As the owner of a jewelry business, you are faced with two main concerns: producing a product (design, materials sourcing, labor, production) and selling that product (advertising, transacting, shipping, customer support). Perhaps the most challenging part is the transition between the two. How do you get from point A (make the jewelry) to point B (sell the jewelry)?
Many small business jewelers choose to become retailers selling their finished jewelry directly to consumers. This can generate a substantial business but also requires constant maintenance in the form of customer support during and after the transaction. While a larger profit margin typically exists when selling to the public, you also incur the costs in both time and money for distributing your products.
Wholesaling your jewelry — selling to other businesses who then retail your product — is an avenue worth exploring for any business owner interested in expanding the scope of her sales. There are several important factors to consider when examining this option:
Do you create jewelry in quantity, or is all of your work one-of-a-kind?
Either can be successful if your relationship with your retailer(s) is strong and well-defined. Setting expectations about your jewelry’s availability will be important in maintaining a productive workflow.
Is your supply chain solid?
If you agree to take orders or work to fulfill demand based on previous sales for a retailer, you must be able to deliver your jewelry with consistent quality and availability. Your retailer might make promises (and sales!) based on your stated ability to manufacture your jewelry. Failure to distribute could mean a loss of sales dollars or even violate your contract.
Do your margins make sense?
Wholesale pricing is lower than direct retail by necessity but that doesn’t mean you should leave no room for profit. Keep an accurate and updated account of your costs including all materials, labor, packaging, shipping, business overhead, and any other related expenses. Once you determine your operating and production costs, build an itemized sheet that clearly outlines the pricing for your jewelry, any customizable options and their cost variances, the specifics of what your price does or does not include (sizing or repairs, branded packaging, shipping) and the product’s availability. Don’t forget to update your price list, line sheets and look books periodically to reflect any changes. Your retailer will not appreciate a surprise invoice with higher-than-quoted costs.
Will you consign your jewelry?
Many retailers do not wish to commit significant amounts of their “open to buy” or available cash to stocking product. Instead, they will ask you to send your jewelry to them “on memo” for a set period of time. During this period (often 30 days or more), your product will be held by the retailer without payment and at no cost to them while they attempt to sell it. At the end of the set term, unsold merchandise will be returned to you and any items sold will be invoiced.
While consigning your jewelry on memo can be a useful option when first targeting retailers with whom you don’t yet have a relationship, there are a number of issues to consider before agreeing to this program. Your inventory will be tied up for a stretch of time with a lower incentive for your retailer to sell it because it costs them nothing to have it in store. The jewelry will potentially be handled often, possibly become damaged and could still end up unsold but now in need of repair. And while it’s not something anyone wants to consider, there is risk in sending your jewelry to anyone without first receiving payment.
Jewelry Designer Manager can help you to keep track of items that are on consignment to stores, galleries, or sales people. The Memo is similar to an Invoice except that items on Memo are not part of finished piece inventory and not yet sold. You will update the Memo as the status of the items on memo changes to either sold or returned. There are reports that will help you keep track of what items are out on Memo, how long they have been out and the customer information so that you can follow-up.
Do you trust your retailers?
Building a strong relationship based on trust and mutual respect is the best way to increase your wholesale jewelry business. Whether you decide to test the waters by wholesaling to a local shop or jump into the deep end and make your business entirely wholesale with wide distribution, choose your retail partners with great care. A shared vision, strong ethics, and commitment to the success of both businesses are all crucial aspects of what can be a mutually beneficial arrangement.