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Thread: Best way to go about introducing a wholesale option?

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    Gold Member Mark Atkinson's Avatar
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    Question Best way to go about introducing a wholesale option?

    Hi Guys,

    Some of you may have already seen the whole Bafokke Shirts saga and read all the debates relating to it all.

    My question is this: What is the best way to introduce a wholesale option for the shirts? There has been a whole load of interest shown and I have had requests from more than one retail outlet wanting to resell the shirts.

    My problem is that initially we priced the shirt too low. Although, I'd say that pricing it so low has actually benefited us more than it's done harm. At the moment, the price is too low to offer a wholesale price below what we're selling the shirts at already.

    Anybody got any creative ideas on how I can raise my prices without upsetting the consumer?

    The best I can come up with is to run it at the current price for a month or two, making a big fuss about it being a "Limited offer" or an early-mover advantage of sorts, and then raising the prices and introducing a wholesaler price at around (or just below) what we are selling the shirts at now.

    A further question, what sort of margins are the norm between retail and wholesale prices in this sort of industry? (clothing/sportswear/fan stuff)

    I've been pondering these matters non-stop for the past 2 weeks, and am a little bit stuck.

    Any advice would be much appreciated.
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    Moderator IanF's Avatar
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    Quote Originally Posted by Mark Atkinson View Post
    My problem is that initially we priced the shirt too low. Although, I'd say that pricing it so low has actually benefited us more than it's done harm. At the moment, the price is too low to offer a wholesale price below what we're selling the shirts at already.

    Anybody got any creative ideas on how I can raise my prices without upsetting the consumer?

    The best I can come up with is to run it at the current price for a month or two, making a big fuss about it being a "Limited offer" or an early-mover advantage of sorts, and then raising the prices and introducing a wholesaler price at around (or just below) what we are selling the shirts at now.

    A further question, what sort of margins are the norm between retail and wholesale prices in this sort of industry? (clothing/sportswear/fan stuff)

    I've been pondering these matters non-stop for the past 2 weeks, and am a little bit stuck.

    Any advice would be much appreciated.
    Hi Mark,
    If printing T shirts works like printing the one thing you could do is increase your order size to get your prices down, you then have the risk factor of dead stock. One thing I learnt from selling running logbooks was to sell them in my shop at the price the retailer would sell unless the customer bought more than 20. I thumb sucked a 100% markup. But we only sell about 200 a year and the retail guide is R15 per book. Have you ever read up about YKK zips when they started they sold zips at a price they thought they would get the costs down too in 5 years plus a profit. But you need to have capital and faith to use that model.
    Well done for creating that demand.
    Only stress when you can change the outcome!

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    Gold Member Mark Atkinson's Avatar
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    Quote Originally Posted by IanF View Post
    Hi Mark,
    If printing T shirts works like printing the one thing you could do is increase your order size to get your prices down, you then have the risk factor of dead stock. One thing I learnt from selling running logbooks was to sell them in my shop at the price the retailer would sell unless the customer bought more than 20. I thumb sucked a 100% markup. But we only sell about 200 a year and the retail guide is R15 per book. Have you ever read up about YKK zips when they started they sold zips at a price they thought they would get the costs down too in 5 years plus a profit. But you need to have capital and faith to use that model.
    Well done for creating that demand.
    The problem is we already get extremely good prices from our manufacturer, and we would have to order quantities of a couple thousand in order to qualify for any further discount. This is not feasible right now.

    To me it seems like the only way is to raise our prices in order to offer the shirts to resellers at a discounted price. See currently our markup is not quite 45% on selling price. To discount any further for retailers would mean it's not really worth our while.

    Initially we had decided on only selling the product through the website. We did not foresee such demand from resellers and have had to rethink our strategy.

    Thanks though Ian. By the way "IanF" wouldn't happen to have any correlation the the DJ "IanF" would it?

    Anybody got any creative ideas on how to raise prices without affecting our goodwill?
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    Quote Originally Posted by Mark Atkinson View Post
    without affecting our goodwill?
    What goodwill? Who will be affected?

    I would imagine most of your customers to-date are private sales. Congratulate them on having received the benefit of your opening special where by they received wholesale prices. They have 10 days to still receive these prices if they want to but some more after which only the retail price will be available to them.

    Those enquiring for wholesale prices: Advise them that the current price is the whole sale price and that the new retail price is effective immediately for all other new customers.

    So yes, your best option is to raise the retail price.

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    Gold Member Mark Atkinson's Avatar
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    Quote Originally Posted by BusFact View Post
    What goodwill? Who will be affected?

    I would imagine most of your customers to-date are private sales. Congratulate them on having received the benefit of your opening special where by they received wholesale prices. They have 10 days to still receive these prices if they want to but some more after which only the retail price will be available to them.

    Those enquiring for wholesale prices: Advise them that the current price is the whole sale price and that the new retail price is effective immediately for all other new customers.

    So yes, your best option is to raise the retail price.
    The +- 1000 people online who have already seen the shirts advertised at the current price. Many of these people are potential customers, and many are already customers. (I'm more worried about the potential customers, as I don't want to negatively influence the possibility of them buying the product by raising the price.)

    I guess it has to be done, though. Thanks, once the pre-order phase is up we will most certainly look to do it. I think it will do more good than harm in the long run. Having retailers stock our shirts means a whole heap of exposure and sales that we might not get otherwise.
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    You need to perform a sensitivity analysis. Put some thumbsucked RRP together and then go do some market research in the street and see what comsumers would be willing to pay.
    If you need any Accounting, Tax or even Financial Management advice, PM me and I'll try help and keep your information confidential.

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    Site Caretaker Dave A's Avatar
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    Set a deadline for the "launch special" and then mark up your retail price. And don't worry about making it sooner rather than later - there's nothing wrong with creating a sense of urgency
    The trouble with opportunity is it normally comes dressed up as work.

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    Gold Member Mark Atkinson's Avatar
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    Quote Originally Posted by Dave A View Post
    Set a deadline for the "launch special" and then mark up your retail price. And don't worry about making it sooner rather than later - there's nothing wrong with creating a sense of urgency
    My thoughts exactly Dave! I will do just that.
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    Hi Mark

    As a rough guide (although this is for importers - but could work for you as well), you take your delivered cost (cost + taxes + transport of the product) TO the place you going to distribute from and mark up at 30-35%. The retailers would then take this wholesale price and mark this up at around 80 - 100%.

    So landed cost R100, you wholesale price would be R130 and would retail in the shops for around R260 (or R259,95 lol).

    This is how it works with a lot of distributors - maybe you could get a better slice as the "brand owner" but just remember, the higher the retail price, the less it is going to sell.

    Retailers are paying anything from R80 - R250 per m2 - profit margins HAVE to be quite large for us to be tempted.

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    Gold Member Mark Atkinson's Avatar
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    Quote Originally Posted by Pap_sak View Post
    Hi Mark

    As a rough guide (although this is for importers - but could work for you as well), you take your delivered cost (cost + taxes + transport of the product) TO the place you going to distribute from and mark up at 30-35%. The retailers would then take this wholesale price and mark this up at around 80 - 100%.

    So landed cost R100, you wholesale price would be R130 and would retail in the shops for around R260 (or R259,95 lol).

    This is how it works with a lot of distributors - maybe you could get a better slice as the "brand owner" but just remember, the higher the retail price, the less it is going to sell.

    Retailers are paying anything from R80 - R250 per m2 - profit margins HAVE to be quite large for us to be tempted.
    Interesting. Well at the moment our plan is as follows:

    We're going to let the pre-order phase run through, the launch date being 10 September. We are then going to maintain the current price at R270/shirt until 30 September as our "Launch Special".

    Following that, we are going to raise the retail price to +- R350, and offer the shirts to retailers at a price of around R250 per shirt. (Taking the cost + transport into account, this is, as you suggested, +- 35% on cost). If retailers wish to add on markup above the retail price, that's their own prerogative. Our market research (albeit limited) has suggested that, for the time being at least, people won't pay more than about R350 for the shirts, particularly online.

    Hence, we have tried to compromise as far as possible, to give retailers a decent profit as well as make it feasible from our end.

    What do you think?

    (Btw, I did try to call you last week. You were on holiday though. Lol)
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