen a consignment sales arrangement work out in the favor of the product maker. Selling through consignment puts a larger risk and financial burden on the product brand which is why I strongly encourage my clients to not offer consignment but instead focus on selling wholesale.
Myth #4: Wholesale is a one-time deal.
While some wholesale relationships may be short-term, I teach my Paper Camp students how to build long-lasting, mutually beneficial relationships with their wholesale accounts.
Our goal is to build long-lasting relationships that lead to repeat business, new opportunities, and a scaled wholesale arm of our business. We do this through:
multiple touchpoints
different communication techniques
various points of outreach before, during, and after someone becomes a wholesale customer
It is entirely possible to have long-lasting relationships and recurring orders from your wholesale accounts.
Myth #5: If I put my products on a wholesale platform, buyers will find me.
Getting started with wholesale requires a lot more than plopping your products on your own website or a third-party wholesale platform. While these tools are excellent for making a smooth purchasing experience for our customers, you still need to actively promote & market your products to retailers that you’d like to work with.
In Conclusion: Finding Success with Wholesale
Now that we’ve debunked 5 myths about selling wholesale, let’s set expectations for what it takes to approach wholesale with realistic expectations. To be successful in wholesale you need three things:
A product line that is robust, cohesive, solves a problem and has strong profit margins.
Wholesale sales tools, specifically terms & conditions, wholesale minimums and correct product pricing
Strategic marketing. Building relationships with accounts through thoughtful touch points & multiple marketing channels.
Too many brands end up on third-party wholesale platforms that aren’t priced right, don’t have wholesale minimums, or are letting Faire dictate their business practices for things like release schedules, returns, and discounts.
The brands that are doing well on third-party platforms have a strong wholesale foundation that extends well beyond their wholesale platform footprint. These are strategies we teach at Paper Camp to those new to wholesale and those who want to scale their existing wholesale program.
Overall, selling wholesale can be a rewarding and effective way for your business to reach new customers and expand your reach. By understanding the realities of the wholesale process and dispelling common myths, you can make informed decisions about whether wholesale is the right fit for your business.
Quick Links:
Here’s a quick recap of all the links shared in this post:
Wholesale strategies and developing your product line with Katie Hunt
272 | Creating an entirely new product category with Kristina Schlegel, Make Bake
109 | Discontinuing an entire product line & starting over with Alicia Heater, Slightly Stationery
234 | Scaling Wholesale with Beth Roszkowski & Tiffany Grimes
Join us in our next round of Paper Camp!
Check out all of our Proof to Product Alum- other businesses just like yours doing their best to start, stream, and scale their product-based businesses!
If you’re looking to grow your wholesale this year, be sure to join the waitlist for Paper Camp! This is our signature program where we teach you how to scale your wholesale program through four weeks of live coaching calls, videos & community connections. Paper Camp has run 40 times in 11 years & we've coached 1000s of brands whose products are sold in Target, Nordstrom, Container Store, Barnes & Noble and independent boutiques all over the world. Make sure you’re on our waitlist!
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Connect with Katie Hunt
Katie Hunt is a business strategist, podcaster, mentor and mama to four. She helps product based businesses build profitable, sustainable companies through her conferences, courses and coaching programs.
Website: prooftoproduct.com | Instagram: @prooftoproduct
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