Seller Handbook

Advice and inspiration for successfully running your Etsy shop

Seller Handbook

How to Create Wholesale Policies

Setting policies you can stand by will help you form good relationships with retailers.

By Vanessa Bertozzi Aug 14, 2014
Photo by Jenny Highsmith Lettering

Ready to take the leap into wholesale? You’ll need to have airtight policies that you communicate to retailers before you confirm an order. Just like the policies in your Etsy shop, these guidelines will help ensure you can process their request and avoid unnecessary back and forth. You can include your policies and ordering info at the end of your linesheet or in accompanying documents. Check off each topic below as you create and complete your own policies.

Minimums

Selling wholesale requires a specific pricing structure that has a lower profit margin per sale than earned when selling directly to shoppers. A minimum is needed to ensure each wholesale order quantity and value is high enough that it makes sense for your business. For example, a designer could have an opening order minimum of $150 and a reorder minimum of $100. Minimums ensure that you will earn a specific amount of money at one given time and that the retailer is investing in your work. The goal is to create a relationship with steady repeat orders that will provide larger cash flow and expose your work to a wide audience. It's up to you to determine what number of items ordered at once will make selling at a wholesale price worthwhile. A few common options:

  • Opening order minimum and reorder minimum
  • Opening order minimum but no reorder minimum
  • No minimums

Payment Methods

State how you prefer to get paid. What forms of payment do you accept? Do you require a credit card number or a PayPal address? Do you accept checks?

Payment Terms

If a retailer decides to place an order, you’ll need to agree on a payment plan. Retailers often have preferred payment terms but this is a negotiable topic. Payment upfront or deposit upfront is rare. If the order is the first from a retailer, a seller can request a cash on delivery (COD) payment, where the seller charges the retailer upon receipt of goods. A retailer may also request to pay a seller 30, 60 or 90 days after the goods have shipped — referred to as Net 30, Net 60 or Net 90, respectively. Note that most commonly, independent retailers will expect to pay you when you ship the order.

Estimated Production or Lead Time

Having a predetermined lead time for orders is key to ensure you don’t commit to an order that you won’t have time to fill. It’s important to be realistic about your capacity and to set expectations with retailers based on that time frame. If you receive a purchase order, it will specify the date the retailer needs your items. Assuming you don’t have the stock on hand, establishing a reasonable lead time will help you determine if you can produce the quantity requested within that window.

You may also want to select a cut-off date, after which it's too late for wholesale buyers to order from you for a specific occasion, such as the holidays or the end of your spring line. Once an order is placed, be communicative and agree upon the final expected delivery date.

Shipping Method

You’ll need to specify the exact method(s) by which you ship your goods and whether you are willing to ship through a different carrier if asked to do so.

When making this decision, consider your policies around lost or damaged packages. It's wise to insure your shipments independently or to use a carrier service with built-in insurance.

Drop Shipping

You may want to specify whether you offer drop shipping to the retailer’s shoppers. If so, you should negotiate a better rate than the typical wholesale pricing structure, since you will be handling all the shipping and packaging on a per-package basis. You can learn more about drop shipping in our Wholesale Glossary.

Shipping Cost

Usually, the retailer is responsible for paying for shipping. Many sellers state on their policies that they can provide shipping estimates once they know the quantity and contents of an order, as well as the ship-to location.

Product Customization and Samples

Some sellers are willing to customize their products for wholesale orders and others are not, so be clear on what you’re willing to offer. The same clarity should apply to samples. Do you send samples upon request? If so, are they finished items, or just material swatches? Do you pay for shipping the samples, or does the buyer? Will you need them returned?

You might consider charging 50% of the wholesale price for a sample, and should be selective about which potential wholesale buyers you send samples to — offering samples to anyone and everyone who asks might not be financially sound for your business.

Returns, Cancellations and Discounts

Many sellers will only accept returns on defective or damaged items for a certain period, such as within 15 days of receipt of goods. You’ll want to clearly state your return policy as well as if there are any circumstances under which a wholesale buyer could cancel their order. You might also consider charging a cancellation fee (usually a percentage of the total order). Buyers often expect that they’ll have the option to cancel an order if you’re late delivering it, so be sure to include a time-limit if you are going to allow cancellations.

Some retailers negotiate for the seller to accept back any unsold inventory and refund the retailer, while other sellers, like Amy Adams of Brooklyn-based Perch Ceramics, do not. “I don’t give buyers the option of returns or buyback credit, since the understanding with wholesale should always be that there’s equal risk.” No matter what you decide for you business, be sure to clarify your buyback policy upfront. Finally, you may also want to include your expectations on when and how much a retailer can discount your item below your own MSRP.

Create a Smooth Process

Having clear policies will help prevent confusion and ensure that you and your retailer build a relationship based on good communication skills.

Author

Vanessa Bertozzi

Vanessa Bertozzi is a Senior Program Manager for Etsy Wholesale, a private, juried section of the Etsy marketplace. Since starting at Etsy in 2007, she has launched the Etsy Blog and led teams focused on seller education and community.

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