The first time I sold something was possibly the best.
I was in my first year of art school and during orientation we all made masks as part of the program. We later displayed them and it sold at that gallery show for $50 or $60 – I can’t remember the specifics, but I can remember the feeling of elation that someone wanted to give me money for something I made! I was being rewarded for being creative – to me it doesn’t get much better than that.
The whole goal here at Sketch to Shelf is to show you ways that you can make a living doing what you love. I want you to be able to share the same sense of accomplishment and pride that I had way back at 18.
Whether or not you have a product ready to go, it’s never too soon to think about how and where you are going to sell it. This is important for a couple reasons: aiming for a target will direct you to it, being aware of your customers will help you create a product that appeals to them, and understanding the market before producing your product will save you tons of time in the long run.
There’s myriad ways to sell your goods, but the big three are:
- Through a Distributor
Each has advantages and disadvantages, and you may find that one is best for you, or a combination of all three. (we’ll get into sales channel diversification later)
You -> Customer
In the simplest terms, selling Retail is when you sell your product directly to someone with no middlemen. The full price – the ‘retail’ price – of the sale goes to you. The most dollars per item go into your pocket via Retail sales and this is a great way to start out. Depending on your product, you can start as small as selling to your friends. Scaling up from there could be at craft shows, farmers markets, local fairs, and anywhere else that customers are buying things.
Selling online also is an easy way to sell at retail prices. This is how I like to work – the online space is easy and exciting for me. It has never been easier to set up a web store and start selling. Services like Shopify make it simple to create a great looking webstore quickly.
You -> Retailer -> Customer
Wholesale sales are when you sell your product to someone else at a discounted price (off of your retail price). The retailer (not you anymore – you’ve passed that job to someone else by selling to them) will then charge their customers the retail price.
You make less profit per item, but you work less. No more schlepping to farmers markets to sell one pair of hand-knit socks at time. Generally, the retailers will also buy in bulk so you will be selling more units at a time.
We all have heard about wholesale and it’s very common to see stores that claim to sell at wholesale prices everyday. The actual ‘wholesale’ price can vary though, and there is no set percentage off of your retail. In my pet products business, I set my wholesale rates at 50% off of retail, but in the jewelry market it’s not uncommon to see wholesale prices at 66% off retail.
A huge advantage of selling your goods at wholesale is that you have shifted the chore of finding and selling to customers to someone else. That someone else is probably better at it than you, as it’s their #1 job. You do have to sell more units at wholesale to make the same profit as selling at retail, but if making is your passion, then leave the selling to someone else.
You -> Distributor -> Retailer -> Customer
Add another middleman to the mix and you have Distributors. Distributors will sell to Retailers. Generally, they will work in much higher quantities and have a much larger group to sell to than you would on your own.
Great! But what’s it going to cost me?
Distributors will buy from you at 10%-30% off your wholesale prices. For example, if your product would sell for $100 at retail, the distributor would pay you around $35-45 for it. They’d then sell it to a Retailer for around $50 and the customer would pay $100 in the store. Volume is the name of the game here. As you can see, you’re not making much per item, so you’d better be selling a ton of items at a time to make it worth your while.
Sketch to Shelf is aimed at us smaller business types, and I personally don’t think Distributors are right for us at the early stages. As your business grows, the numbers may look better. As always, it’s your company and you have to find what works for you.
Too many options! Just tell me what to do!
These are just the basics of sales channels, and there’s lots of other angles that you can explore as things get moving. If you’re just starting out, consider the pro’s and con’s of these 3 options and start to make your plan.
If it isn’t already clear from this, I’ll spell it out: Margins are important. Remember when I said it’s never too early to start planning? If you want to make profit, you have to be aware of all the costs associated with selling your products. ‘Margin’ is a daily word for me now. Shaving a couple percentage points off my costs where ever I can has made my relatively small company pretty profitable.
It’s not the kind of stuff us creative types like to think about, but it is vital to your financial success. I was talking with a friend the other day about all this and I realized I hadn’t once brought up any new designs or creative stuff. I was wearing the business hat that day and I am thankful that I can do that, because it allows me to wear my designer hat on other days.
How do I find Retailers to buy my goods?
With my first company – hip, urban messenger bags – I literally went from store to store in NYC and asked to meet with a buyer. I showed them samples and handed the buyers my photocopied order form. And more often than not, I left with some sales. (In retrospect, they may have been pity sales as I was a sweaty, ponytailed country kid dragging a big bag of samples all around the city.)
To be clear – this still works. Find your favorite stores, check them out and see if your goods would fit in and make them money (bottom line, they need to make money), and then request a meeting with the buyer for your category. This is a great way to cut your teeth and learn fast about the world of selling.
A slightly easier, albeit more expensive way to attract wholesale sales is to show at a tradeshow. For fees from $100’s to many $1000’s you can set up a booth at a tradeshow to, well, show off your trades. Buyers go to these shows to buy and if your product is compelling, chances are good you’ll get some orders.
The three channels I mention here – retail, wholesale and distribution – really only cover the very high-level basic idea of how to sell. This is where you should begin thinking, but once you get the concept there are so many other ways to get your goods to the end users. Flash sales, drop shipping, auctions, pre-selling: just some of the other ways to sell.
My advice, as always, is to start simple, learn as much as possible and progress slowly.
Do any of these sales channels resonate with you? Do you need any clarifications? Hop on over to the forums and let us know if you have any questions or advice!
Read next: Product Fulfillment