Home – New Forums Logistics Setting up for wholesale – question

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  • #979477
    EmbalmSkincare
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    Hi everyone,

    Could someone please tell me whether there is a special terms & conditions I need to use for wholesale via my website or can I simply adjust the one I currently have for regular sales so that it also covers wholesale?

    Also, I have been told that there is a term (pro-forma) for my payment terms. I’m not sure where I should put this term on my website or whether I have to at all or just simply say “payment is due at the time of the order”?

    Thank you in advance!

    Kind regards,
    Mel

    #1114549
    Melanie Miller Biz Coach
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    Hi Mel,

    Your wholesale terms and conditions can be the same as your retail but generally incorporate different returns policies, shipping policies and payment terms depending on your business.

    Proforma invoicing simply means “you pay before we ship”. Are you intending on offering wholesale customers account terms (e.g 7 days or 30 days)? If so you would need to include a wholesale application form. Many wholesale businesses now offer pro forma only, however it is always a good idea to have a wholesale application form completed and on file. You don’t need to use the term “pro forma”, some businesses still don’t understand the its use.

    Hope that helps out a bit!

    Melanie
    http://www.melaniemiller.net.au

    #1114550
    marketingweb
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    The advice you have been given is spot on, although in some cases it can refer also to an invoice that’s sent before production starts of custom made product. But it’s a bit of an old fashioned term in some ways so often easier to just tell it like it is.

    Re your business model – two things I often come across with people looking to wholesale product:

    1) Not wanting to offer credit terms
    2) Not offering enough difference between wholesale and retail price.

    With the first one, in my experience most retailers will not be willing to buy from you unless you offer credit terms, generally 30 days (don’t fall for 31, it doesn’t just mean one extra day – but i digress). Standard is to make people pay for the first 1-3 orders upfront, something like that, then offer terms subject to either a credit check, view of ballance sheet etc. Some of the big retailers with muscle and buying power insist on 60 or even 90 day terms, or they won’t buy – this alone can break a small business if not taken into account as you are playing bank for them.

    The second one of wholesale discount, it varies from industry to industry. Generally it will be between 30% and 60% discount from your normal sell price. Don’t make the mistake that many moving from retail to wholesale do, that of thinking that you have “done the hard work” and that they are “just selling it”, retailers would be happy with a 10% discount. You can’t run your business on 10% margin, and neither can they.

    Not exactly the question you asked, but hope it’s of some assistance in your new venture.

    Matt

    #1114551
    Anonymous
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    Hi Mel,

    This is another question where the type of retailers you’re looking to sell to may come into play.

    As Matt mentioned, many retailers simply won’t consider stocking your product if you expect them to pay upfront. In many instances 30 day terms are considered standard (but then they will often drag things out for 60 days or longer anyway).

    Unfortunately at this stage you need them more than they need you, and they know it, so some may even try to convince you to give them stock on consignment. You will need to think about whether that’s something you will be prepared to do.

    Matt’s comment about the difference between the wholesale and retail price is also important, because this dictates how much profit is available to the retailer and will drive their decision making processes. If you’re not already familiar with the standard pricing structures and mark-ups in the retail channel you’re looking at, try to get hold of some of the distributors’ wholesale catalogues and work it out from your competitor’s pricing.

    Don’t forget to leave enough buffer zone in your pricing structure to give you room to discount – you may need to do that to sweeten the deal for the retailers further.

    It’s exciting to hear you getting to the pointy end of all your planning, and I hope it is all coming together nicely for you!

    Jayne

    #1114552
    EmbalmSkincare
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    Thanks so much for your great responses!

    Will be looking into offering credit terms in a few months time or better once there is a regular cash flow which is unfortunately not now.

    So if I was to put a little note on my wholesale page saying something like:
    “We currently can only offer pro forma (or payment due at order) but are looking to establish a long-term relationship with our wholesalers (stockists) so that we will be able to offer credit terms. “

    Would that sound ok?

    Also, Melanie mentioned a different returns policy for wholesale. What kind of terms would I be looking at? I have been trying to google wholesale terms and conditions but all I could find was distribution agreements.

    Thanks again!

    Regards,
    Mel

    #1114553
    King
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    Also be wary of those who try to dictate terms like 30 days from end of month. This means you could be waiting 59 days for payment.

    Sadly many businesses try to use other businesses as short-term lenders…..

    Oh and the there are those that will try to only pay on receipt of a statement. That can be a trap if you normally do not send them.

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