I get asked a lot what the pros and cons are of selling your product to boutiques vs. larger retailers like Dept. stores, Bed Bath and Beyond or even big box stores like Target, Walmart, or even Costco. There are many advantages to both. I have built all my companies on boutique sales as I find them to be more reliable and consistent. Once you have a good base of boutiques, you can reach out to larger retailers as they tend to be more fickle and that way you won’t be stuck with “no sales” if you don’t succeed in that market.
Pros of working with boutiques:
1. Buyer relationship: Working with a small store you usually can form a stronger bond with the buyer that can lead to strong sales and regular reorders.
2. Easier payment: Boutiques are used to having to pay by credit card these days so you can usually get payment the day you ship.
3. Paid shipping: Boutiques pay for shipment of goods.
4. Trunk shows: Boutiques are always looking for fun ways to attract clients – you have a greater opportunity to do in store appearances and sell more.
5. Loyalty: If your product is selling well, boutiques are very loyal and will buy from you each season.
6. Higher margins: Boutiques are used to paying your regular wholesale price.
Cons of working with boutiques:
1. Busy Buyer: Sometimes the owner wears all the hats and can be hard to get a hold of.
2. Slow sales: If you happen to extend Net 30 payment terms they might be late with a payment if sales are slow.
3. Incentive Buyer: If you offer incentives from time to time (free shipping or a gift with purchase), some boutiques may only purchase when you have a special order.
Pros of working with larger retailers:
1. Bigger orders: Usually large retailers will order bigger quantities to be able to supply all their stores.
2. More exposure: With your products in larger retailers, you usually get more exposure to a larger customer base, which can result in more sales from other sources like other boutiques or your own internet sales.
3. Payments more secure: Big retailers are (in general) more reliable for payment.
4. Possible PR: Sometimes larger retailers will offer you placement in their catalog (fee required at times), they may use your item in a TV or Magazine ad, or even submit your item for editorial review in a magazine.
5. More money: Even if your margins are smaller (and often are) you often end up with a bigger payoff.
Cons of working with larger retailers:
1. Financing: If you get a huge order, you will need to find the resources to finance it.
2. Growing pains: You will need to be sure you have your production 100% under control to be able to handle large growth.
3. Shipping manual: All big retailers have very strict guidelines to follow for packing and shipping. This can be very confusing but obviously not insurmountable…….and they are all different!
4. Charge backs: These are expensive money dings to your account for everything you do incorrectly with your order. This could be mistakes in paperwork, incorrect quantities, boxes not properly marked, not shipped on time, damaged items, missing tags, not packaged as per contract and many other things….. If you are very careful with #3, you can eliminate these charges.
5. Paid ads: Some large retailers require you to pay for placement in their catalogs. This can range from $300-$5000.
6. The big squeeze: You might want to consider how selling to the big guys will affect your current boutiques. Usually it doesn’t, but just something to be aware of.
Love to hear your experiences below – leave a comment!
By Sarah Shaw, Founder of Entreprenette
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Sarah Shaw is the founder of Entreprenette.com, a consulting company that works with entrepreneurs in bringing their product to market. Sarah grew her own million dollar company with her famous "Pinked" handbag and has applied her expertise and knowledge to her consulting practice. Sarah has been featured in the LA Times, WWD, Oprah Magazine, as well as on Access Hollywood and regularly speaks to inventors and entrepreneurs nationally. |
