Fashion Wholesale: Unlocking the World of Bulk Fashion Distribution
To wholesale or not to wholesale? That is the question. That is my spin on the question I often get asked:“What is Wholesale?” Fashion wholesale was and still is the backbone of the fashion industry depending on the fashion market level.
Although direct-to-consumer brands appeared to be the most hyped business model pre-covid, traditionally, most ready-to-wear brands rely on wholesale accounts. Recently, I was listening to a podcast and was astounded to hear that a resort wear brand launched in 2016 made 90% of its revenue via wholesale. Fashion wholesale is very much still relevant. Ignore it at your peril.
Don’t get me wrong, the direct-to-consumer-only business model does work. Direct to consumer or what the industry used to refer to as Private Label, is when you create a brand that is not available for wholesale, i.e. not available through third-party retailers, only allows customers to purchase via its own channels (store or website etc).
However, when developing your distribution strategy consider that wholesale or bulk sales plays a crucial role if you have limited resources. Scaling up with limited funds means making products accessible to a wide audience and one of the easiest ways to do that is via a wholesale model. If you are considering wholesale read on to understand the advantages and pitfalls.
Understanding Fashion Wholesale
Fashion wholesale is a supply chain model that involves the sale of products in bulk quantities to retailers, such as department stores, independent boutiques, and online stores.
It acts as a bridge to allow fashion brands to reach new customers, expand to new markets and reduce financial burdens and risks. Orders are placed and full or part-payment is made before the product is manufactured, which helps maintain liquidity and positive cash flow.
By definition fashion wholesale allows other multi-label retailers to sell the brand’s products at a profit. That profit margin is subject to negotiation and may vary depending on the market. For example, some high-end retailers may expect a 60%-80% margin at retail. Whilst mass market retailers might accept lower margins since more volume is sold.
Speaking of volume, wholesale works on the premise of larger quantities. The wholesale brand must set a minimum quantity the retailer needs to order to make a profit. Established brands think in terms of collections, which includes style, colour, materials, and sizes. For very successful brands they control what the Retailer receives and may stipulate the retailer orders the entire collection and in the specific sizes. This usually reflects what is negotiated with the brands’ manufacturer. By definition, fashion wholesale is a B2B (business-to-business) model.
Benefits of Fashion Wholesale: Reduced Risk of Unsold Inventory
Direct to retail to consumer always runs the risk of having excess inventory at the end of the selling season. With a wholesale model, since payment is made upfront before manufacturing or agreed timeline, the risk is transferred from you to the retailer. Who holds the title of the goods, and is responsible for sale. Unlike a consignment model when the retailer sends back any unsold stock.
Benefits of Fashion Wholesale: Economies of Scale & Efficiency & Spreading Risk
Orders are secured in advance of production and brands can use this knowledge to negotiate with suppliers based on the quantity of orders they place with the factory. This is known as an economy of scale. If you only place orders for direct retail, you may have less quantity to manufacture and therefore you miss out on potential cost-savings.
With regards to spreading or reducing your risk or exposure to unsold inventory let’s say for example the minimum quantity the factory accepts is 300pcs, if I have 2 wholesale accounts then you could spread that risk with Retailers. By stipulating that retailers must order a minimum of one hundred pieces (approximating 100 per retailer and 100 sold directly). Of course, you should have built a ‘must-have brand’ to wield some negotiating power. Retailers will want to reduce their risk by ordering the lowest quantity possible.
Benefits of Fashion Wholesale: May benefit from the Brand Equity
Retailers, whether physical stores or e-commerce have a brand reputation, some have a loyal customer base, who may try a brand for the first time on the recommendation of being in their favourite store.
Successful retailers have more foot traffic or online visitors than individual brands especially legacy retailers such as Net-a-porter, Liberties of London etc. For e-commerce that sense of familiarity and trust may also work on the level that consumers are confident their personal data and credit card information is safe with larger or more established retailers.
Benefits of Fashion Wholesale: Widen Customer Base
If you target the correct Retailer who shares a similar target market with your brand you can attract new customers, who may buy directly from you in the future. The most important factor is wholesale allows you to have either an online or physical presence in multiple markets without incurring huge costs.
Wholesale accounts get you distribution in more countries and broaden your customer base. In an economic downturn, this is a critical strategy, since one market may be in the doldrums whilst another maintains sales and therefore may result in less impact on your revenue.
Benefits of Fashion Wholesale: Cross-marketing
Since brands help retailers offer new fashion trends and seasonality there is an opportunity for cross-marketing and sharing the cost of communication. A brand and a retailer may create content online, posters in store, or even co-advertising in traditional media like fashion magazines. The retailer may have the brand cache or connections to create PR buzz and secure lower media costs due to long-term relationships which would in turn help your brand.
Benefits of Fashion Wholesale: Serendipity
Although this sounds intangible, and of course may not always happen, there is something to be said for serendipitous moments, whilst being stocked in one store, I have been approached by stylists, and photographers, and found a life-long network from other brands. Wholesaling in specific retailers especially retailers can expand your network, allow you to meet other founders, and pick up best practice tips from the retailer and other wholesalers.
Pitfalls of Fashion Wholesale
Of course, not every fashion business works wholesale distribution. For example, if your product is unique, or the cost prices are high, the price the end customer is willing to pay may not support a wholesale model. Carry out some cost analysis and you will quickly find out if your product can be sold at wholesale and the quantity required.
Some fashion business models may not support wholesale such as bespoke, or if the pieces are hand-made, or one-off. However, we are seeing upcycled brands providing unique products that disrupt this traditional idea.
As mentioned earlier suppliers/manufacturers have Minimum Order Quantities (MOQs) therefore this must be taken into consideration when offering your MOQs to retailers. Some smaller retailers may be clients that you grow with over time. If they find it challenging to meet your minimums you may have to forgo supplying them, which could mean missing out on a future retail star.
Not all wholesale accounts are made equal. Some retailers are notorious for long invoice payment terms such as 90 days, some do not pay at all. I have heard and experienced first-hand horror stories of non-payment, however, that could happen with consignment. So due diligence is required in each scenario. Don’t be afraid to ask questions, do some background research to look into the finances of the retail business. Ask if other brands that supply that retailer.
Ensure MOUs or contracts are signed and returned and provide a paper trail. I would also recommend you always ask for a deposit of at least 30% to cover the cost of manufacturing. Unfortunate, or unforeseen circumstances could see orders cancelled at the last minute.
Take COVID-19 for instance, many retailers through no fault of their own had to cancel orders to survive the sales downtown. In such instances empathy and coming to mutually beneficial agreements are the only long-term solutions.
Conclusion
The advantages of cost savings, widening target market, scalability, and promotional opportunities make fashion wholesale a cornerstone of the industry.
While challenges exist, such as minimum order quantities, finding the right wholesale accounts and following up on admin and payment terms, the benefits of fashion wholesale outweigh the drawbacks.
As the industry continues to evolve, brands would do well not to ignore third-party retailers as the entire industry must adapt to changing consumer preferences and technological advancements to stay competitive and continue delivering to savvy consumers.
Singapore
In Singapore, wholesale accounts are as rare as unicorns, with retailers preferring consignment arrangements. To survive small fashion brands often rely on corporate or bulk orders from organizations that make bulk orders for special occasions such as National Day, Mother’s Day, Teachers Day and Women’s Day. The price is not always at Wholesale since it’s often a once a year purchase. I’m told it’s usually at retail or a negotiated discount. If you are an entrepreneur based in Asia you could do well with ensuring you know the difference between discounts and wholesale pricing if you hope to expand and sell globally.
Asian Innovation - Clynn By Nature's Founder Lynn Yap A Scientist With A Mission
Meeting Clynn By Nature founder Lynn Yap at a women’s event was eye opening. Determined and energetic, I recalled how she was explaining to each browser at her stand exactly what every product contained. Customers would leave with an arm-full of product. It was clear her range of shampoos and hair care, had a unique benefit ladies were looking for.
Working with her to deepen her brand attributes and create a clear brand hierarchy in order to refresh the packaging was a pleasure. Here’s is a story of deep knowledge in her field, continued product improvement and perseverance.
1.Tell us about your entrepreneurship journey - how did it all start?
Suffering from hair loss and frizzy hair, I looked everywhere for hair care products that were safe, effective and affordable, but had no luck. Soon, I found out that I wasn’t the only one who needed products that addressed these hair issues – my friends, relatives and even a professional hairstylist told me that they had trouble finding good products. I decided to create my own scalp care and hair care products. I launched the range, Clynn by Nature, in 2016. The products are made from safe, sustainable, natural, active ingredients; and are designed for use in our hot, humid climate. Clynn By Nature is now sold mainly in pharmacies in hospitals and polyclinics. It’s also available online and in a few hair salons.
2. You are a trained chemist, what does that mean for non-science people?
I obtained a Master’s degree in Polymer Science from Loughborough University, UK in 1988. I have accumulated over 20 years of research and formulation experience while working for multinational companies in the personal care ingredients industry. My work included carrying out independent research projects. I was named co-inventor of a world-wide patent in personal cleansing. Prior to working in personal care, I spent two and a half years setting up a bakery from scratch, obtaining ISO 9000 accreditation. As such, I am both confident and competent to formulate and create efficacious products for self-care.
As a trained chemist I am able to understand things at their elementary or molecular level. Understanding how these molecules interact both physically and chemically, allows me to formulate products that actually perform. It's from this knowledge and experience, that I am able to create a range that gets to the heart of people’s hair care problems. Clynn By Nature products were specifically formulated for Singapore’s tropical climate conditions and our busy, stressful lifestyles.
The research process took over 10 years due to many reasons. For example, where microorganisms are involved, things get more interesting. The presence of unwanted microorganisms may compromise product safety. On the other hand, we need good bacteria to break down some chemical structures to carry out fermentation and achieve certain functional ingredients. In other words it took time to test the best formulations.
3. Consumers are prone to losing hair in Singapore, why is that?
Hair loss is a major concern in Singapore. It affects consumers of all ages. To begin with, our daily tropical heat and humidity spur fungal and bacteria growth on the oily substances that reside on our scalp. The result is scalp itching, dandruff, blockage and weakening of hair follicles that could lead to hair loss. Such oily substances may come from our scalp secretion, urban traffic film, or contributed to by the conditioning agents in our hair products.
Next, hormone imbalance caused by childbirth, menopause, medication or lifestyle-related stress, leads to the formation of dihydrotestosterone (DHT) that can cause root shrinking and eventually hair loss. Frequent hair dyeing, exposing our scalp to allergens, may lead to hair loss too.
4. Can you give readers tips about maintaining hair? Especially after reaching a certain age and or having a baby or moving to Singapore from the Northern hemisphere.
Step i: Keep our scalp clean
Shampoo once a day. Even if you do not sweat, the pollution from traffic in a busy city, justifies daily shampooing. Many consumers are averse to washing their hair every day for fear of exposing their hair to too many chemicals leading to dryness. However, shampooing only when the scalp feels itchy or when hair feels oily, risks leading to itchy scalp, dandruff and premature hair loss. The solution is to use the right shampoo. The right shampoo allows us to shampoo daily without drying out the hair and keeps our scalp clean, healthy and dandruff-free. It also maintains good follicle health and promotes healthy hair growth cycles.
Our award-winning best anti-hair loss shampoo, Clynn By Nature Hair Shampoo, adds volume, and is carefully formulated for thin and fine hair. It gives volume without the frizz. Clynn By Nature Hair Shampoo EXTRA MOISTURE suits coarse or dry hair. It provides deep hydration and is gentle to the scalp.
Step ii: Keep your hair strong and healthy
Additional protein treatment helps strengthen and smoothen your hair. Use Clynn By Nature’s MY Haircare Hair Conditioner after every shampoo, to restore the smoothness and shine. Note: This fast-acting rinse-off conditioner absorbs quickly. Massage for 30 seconds and rinse off. You do not need to leave it on and wait.
After towel drying your hair, spray on Clynn By Nature’s MY Haircare Hair Mist, from mid-length down to the ends. Massage in and comb through. This oil-free formula does not weigh your hair down. It smooths and detangles to ease combing and prevents split ends. Blow dry and style. A weekly treatment with Clynn By Nature’s Hair Mask provides the additional nourishment for the hair.
Step iii: Nourish our scalp
For those experiencing hormone imbalance, due to lifestyle changes, such as moving to Singapore from the northern hemisphere, childbirth, menopause or prolonged medication, it is important to keep your roots strong and healthy to prevent premature hair loss.
Daily application of Clynn By Nature Scalp Tonic 01 – Strong Roots delivers the right amount of nourishment to our scalp to keep your roots strong and healthy. It also prevents scalp greasiness and promotes new roots.
Step iv: Weekly Scalp Treatment
Clynn By Nature Scalp Shampoo rejuvenates and maintains scalp health by combining deep cleansing, oil control, DHT-blocking, gentle exfoliation with lasting hydration. This allergen-free formula is a 2-in-1 Tonic-cum-shampoo, for single-step convenience. Use it after hair dyeing to keep your scalp allergen-free. Use weekly in place of Hair Shampoo as weekly scalp treatment.
For consumers above 45 years of age, Clynn By Nature Scalp Shampoo may be used as a daily shampoo to prevent hair loss and promote hair growth.
5. Tell us your brand story and how you resolved or developed it after the workshop session?
When I started formulating products to improve scalp health, I had to come up with a name for my products. Clynn sounds like “clean” which is “the first step” for personal care. Being born and bred in this part of the world, where the best thriving conditions for microorganisms exist, our skin and scalp are highly susceptible to microbial related diseases. Therefore, good personal hygiene cannot be compromised. Because our products are formulated and designed based on the concept of utilizing the gifts of mother nature, by nurturing our body’s natural ability to renew, rejuvenate and restore - the name “Clynn By Nature” made sense.
Before the workshop, I paid all my attention to the formulation of my products, ensuring top quality, safety and efficacy. Branding was a name just to describe who we are and what we do. After the workshop, I realised that Clynn By Nature needs to be a brand, not just a name. It has to be a brand that means something to others and bring something to our customers. I was fortunate to have the help of Anisa who worked with me on sharpening our brand identity, values, what it [the brand] stands for, what it means for the users of Clynn By Nature, i.e. improve brand messaging with clarity.
6. What is your hope for your brand? - feel free to dream and share a large or small goal!
Firstly, to become a trusted brand in Singapore and overseas markets. Users associate CLYNN BY NATURE with quality, reliability and efficacy in hair care and hair loss treatment products.
Secondly, to contribute positively to our environment:
- Reduce water consumption and carbon emission: Clynn By Nature’s products rinse off quickly, reducing the need for rinse water; and saving energy by needing less hot water, therefore reduce carbon emission
- Reduce plastic waste: Clynn By Nature shampoos are available in bottles and refill pouches. Refills use 80% less plastic than bottles, therefore we are contributing to reducing plastic waste by 80% every time a customer purchases a refill. Refills also promote reusing of used bottles of other products which could further encourage zero waste.
- Continue to launch new products with sustainable ingredients with reduced dependency on palm oil.
Founder Lynn Yap
Clynn By Nature
Follow the brand on Instagram @Clynnbynature