Wondering about the difference between wholesale vs retail for your handmade business? There are definite benefits to both, but there may also be a vast difference to how you might, or might not, enjoy either of the two. Before deciding which one is right for you, let’s look closer at both.
Wholesale vs Retail Pricing - Selling wholesale will mean that you’ll need to price your work lower than your retail price points. Standard practice for wholesale pricing is half of the retail price. While this may seem like a big chunk of change when it comes to reducing your price points for wholesale, if done properly, what you lose in per-item revenue, you can make up for with order size and potentially lower overhead costs.
Of course, this depends entirely on how labor-intensive your product manufacturing is, how you plan to reach your wholesale buyers, how you plan to reach your retail buyers and the cost of producing your wares. For example, if you start your wholesale business by investing in high-priced trade shows, you may or may not recover the cost of your investment quickly depending on the success of your exhibitions.
Alternately, selling your products directly to the public via retail shows such as craft fairs will also depend on the cost of exhibiting and the success of your chosen shows. Either way, there are risks in terms of reaching the right buyers with the right shows.
While it can be difficult to reduce overhead costs when selling retail in person at events, there is a lot you can do to reduce your costs when selling wholesale. Wholesale vs retail profits will vary considerably depending on how much prospecting you are willing to do on your own. Reaching out to stores via email and phone, are great ways to not only cut costs, but also to grow your business quickly and steadily.
Wholesale vs Retail Website - Reaching customers online can be challenging, especially if you have your own website rather than on a hosted platform, with its own built in audience, such as Etsy or Amazon Handmade. However, having online representation of your collection on a site that is entirely your own is a must these days. Driving traffic to a wholesale website will require making contact with store owners and building a wholesale list to which you can market your collection.
Your retail website will allow for easier online marketing such as online ads, keyword traffic, image traffic and social media engagement. Maintaining a retail website will also help to attract store owners, provided you are taking measures to promote your online presence.
Attracting buyers to a wholesale website can be a little trickier when it comes to advertising and social media. It is far easier to reach wholesale buyers by prospecting than it is to attract online targeted traffic from suitable retailers, unless you have already established a strong brand identity that is widely recognized.
Wholesale vs Retail Online Platforms - Sites such as Etsy offer more exposure to potential buyers, but you will still have to work at promoting your shop. While you may find that your products are more readily found on sites such as Etsy, you won’t have the same availability to market to your visitors, or buyers, as you would on your own website. The advantage to having your own website is that you can, over time, build a list to which you can market your products.
Online wholesale platforms will provide you with greater availability to an already built in audience of wholesale buyers, but, like Etsy, those buyers belong to the platform and you won’t have complete control in terms of marketing to these buyers. Wholesale platforms can be an economical way to reach more wholesale buyers, depending on the platform and buyer interest in your particular product.
That said, established online platforms with a built in audience can be a great way to get qualified traffic and build your business for both retail and wholesale.
Wholesale vs Retail Shows - Selling directly to the public via in-person events and shows can not only be a great way to grow your business, it's also an excellent way to get direct feedback on your product as well as build a list to which you can market your products and online presence.
The same goes for wholesale trade shows, however, wholesale booth fees can come at a steep cost and it may take time to see a good return on your investment. Like exhibiting at any venue, there are many factors which will affect the success of your shows such as how well you’ve researched the events prior to making the investment, the effectiveness of your product presentation, your selling skills, your price points, and the product appeal.
Typically, there is a wide range of both wholesale and retail/craft shows out there and not all will be suited to your product. Once shows open up again, research will be your best friend and getting first-hand feedback from other artists, before investing in any show, is always advisable. You’ll find that you can quickly burn through a lot of cash by renting booths in shows that are not pre-qualified with some good testimonials from vendors with similar products.
Wholesale vs Retail Lifestyle - Now let's look at the wholesale vs retail experience. Not everyone is suited to the craft show lifestyle and the same goes for the wholesale business model. Selling at craft shows with back-to-back show bookings can be physically and emotionally exhausting, but also very rewarding. The only way to know if selling at craft fairs is right for you is to test the waters. It won’t be long before you know whether you have been bitten by craft show bug or not.
Wholesale brings its own set of experiences. You may find yourself becoming your own little factory. If you have priced your work properly then you should be able to incorporate hiring production help into your price points. This will allow you to focus your efforts on other tasks such as design, or sales, if that is the area in which you thrive.
You can maintain a wholesale business and make your own products yourself if you so choose, but again you may risk killing your passion if you don’t like making multiples of the same designs. Some people abhor the notion of repetitive production, while others are quite willing to trade that for the security of income from regular wholesale accounts.
Wholesale vs Retail Profitability - There is a wide range of potential for both wholesale and retail and, as we discussed earlier, much of that will depend on your product’s labor costs, material costs and the overhead involved in reaching your buyers. While retail will give you the opportunity to charge more per item, that figure can come down dramatically if the cost of reaching your potential buyer is high.
Making the right decision requires doing the math and a little first-hand experience to know which is a fit for you and your product. For example, a craft show may bring in $2,500 in a weekend, but if it's costing you more than half that amount to secure a booth, pay for travel, plus the cost of your materials, then you might want to ask yourself if making calls and sending out line sheets to stores will net you higher profits.
Even though your price points are half of your retail prices, you may not be seeing a higher profit from selling your wares at retail if your exhibition overhead is high and your sales are not adequate. While wholesale price points are much lower, you may find that the potential for receiving large orders can be very motivating. It doesn’t take long to build a solid income when you’re bringing in orders that are upwards of a $1000 each.
Making a choice between wholesale vs retail is a very personal decision that is everything to do with both your product and your personality. You may well find that you enjoy the best of both worlds with a large portion of your sales coming from wholesale orders and a few craft shows thrown into the mix. The craft show option, when available again, will also help fuel your online traffic and you may get the occasional store order to boot!
Return from Wholesale vs Retail to Selling Handmade Jewelry to Stores
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