| Wholesale versus Consignment by Wiliam T. Lasley Many crafters decide to attend wholesale trade markets to sell their wares to the public. Others prefer to go the consignment route to bring their products to the market. When deciding which route is best for you and your products, it's important to know the difference between these two markets. Wholesale: When you wholesale your products, you sell your products directly to retailers. This usually involves attending trade shows. This method, though many exhibitors do well, is often costly and can sometimes be a big gamble. Many quality trade shows can cost several thousand dollars to attend. When a crafter is used to "cash on hand" from retail markets, simply writing orders to fill in the future and coming home with no cash can seem to some like a waste of time and money. However, it's important to keep in mind that many exhibitors will take in tens of thousands of dollars in orders at these events. This often dwarfs what even the best of retail shows can bring. On the other hand, as I've already stated, it's a gamble. If you invest, let's say, $5000.00 into one event and do not reach above your expense-line, you might be out of business for a while. Even at a great trade event, the expenses are immediate and the cash received from orders can be stretched out over a long period of time. Many buyers (especially the large corporate ones) will never pay for their shipments up front. Most will only work from a 30-90/net payment standpoint. My policy for wholesale orders is: wholesale customers must make payment via prepaid (I usually give a 5-10% discount to encourage this), pro-forma (where the customer is notified when the order is ready to ship & payment is then made before shipment), or COD. However, as I said, many of the large companies have their own terms. You must either accept their method of payment, or forget the big orders altogether. (I usually accept their terms and wait for the payment rather than turn away orders!) Make sure you state your payment policies clearly. And keep in mind how far you will bend your own rules to make a sale. If you do not have the cash flow to attend (and possibly lose) in the wholesale markets, you may want to try an alternative: consignment. Consignment: When you offer your crafts at consignment, you put the products in a store for free. Some businesses that offer consignment will charge you a fee. In my opinion, though, I feel that if a store is making money off of me without the need to sell my products, it means that they won't be trying hard enough to sell my work! You make money when your products sell. A retail price is offered, and the consignment shop will get a cut (upwards of 50%) and you get the remaining percentage. Consigning products is less of a gamble than wholesale markets in the sense that if the products don't sell, you simply get them back. Although unless you plan on occupying hundreds of consignment spaces at a time, outright wholesaling can be much more profitable. Also, with "straight" wholesaling, if your products don't sell for the vendor, tough! Although you occasionally will get the buyer who wants their money back for unsold goods, most understand that not many people can do business this way. After all, if you could get your cash back on unsold goods, wouldn't we all rush out and try our hands at retailing? Many people have had great success in the consignment market. It's not much of a gamble and worth a try. Finally, it's up to you to decide. If you, like many in the handmade business, cannot afford to take too many thousand dollar losses in the wholesale industry, you might want to first try consigning. Or if you have a highly marketable craft with an affordable wholesale price, you might want to go for the wholesale markets with both barrels! As for me, I like to keep my eggs in as many baskets as possible. I do both. I have found both methods with their good and bad sides. But what, in this business, is 100% sure. The only thing I have found after several years that is for sure is: everything changes and nothing is guaranteed! |
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