Wednesday, August 5, 2009

A Lesson In Wholesale

I haven't had much of an opportunity to do wholesale orders, so when I was recently approached regarding one, I was pretty excited. The pieces in question, though, sell for $16-$20 in my shop. How much did the person want to pay? $2 per piece. Hmmm. My first thought was "no way!" Then I started looking at how slow my shop has been and how nice it would be to have cash flow.

The potential buyer mentioned needing restocking every two weeks because her shop was busy. Hmmm flow...that would be nice. Then I started trying to figure out how I could create these pendants for $2 while still making some money for my time. Finally, I figured out a way to do them faster, using a faster-setting resin so I could pour the layers more quickly. I quickly (well, over a week's time) churned out 60 of these pieces and had them ready to ship. All was paid for upfront (which I would always recommend, at least until a rapport is established with the buyer). I sent photos of the pieces and once approved, they were on their way, first class, delivery confirmation, insurance. My first miscalculation? Shipping was a total of $10. I had charged $5.

The pieces arrived safely. However, the buyer did not like the quality. "I cannot sell these in my shop...they look too handmade". Talking to my mother about it on the phone, she said "why didn't you send a couple of samples to her before you did all that work?". A big "DUH" sounded out in my head. Why didn't I do that? Another thing I would HIGHLY recommend.

So, of course the buyer wants a refund. We agree on a partial refund. I am covered for the materials and maybe a tiny bit for my time. Now I will have 60 resin pendants to get rid don't be surprised if you see them pop up in my shop. Some of them I will take down to Crown Center to Gifted Hands where I have a display.

All in all, this could have been a super bad experience, but it has been a really good learning experience for me. After going through all the hard work, I realized that I have to be really careful, no matter how tempting the idea of "cash flow" might be. I hadn't taken into account the hours of labor involved in trimming and sanding the pieces, not to mention drilling them and inserting jump rings so they would be ready to place on a chain. All of the little things you forget to add in all add up to hours of extra time. So if you are reading this, DON'T forget to count every step involved in creating your product when figuring out a reasonable wholesale price.

The silver lining in this is that there were other pendants that this particular buyer DOES like and has purchased. So it may be a long-term, cash flow positive opportunity after all. Even though it didn't completely work out, I'm really glad I gave it a shot! I improved my skill a bit at my craft and learned what REALLY goes into what I create so I will be better prepared next time.

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