Today's fashion brands tend to sell in 3 main channels: brand boutiques, department/concept stores, or e-commerce. There are many reasons to adopt wholesale within a business’ distribution channel.
Fashion businesses, in particular, may use wholesale because: when selling wholesale, brands are usually able to rake up larger quantities to be produced since they will be selling in bulk to clients that are businesses themselves; the Fashion System is set up such that there is still relevance given to these aforementioned institutions such as department stores, who attract a large number of tourists in hubs like Paris, London, Tokyo, etc.; it’s a safe haven for new and upcoming designer brands to gain visibility.
While with the rise of e-commerce and online shopping, the luxury wholesale business seems like dying, brands still need the push from that channel.
Here is a guide to help you through getting into a wholesale channel.
Image Source: Storefront
To help their brands get into a wholesale channel, most businesses first consider joining a showroom to be the bridge between their brand and the buyers, present their collections on behalf of themselves, attract buyers for their brand, handle sales, etc. Let's see what would be the pros and cons in that case:
Joining a Showroom
Pros:
Focusing on the creative side and development of your business
Easier to reach new customers with their exclusive contacts
Higher chances to achieve sales, as sales representatives are trained to negotiate with buyers
Receive coaching as the showroom team will advise on how to improve your marketing materials, and provide continuous feedback from buyers
Cons:
Retainer fee for renting space and rack
Commission of around 15-20% when sales are made
Results are not immediate; it usually takes 3-6 months to educate buyers and start seeing sales
May lose rights to make certain decisions when contracting with big showrooms
Exclusive rights might be given to the agent for showcasing your brand
Toolkit to Impress Showroom Representatives
Product samples to illustrate the full spectrum of your line and to allow the representative to interact with your products
Wholesale materials such as line sheets, catalogs, and price lists, to show that your products are ready to move
Copies of any press coverage you have received, such as blog reviews and local media clippings, to show you are actively marketing your product
Press kit to share with buyers, and show your ability to market your brand
List of your stockists, which shows retailers’ interest in your brand
Story of the brand of your story as a designer – a memorable story stays in the representative’s mind longer and makes you more remarkable
Considering the Right Showroom
The Contract
How much does the whole showroom package cost, and when is the payment due?
How long is the duration of the contract?
What territories do they cover?
The Connections
How many years have they been in business, and who are their past clients?
What retailers do they sell to?
What other brands do they represent?
The Services
Is there a certain number of clients, or a certain amount of sales, guaranteed?
What services do they offer?
What is their sales structure?
What trade shows are they exhibiting in?
Selling Big and Small
It’s best to have multiple retailers selling your products, even if some aren’t taking large orders. There is always a risk of order cancellation, especially in chain stores or department stores, and relying on them heavily for business can put your company at risk.
Boutiques and Specialty Stores
Pros:
A tighter and more focused assortment of brands and products, allows the store to reach its target market and make a noise about a brand or product more easily
More personable customer experience and unique atmosphere, which in turn creates a more loyal customer group
Potentially more leverage when it comes to terms such as shipping and payment, as smaller retailers tend to be more lenient
Cons:
Smaller orders of products from a smaller store
Time-consuming when dealing individually with multiple small stores
Less financially stable typically, it’s possible the store could go out of business before paying you in full
Image Source: Selfridges London
Department Stores and Chain Stores
Pros:
More brand visibility toward potential customers and other retailers
Strengthen brand positioning by being sold next to other luxury or popular brands
Established customer base and regular store traffic
Higher volume of sales potential
Cons:
More competition from other brands makes it difficult to stand out
Large orders but always overbuying leads to chargebacks or order cancellation
Lower margins
Stricter requirements regarding packaging, labeling, shipping documents, and returns
Less willing to negotiate terms, meaning more risk will be placed on the brand
To sum up, all options come with their own advantages and disadvantages. The key is to select the option that is the most suitable for your brand, in your current situation, considering your assets and business goals. If you need help with decision-making, we are here to guide you better in your brand management journey. Feel free to reach out to us, to learn more.
Credit: The Fashion Business Manual, Fashionary
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