How to Wholesale as a Startup

For a startup company, winning a wholesale account is a big deal in the business development process. You may have courted the retailer (your customer) for a long time, and now you’ve finally come to a verbal agreement on a purchase.

After your champagne, you, a startup founder, may fall prey to an impending sense of doom. What is the next step? Do you need a wholesale agreement? What about an order form? Will the retailer price your product in line with your MSRP and/or MAPP? Who even knows what all these acronyms mean?

We worked with some of our more experienced entrepreneurs who have completed ICELab entrepreneurship programming (specifically, the Moosejaw Outdoor Accelerator and the Gunnison Valley incubator program) to come up with some answers and ease your sense of doom. Below are some best practices we’ve put together for you and your small business about how to wholesale.

Best practices for wholesale

Research the buyer

If you haven’t already, doing a little homework on the new customer can save headaches down the road. Are they a legitimate company? This can be checked online. Do they have an internet presence?  Reviews even?

Create a wholesale agreement

Next, having a wholesale agreement would be a best practice and any wholesale account should be required to sign it. Thousands of examples of wholesale agreements can be found online with a quick search. When requesting a signature on the wholesale agreement, ask for a Tax ID/Reseller Permit/Reseller License, which will provide proper documentation for avoiding sales taxes.

Send informational documents to the buyer

After getting that wholesale agreement squared away, a warm welcome email with an order form and price list attached is a great next step. We’d recommend doing a quick search for price list examples online; they may include Item, Description, UPC, SKU, Wholesale price, MSRP (Manufacturer Suggested Retail Price), MAPP (Minimum Advertising Pricing Policy) and more. It is a bit more involved than a simple product and price. If you already know what they want to order, filling the order form in for them may be a nice way to make things easier on your new customer. If your MAPP isn’t included with your wholesale agreement, this would be a good time to share that as well.

Shipping costs

Your wholesale agreement likely has payment terms and policies. When in doubt, signing up your new wholesale accounts with a credit card in advance is a good starting point until trust is built. If not addressed previously, shipping costs paid by the customer should be included in your order form and charged with the order up front or on the invoice. If you sold into a national account, the payment and shipping cost terms will likely be less favorable to you.

Keep track of order requirements

Many larger customers will have other information requirements for an order such as item#, UPC, description, case quantity, case dimensions, case weight, cost (to them), MSRP, etc. Although this seems overboard, many retailers are handling hundreds of deliveries a week and need to keep things orderly in their loading docks and storage facilities. A spreadsheet is often the file type used for this information.

Pack and ship your order

Once all of these requirements are squared away for both parties, make sure you receive a purchase order (PO) from the customer. This is the best way to know that the order has truly materialized and you should start packing boxes. Don’t forget to include a packing list with the boxes when shipping. Adding a one-page brand overview as well is optional. The brand overview should include talking points for the sales staff at the retailer and product display expectations. The PO will likely help you understand the expectations of the customer on delivery timing. Early and late are both bad, and sometimes carry financial penalties, so try to keep the delivery in their date range or adjust expectations before accepting the PO.

Send an invoice

Finally, if you’re making the shipment and they haven’t paid in advance, don’t forget to send an invoice. We’d suggest sending this digitally and having easy pay links so they can pay it quickly online instead of sending a check. When sending the digital invoice, including your logo and requesting theirs could be a quick way to get some two-way social media or digital promotion going.

Why selling wholesale helps your business

Has the champagne worn off yet? If so, repeat this process and keep growing your business! When all goes well, your product will fly off the shelves and the second order will be a breeze. You may have heard it’s better to keep existing customers than to attract new customers. This new wholesale account process is a great example of why that’s true.

More articles for startups

Looking for more advice for your startup? Keep reading! Learn how to communicate with angel investors and how to get customers for your outdoor product. Still searching for answers? Check out these business resources.

Special thanks to Pact Outdoors, Outdoor Element and Lume Six for their help in building this business resource. The outdoor industry has some helpful folks!