“Wholesale” is a word that gets thrown around a lot in the retail industry, but what does it mean exactly? Wholesale is the “selling of goods in large quantities to be retailed by others.” While buying wholesale is appealing – particularly to boutique shop owners not looking to design the clothes they sell – using a wholesale supplier has its drawbacks.
Here are five things wholesale vendors won’t tell you.
1) Factory Prices Are Lower
If you work with a manufacturer directly, the price will be lower. This is because wholesale vendors need to earn back the money they spent in initially buying your products from the factories. They do so by billing you a price per unit that’s above their factory price. Some wholesale vendors charge as much as twice the factory cost. Buying clothes at a lower price point enables you to sell your clothes at a lower price, giving you a competitive edge in the market. With private label clothing, you can increase your profit margin by cutting out the middleman’s commission.
2) White Label Fashion Is a Smarter Alternative
Many boutique owners see wholesale as a way to circumvent designing clothes themselves. But, white label can accomplish the same goal at a cheaper price and with room for customization.
So, what is white label? “White label describes a good or a service that one company makes for another company to rebrand as its own and sell to customers.” A white label clothing manufacturer will let you add your label to garments and sell them as your own brand. There are even some white label resources (like MakersValley) that give you the option of customizing a piece in the white label catalogue, like adjusting sleeve length or changing the color or print.
Many emerging labels seek to gain recognition by partnering with multi-brand retailers who work in the wholesale sphere. Working with multi-brand retailers reduces risk for a startup label; but, using white label products is also low risk because manufacturers know that white label products will sell based on them having been successfully sold to other brands previously.
3) The Downsides of Selling Already Established Products
Perhaps the most attractive part of buying wholesale is buying already established products. Seemingly, this minimizes the risk that comes with purchasing inventory. While this can work in your favor, it can also work against you. Just as you are purchasing these products from the wholesale vendor, so are other retailers. With the same product being offered by different retailers, it becomes difficult to bring in customers unless you lower the sales price. This goes back to the white label catalogue: because you have the ability to make small adjustments to the white label piece, you can now offer a unique garment that no other competitors have on their shopping racks.
4) Not Everyone Is Honest
Boutique Hub has a Do’s and Dont’s blog for finding wholesalers. One of the Dont’s on this list is not to ask other brands for their wholesale vendors. Many brands try to keep their wholesale vendors under the radar so their competitors don’t find those vendors and sell the same clothes at a cheaper price. It would be nice if everyone abided by this advice, but that isn’t the case. There are a few people who will look for ways to find a brand’s wholesale vendor and take advantage of that information. In this vein, working with wholesale can be risky.
5) Wholesale Gives You Less Control
With wholesale, you have less control of your brand, price, quality, and quantity. Working directly with a manufacturer instead affords you the ability to build your own brand. With the ability to create your own brand, comes the ability to control the prices you set for your products. Gone will be the days of low prices for the sake of battling the competition.
There is also a lack of quantity control when it comes to some wholesalers. Plus, certain wholesalers have higher minimum order quantities than factories. Buying more clothes than you will be able to sell will lead to overstock, which is money down the drain.
Unlike wholesale, manufacturing your own product allows you to control the quality of your final product. Clothing factories have general guidelines concerning defective products. With wholesale, on the other hand, quality assurance is more of a luxury than a given.
Most boutique owners opt for buying wholesale, but just because it’s common doesn’t necessarily mean it’s right for you. Evaluate the pros and cons of both options before you decide which route to take.