If you’re venturing into the realm of selling handmade goods through retailers, it’s essential to weigh the pros and cons of two primary models: wholesale and consignment. This strategic decision can significantly impact your exposure, sales, and overall business trajectory. Let’s explore the considerations to help you make an informed choice that aligns with your business goals.

Wholesale Pricing Considerations:

Before delving into the wholesale vs. consignment debate, ensure your products are appropriately priced to maintain profitability. Typically, retailers expect to purchase your products at around 50% of the retail price. A solid pricing formula, such as Materials + Time = Costs x 2 = Wholesale x 2 = Retail, ensures that both craft fair and retailer transactions contribute to your bottom line.

Wholesale Approach:

Pros:

• Upfront Payment: Receive payment upfront for your products, providing financial predictability.
• Store Investment: Store owners have a vested interest in selling your goods, minimizing the risk of unsold inventory.
• Ownership Responsibility: Once purchased, the store assumes responsibility for seasonal changes, losses, or damages.
• Order Minimums: Set order minimums to ensure profitability when selling at wholesale prices.

Cons:

• Limited Flexibility: Less flexibility if products don’t sell initially, and store owners may hesitate to restock.
• Strict Deadlines: Must meet deadlines for filling orders, with less room for negotiation compared to consignment.
• Product Ownership: Once bought by the store, they have autonomy in displaying and selling the products.

Consignment Approach:

Pros:

• Low-Risk Entry: A less risky way to establish relationships with retailers, potentially evolving into a wholesale agreement.
• Flexible Inventory: Greater flexibility with inventory management, allowing adjustments based on your business needs.
• Commission Variability: Some boutiques offer commissions exceeding the standard 50%, providing more lucrative returns.

Cons:

• Payment upon Sale: Payment is contingent on items selling, introducing a financial dependency on sales.
• Commission Fluctuation: Commission rates can vary, with some retailers offering less than the standard 50%.
• Unsold Items Return: Unsold items are returned, potentially leaving you with out-of-season or shop-worn products.
• Store Commitment: The store’s commitment to selling may be lower for consigned items than for those they own.

Key Considerations for Both Approaches:

• Documentation is Crucial: Always establish clear contracts outlining terms, payments, and product details.
• Return Policies: Clearly define how long the store will keep your items, especially relevant for seasonal products.
• Diversified Options: Explore additional options like renting space in retailers and drop-shipping to find the best fit for your business.

As you navigate the complexities of retail partnerships, join us at Hometown Vendor Market for tailored insights and a collaborative community. Let’s shape the future of your handmade business together, ensuring a sustainable and prosperous journey in the retail landscape!

Have questions, or comments, or need assistance in preparing for the upcoming Hometown Vendor Market? We’re here to help! Contact us at info@hometownvendormarket.com for any inquiries, feedback, or general questions. Our dedicated Hometown Vendor Market team is passionate about ensuring our vendors are well taken care of.

We understand the importance of a supportive community, and that’s what we aim to provide. Rest assured, we’ll respond to your inquiries within 24-48 hours, helping you make the most of your experience at our markets.