Selling Wholesale to Retailers: How to Choose Retail Partners

By
Michael Elmgreen
June 25, 2015

Smart brands selling wholesale to retailers look to meticulously tend to their list of stockists to maximize product sell through, marketing efficiency and brand penetration. An important part of ensuring acquisition of high quality retail customers and maximizing retention is pre-qualification of the store that is looking to stock your product. There are a number of key attributes you may consider when evaluating a new retail partner:

  • Creditworthiness
  • Geographic Territory and Competitive Radius
  • Store Merchandise and Brand Alignment
  • Minimum first order or merchandise space requirements

Let’s take a look at each of these in detail.

Selling Wholesale to Retailers: Choosing Stores to Stock Your Products

Creditworthiness

If a retailer is requesting to purchase on credit terms (Net 30, Net 60, etc), you need to be able to evaluate the associated level of financial risk to your business and decide upon how favorable the terms you offer should be. Credit check providers evaluate the payment history, any public financial statements or filing, debt collection referrals and complaints lodged against a given business in order to predict the likelihood of future business failure or late payment.

Geographic Territory and Competitive Radius

Some brands recognize that over-saturating the market with product will lead to eroded brand perception and may lead to retailer frustration because of their inability to differentiate their store effectively from the competition. As such, laying out all accounts will enable you to evaluate the potential conflict with your existing customer base, and allow you to resolve any issues up front. In some cases, brands will provide guarantees that they will not sell to other retailers of a distance radius around their location. Typically, this will apply to independent retailers only. Simple sites like MapAList or the more robust Maptive will enable you to quickly turn your customer list into a visual, interactive map.

Store Merchandise and Brand Alignment

Brands looking to establish a particular market positioning and perception will often require the retailer to provide information on other brands or labels stocked in the store, as a means to establish whether the store appeals to their target market. For new brands, this can often be a means by which to derive favorable brand perception by association with well-known brands in adjacent categories.

Minimum First Order or Merchandise Space Requirements

Many brands require a first order minimum threshold to ensure that the retailer or stockist of the product purchases a minimum merchandisable quantity of product or point-of-purchase display that will give the product the best chance of success in the retail environment. In many cases, these first-order minimums may be larger than reorder minimums to protect against the product failing to sell because of limited initial selection being available in store. Similarly, requirements may be expressed as a minimum amount of merchandisable square footage or an initial display being located at some proximity to the point-of-purchase, or entrance to the store. What qualifications do you require when selling wholesale retailers? Are there others that we have missed that apply to your business or industry? Have you had any experiences where these have failed you? Let us know in the comments.