Apparel 101: Retail vs Wholesale What's The Difference
One goal that certain apparel companies may have is to get their merchandise in stores. It’s a great accomplishment that signifies the growth and expansion of a brand.
However, before this happens, businesses are constantly faced with a tough decision; should they sell their clothes at a wholesale or retail price? Deciding this can be overwhelming for companies, especially if they’re relatively new to the scene.
To help you out, in this article, we’ll be discussing the differences between each and how you’ll know which option is the best for your apparel company.
What is Wholesale Price?
When clothing gets sold at wholesale price, a large quantity of the product is sold at a lower price than at retail. So apparel companies don’t sell their clothes directly to consumers.
Instead, they sell them to retail stores, which makes the merchandise available to potential customers at a higher price. It’s an excellent way for retail stores to get the clothes they need at an affordable price.
To calculate the wholesale price, you’ll first need to figure out the cost of making your product. So you’ll add the cost of materials, labor, and other overheads (rent, utilities, etc.) together, which gives you the cost of goods manufactured (COGM).
After that’s done, you can multiply this figure by two to get the wholesale price of your product. In the apparel industry, most business owners aim for a profit margin of 30 - 50%. You’ll need to make sure that your figures lead to a substantial profit to continue building.
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Benefits of Selling Wholesale
Before you decide whether you should sell at a wholesale or retail price, it’s essential to consider the benefits of each. Here are some of the advantages that you’ll obtain from selling your merchandise wholesale.
More Brand Awareness
By selling your clothes wholesale to retailers, it provides exposure to different people. Instead of customers having to purchase your clothing on your site exclusively, they can quickly get it in multiple stores, which can generate more interest in your business.
You’ll also be able to save money from selling wholesale since there won’t be the usual advertising costs associated with marketing your brand.
Possibility of Global Expansion
Besides opening yourself up to new customers domestically through wholesale of your merchandise, there’s also the possibility of global expansion. If the retailer you’re partnering with also has international stores, getting your apparel in those stores can give you global recognition.
Ensure that your accounting system can take orders from international currencies, so there are no delays when an order comes in. Wholesale pricing also allows you to save money when shipping internationally.
Your merchandise will be shipped in one large order instead of hundreds of individual packages. It’s a great way for smaller apparel companies to get a solid foundation abroad.
Related: The Best Online Selling Sites For Your Apparel Company
What is Retail Price?
The retail price of a product is the price given when a consumer directly buys merchandise from you. So there’s no intermediary between you and the customer; once they order something from you, it’s your job to supply the product to them in a timely fashion.
Calculating the retail price is very simple. First, you need to find out the COGM just like you did for the wholesale. Once you do, multiply that figure by 2 or 2.5 to it, and there’s your retail price.
Most apparel owners who choose to sell their goods through retail aim to have a 55 - 65% profit margin. Remember that you’re the one who decides how much your product will cost, but that will depend on other factors like the current market, your projections, and the nature of your business.
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Benefits of Selling via Retail
You’ve probably gone back and forth between selling through retail and wholesale because both options provide your business with some opportunities. However, here are some benefits that are exclusive to selling through retail.
Personalized Customer Base
If you decide to sell as a retailer, you can target a specific customer demographic and tailor your apparel towards them. It will also allow you to choose whether you’ll sell your clothing online, through a brick-and-mortar store, or both.
Whatever you decide, ensure you keep track of your sales analysis. That way, you can see any progressional trends and adjust your business plans accordingly.
You Control Your Brand
One of the problems with selling wholesale is that you leave it up to that retailer to showcase your brand. So you have little to no say over how your products are displayed in stores. The only thing you’re doing is supplying the product to get sold.
By selling as a retailer yourself, you’ll have complete autonomy over your brand. You can display it how you want, set the prices, and control its marketing. So if your identity is essential to you, then selling wholesale may not be what you want.
Connect With Your Customers
Without the middleman selling your product, it will be easier to connect with your customers. You can get to know them personally and listen to any suggestions they may have about your product.
By engaging with customers on a personal level, it can lead to good reviews for your business. That could result in further customers buying from your company.
Are you looking to find a clothing manufacturer for your business? Follow this guide from POND Threads for step-by-step instructions!
Not Sure Which is Better? Then Ask POND Threads for Assistance
At POND Threads, we understand that considering your goods’ retail and wholesale price can be overwhelming. But that’s where we come in to help. No matter what you decide, we have design and printing services that can be tailored to any business’s needs.
So if you have a large number of orders that you want to send to a retailer, we can handle that for you. If you need a simple amount of merchandise for your store, that’s no problem either. We’re here to help.
Contact us today, so we can help you get those orders out efficiently. You can also check out our website for more information about the apparel industry.
Related: How Does Clothing Distribution Work?