51. Getting Your Product On Store Shelves: How to Wholesale with Katie Hunt

Have you been thinking about adding wholesale to your business and selling to retailers? It can definitely be a great way to generate more revenue for your business, get you more visible, and make your brand a household name. But… is it right for YOUR business? Only you can truly answer that, but my guest today is laying out what it really takes to do wholesale well and what you need to know before you get started.

What You’ll Learn: 

  • The key foundational items you need to have in place before you even consider wholesale
  • Understanding how to properly price your product for wholesale
  • The right way to pitch your product to buyers



Read the Full Episode Transcript

This week, Katie Hunt joins me to talk about her wild entrepreneur journey. Katie runs a company called Proof to Product that specializes in helping manufacturers sell wholesale. She has a membership, runs courses and conferences and her big goal is to help 500,000 product based business owners and make a positive impact in their business and in their life.

She’s got a passion for creating, a mind for business and a strong desire to help others succeed, which is why I think we just hit it off so well from day one that we met. And when she’s not cheering on her clients or dreaming up new workshops, you can find her spending time with her husband and four young children hosting friends for dinner or surfing Instagram, which is where I think we first met.

When did you decide that you were going to do this crazy thing and be an entrepreneur? 

I wanted to be an online entrepreneur 12 years ago. I started a stationery brand that is no longer around and I ran it for eight years. I was selling to stores all over the United States and Canada, I was exhibiting at trade shows, and I loved it. 

In the first few years building that brand, I realised that I was surrounded by talented artists but they really lacked business knowledge. They often doubted themselves, and they weren’t moving forward on things because they were unsure. Whereas my background was in business, and I was self taught in art. 

I knew there was an opportunity for all of us to learn from each other. Let’s share what we know. 

Even though our paths are going to be different and our definitions of success are going to be different, we can help each other with our shared experiences and resources. 

When is the right time to go wholesale? 

This is the million dollar question. It’s tied with: “when’s the right time to do a trade show” “when is the right time to hire a team” “when is the right time to have a baby?”

I don’t know all the things there’s some key foundational pieces that I want manufacturers to have in place before they consider wholesale. There’s two sides of the wholesale coin: internally as a manufacturer, and externally for the stores who are purchasing. 

What to consider internally 

This is the order we take people through in our program called Paper Camp. 

  1. Have your product ready, 
  2. Have a large enough line that wholesale buyers can pick and choose from your line. Make sure they can hit that opening order requirement without having to struggle. No buyer is going to purchase everything we sell as much as we would like them to. So if you’re only selling 10 things and they have to buy all ten to hit that opening order requirement, they may pass until you have more. 
  3. Have at least 14 skus in their line before they start wholesaling. Even better if you have 50 or 100 skus for them to pick and choose from. 
  4. Get your production costs as low as you can so that your profit margins are as high as we can get them. 
  5. Don’t sell things to the wholesale market that you’re not making money on. If you can’t make money on it in wholesale, keep it to the retail side. Take a holistic look at your business and ask: do I have enough product? Do I have the profit margin to be able to wholesale this? 
  6. Have sales tools, like the catalogs and your wholesale terms and conditions ready. What is the baseline knowledge people need to purchase from you? What kind of requirements do they need to meet? 

Put simply, your product line needs to be strong and cohesive so that it all correlates. The whole point of wholesale is to make money, so make sure your profit margins are strong.

What to consider externally

You also have to think about the retailer and whether the retailer can sell your product successfully. If they can’t, they won’t come back and buy from you again. 

Good customer experience is important so eliminate any hurdles that they have to jump through to make it as easy as possible. If they’re online, give them images they can use, ect. 

If the buyer can rely on you to deliver on your promises to come out with a new product regularly to help solve problems when they have them, they’re going to keep coming back to you over and over again for more product as your line develops as you do new things. 

We need to think of it with others in mind, not just internally within our own business and that that’s a mindset that a lot of manufacturers have a hard time getting over a hard time understanding.

Building relationships is key

No matter whether you’re selling physical service, B2B, B2C — it doesn’t matter. It’s always about building relationships.

Unless you created the most innovative product ever that only you sell—like the Squatty Potty. 

If you have something that other people sell, you’re ability to build relationships is going to be the deciding factor between them buying from you or buying from someone else. 

Often, you need to invest more time and energy on your wholesale accounts than you do with the direct to consumer. It’s a whole other level of intimacy,

It’s a separate arm of your business that takes a whole separate set of resources to do it really well. Your audience is different, your messaging is different, your marketing strategies are different, the way you process orders is slightly different. It’s essentially like having two businesses under the same brand.

Pricing your product for wholesale

There’s so much misinformation and misunderstanding when product entrepreneurs move to wholesale. Generally, you’re underpriced to begin with so when it comes time to wholesale there’s not a lot of margin. 

Price your product as if you’re going to wholesale later (even if you think you never will). Then, if the opportunity ever arises, you can give the retailer enough margin to make it worth it. If you don’t price your product this way, you’re just undercutting yourself. 

Ultimately, what it boils down to is, the manufacturer sets the wholesale price, and the boutique owners are going to set the retail price in the store. And that’s a really critical thing for people to understand. 

Running the numbers bottom up vs top down 

To identify your pricing you need to run your numbers in two different ways. 

Bottom up 

Look at everything that goes into creating that product. In a greeting card, it’s going to be the paper, the printing, the cello sleeve it’s packaged in, the envelope — all of these go into our production cost. And then you need to make sure those production costs are covered so your price obviously has to be much more than that. 

Top down

Look at the industry as a whole and consider what similar products to yours are selling for on the market, retail price. 

The happy medium 

Your pricing sweet spot is going to be somewhere in the middle of those two numbers. Obviously, it’s going to be closer to that top down number of what the general market can bear. 

If you price your products too low, you’re leaving money on the table and that is not healthy for your business. If you price your products too high, you’re pricing yourself out of the market. General consumers or wholesale accounts aren’t going to be purchasing from you because they just can’t make it work. 

Understand how wholesale prices and store prices differ

When you start selling wholesale, you will tell your store owners the wholesale prices whereas store owners will generally keystone that price, which means they’re going to double your wholesale price. 

However, there are people in New York or California or other places where they have higher overhead, which can warrant a higher price. Or it’s a more luxurious market where customers will pay a higher price. In those cases, they’re going to more than keystone your products. 

Keystoning is the bare minimum. These days even the keystone is becoming a little lower than the norm, closer to 2.2. 

This is important because you need to recognize what the buyers are doing with your pricing.

You need to make sure that they’re getting enough margin, if you have your wholesale price too high, and they can’t at least double it then they can’t make a profit. But if you’re maximizing your profit and they’re maximizing their profit. It’s a win-win for everybody.

There’s no standard formula for wholesale pricing

Set your pricing based on what your needs are and what the market will bear. There’s no “times this by that” formula usually either inflate your price to something that’s outside the market norm or you’re charging way too little.

I will say that if you came to me and told me your wholesale price was 10 to 15% less than your retail price, I would not buy from you because it’s gonna cost me money to have your product in my store. 

Those sorts of pricing structures are very much driven from formulas that are out on the internet and I don’t blame people for Googling. But we should not be looking to those types of standardized formulas to price our products because each product is different, with a different profit margin, with different manufacturing expenses, with different production volume, ect. You’ve really got to take the overarching average. 

Factor your time into your price 

In the maker space, creators forget to actually calculate in hiring someone else to make the product or calculating what they would pay themselves the time to create the product. 

A lot of the time it’s because they don’t necessarily have the aspiration to take it elsewhere or having to hire other people or to outsource it or anything like that. They also don’t necessarily realize it’s possible. So they undervalue their design time, or sewing time and then they have this harsh reality at some point when they can’t keep up with the volume of the orders. 

Then they’re either hiring somebody and paying them an hourly rate, which they’ve never taken into consideration because they were doing it and they don’t factor in their time. 

I tell everybody to come into this with the mindset that you will be outsourcing it before you’re doing it. 

Then you are factoring in labor, not just the materials. 

It comes down to thinking ahead. What do you want your business to look like in five years, or when your hit certain milestones? Most of the time those achievements  require either paying for help in house or outsourcing. 

How do we actually pitch retailers?

I like to use a tiered outreach approach. What I mean by that is I encourage you to reach out in multiple ways. 

Send an email 

The easiest and fastest way to do it is sending a simple email. Keep it brief, keep it scannable and show why they should consider buying from you. What’s the benefit to the store owner to purchase from you? 

A basic email outline looks like this: 

  1. Introduce who you are 
  2. Talk about the types of products you have
  3. Your opening order (eg. choose roughly 10 to 12 skus) 
  4. How they can order from you (reply to this email, call you, ect) 

Emails are great start because it’s easy to include images and a link to your catalogue. They get a sense of who you are. 

Send snail mail 

After you’ve sent an email, follow up with snail mail. Send a postcard that has product images and on the back use similar bullet points to what you put in the email. 

That way you’ll catch them on different days. They may miss your email and see the postcard. Maybe they saw the email and missed the postcard. 

Engage on social media 

Like their stuff, comment on their posts, share their posts on your feed. Basically, think of ways that you can enhance and build this relationship in a thoughtful manner rather than approaching it as sell, sell, sell. We really want to build the relationship because the orders come with that.

Get your ducks in a row before reaching out to wholesalers 

It’s tough in the beginning, because most people are still getting their product ready, still getting their terms and conditions for wholesale ready, still developing their catalogue and at the same time, they’re trying to reach out to stores because they’re wanting to get the ball rolling. 

As a buyer, if you come to me, and you don’t have all the answers to my questions, or I’m trying to find information, or your website’s complete or your catalog is missing, I’m not going to buy from you because I don’t have the time to ask for that information. And frankly, there’s probably someone else who is ready to sell me something similar. 

Don’t get me wrong, I applaud scrappy entrepreneurs who are just taking messy action and want to get stuff done but make sure the action is a little bit more refined and a little less messy. 

Wholesale is something you want to plan for, and you do want to methodically approach it. I do want you to take action — prepared, thoughtful action.

Consumer vs wholesale expections 

Consumers think about price, who it’s for, and the feelings and emotions attached to the buying process. Whereas wholesalers think about business. What’s the margin, what’s my shelf space, what’s my cash flow. That difference is a really stark one to remember as we enter this.

Drop in meetings

Even before COVID, I didn’t recommend it randomly dropping into a store. Imagine you’re making dinner one night and somebody comes knocking at your door and they want to sell you magazines. They’re interrupting you making dinner and you don’t have time to talk to them. Certain days are more busy than others. 

It’s not always the buyer that’s working in the store, either. Sometimes it’s staff member. If you want to drop off a catalog and a sample or a postcard, just drop it and go. Don’t bring your entire deck of product and them everything. Covid just adds an extra layer to those considerations. 

Lead with some of the more remote access touch points to begin with. Then, once you’ve established a relationship stop by and say hi. 

How do you managing a market strategy for both wholesale and customer 

Every communication and touch point needs to consider the needs of our customer. It’s the same on the both the wholesale and direct to consumer side, but the frequency and the messaging are going to change. 

Email strategy 

I can tell you with certainty that all manufacturers worry they are sending too many emails to store owners, they worry about sounding salesy, they worry about being annoying or bothersome and most of all, they don’t know what to say. So I recommend creating templates that are drag and drop with can links that go straight to your site so they can buy. A basic template includes: 

  • bestsellers of the quarter
  • new products that are out
  • immediates that you always have available
  • if you’re offering any incentives or promotions
  • show behind the scenes
  • put a face to the brand and let them know the people behind it. 

They signed up for your email list, they want to hear from you. If they didn’t see the email the day of or the day after you sent it they’ll never see it. You need to show up again and again because they don’t have time to look back at what each vendor sent. 

Repurposing content 

The same thing you put in your emails, you can put on a postcard that you mail to them, put it on social media, put it on your website — put it everywhere, because even if they were to see it in multiple places, they’re not going to put two and two together and say, oh, wait, didn’t I see this exact same copy in that email that came out two months ago? They’re not going to remember that. Save yourself some headaches and repurpose content. 

What is one of your biggest successes, either in your own business or with one of your clients?

In my business, teaching my classes for Creative Live was a really fun, pivotal moment for me. It really opened my eyes to how much more I could do and what impact I could make for people that are in the product world. So that was really kind of a great moment for me. 

For my clients, I’m adding things to my warm fuzzies folder every day. One company that came through our Paper Camp program on scholarship that went on to sell in Target and create a secondary brand that’s doing different types of products. They went on to expand in a lot of ways that they didn’t even have on their radar when we first started working together. That growth in mindset and opportunities is what really makes me excited. I get goosebumps when I think about all of them doing the things that they want to do.

What’s your #1 take away from this episode? 

Focus on your product first. That sounds very simple because it is. Focus on making a really well designed cohesive product line that is priced correctly. 

Don’t overthink it. That’s the catch 22. Don’t get in your own way and cause more hurdles for yourself. You can always change things down the road.

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Hey, I’m Jessica!

eCommerce + email Marketing Strategist

I support scrappy female entrepreneurs with actionable steps & strategies to grow and scale the traffic, sales & profit in their eCommerce businesses. Learning from the top experts in the digital marketing & eCommerce industry she loves working with female entrepreneurs and teaching the secrets of 7-figure eCommerce businesses.

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